Financial and Non-Financial Incentive Motivators
Summary
Both financial and non financial incentive motivators implemented with or without systematic administrations had different effects on work performance. The authors, Stajkovic and Luthans, based on their study of a manufacturing company of 7,000 workers, concluded that financial incentive motivator, specifically pay for performance, had a stronger effect on work performance by increasing it by 37% than non financial incentive motivators, namely social recognition and performance feedback, which increased the performance by 24% and 20% respectively. They also observed that with the same pay for performance incentive, the incentive conducted with invention of organizational behavioural model had a stronger result than routine pay for performance of which performance increased by 11% only compared to 37%. All the pay for performance, social recognition, and performance feedback were distinguished on the basis of the social cognitive theoretical dimensions: outcome utility, informative content, and regulatory mechanism. Characteristics of each motivator are described in the table below. Incentive Motivators | Outcome Utility | Informative Content | Regulatory Mechanism | Pay for performance: “paying individuals predetermined amounts of money for each unit produced.” | * The outcome is tangible and attractive to most employees to work harder and perform better. | * The outcome is in either fixed or variable form of compensation. Both show the discrepancies in levels of desired performance but do not relate the required task to outcome in detail. | * Money can be instrumental because it meets the physiological and psychological needs. * Money can be symbolic because it signals the social status. | Social Recognition | * The outcome is in the form of verbal expression, such as appraisal, approval, and interest. * It costs management’s time, effort, and interpersonal skills. * Employees will continue to perform at a desired level as
Both financial and non financial incentive motivators implemented with or without systematic administrations had different effects on work performance. The authors, Stajkovic and Luthans, based on their study of a manufacturing company of 7,000 workers, concluded that financial incentive motivator, specifically pay for performance, had a stronger effect on work performance by increasing it by 37% than non financial incentive motivators, namely social recognition and performance feedback, which increased the performance by 24% and 20% respectively. They also observed that with the same pay for performance incentive, the incentive conducted with invention of organizational behavioural model had a stronger result than routine pay for performance of which performance increased by 11% only compared to 37%. All the pay for performance, social recognition, and performance feedback were distinguished on the basis of the social cognitive theoretical dimensions: outcome utility, informative content, and regulatory mechanism. Characteristics of each motivator are described in the table below. Incentive Motivators | Outcome Utility | Informative Content | Regulatory Mechanism | Pay for performance: “paying individuals predetermined amounts of money for each unit produced.” | * The outcome is tangible and attractive to most employees to work harder and perform better. | * The outcome is in either fixed or variable form of compensation. Both show the discrepancies in levels of desired performance but do not relate the required task to outcome in detail. | * Money can be instrumental because it meets the physiological and psychological needs. * Money can be symbolic because it signals the social status. | Social Recognition | * The outcome is in the form of verbal expression, such as appraisal, approval, and interest. * It costs management’s time, effort, and interpersonal skills. * Employees will continue to perform at a desired level as