How non-financial methods work
Definition
Non-financial method of motivation: a way of raising motivation that does not involve paying the employee more money.
- Non-financial methods change how the job feels and how the employee is treated, so they work on pride, interest and belonging rather than on the size of the pay packet.
- They matter because a pay rise cannot cure boredom, being ignored by a manager or having nothing to aim for, and most of them cost far less than raising the pay of the whole workforce.
- The four you need are the style of management, training, greater responsibility and fringe benefits.
Styles of management
- Democratic style: the manager consults staff, asks for their ideas and explains decisions, so employees feel their views count and take ownership of the way the work is organised.
- Consultation takes time, so it fits skilled staff and decisions that are not urgent rather than a problem that has to be solved in the next five minutes.
- Autocratic style: the manager gives instructions and expects them to be followed, which is quick and clear, but capable employees who are never asked their opinion feel ignored and stop offering ideas.
- Laissez-faire style: the manager sets the goal and leaves staff to decide how to reach it, which motivates experienced specialists who want to be trusted but leaves new staff unsure what to do.
Example
- A Nando's restaurant manager who asks the team how to reorganise the Friday rota, then uses their suggestion, raises motivation at the cost of one conversation.
- The same manager still gives direct instructions during a fire drill, because some situations need one voice rather than a discussion.
Training as a motivator
- Being trained tells an employee the business is willing to spend money on them, which makes them feel valued rather than easily replaced.
- Training removes the stress of not knowing how to do part of the job, so the employee works with more confidence and gets more satisfaction from finishing the task properly.
- New skills open the way to promotion and better paid work, so training gives staff a reason to stay rather than look elsewhere.
Note
Why businesses train and the methods they use belong to the training articles that follow, so here you only need the effect training has on motivation.
Greater responsibility
Definition
Delegation: passing responsibility for a task, along with the authority to make decisions about it, down to a more junior employee.
Job enrichment: giving an employee more demanding tasks and more control over their work, so the job itself becomes more satisfying.
- Delegation: being trusted to run a task without being checked on shows the manager has confidence in the employee, and the employee gains skills that make them more useful to the business.
- Job enrichment: harder and more varied work brings a sense of achievement when it is finished, which extra pay for the same dull tasks cannot provide.
- Promotion: moving up to a role with more status and more responsibility rewards the effort an employee has already made and gives everybody below them something to aim for.
- Responsibility demotivates if it is handed over without training or support, because the employee feels set up to fail, and promotion only motivates while staff believe it is awarded fairly.
Example
- An experienced server at a Greggs shop who is given responsibility for ordering stock and opening up has a reason to stay when a rival offers the same wage.
- If nobody shows them how the ordering system works, that same responsibility becomes a source of stress instead of pride.
Fringe benefits
Definition
Fringe benefits: rewards given to employees on top of their pay that are not cash, such as a staff discount, a company car or private health cover.
- Common fringe benefits include a staff discount, free or subsidised meals, a company car, gym membership, private health cover, extra holiday and a pension above the legal minimum.
- They motivate by making staff feel looked after, and they help keep them, because leaving means giving up the benefit as well as the pay.
- Some cost the business very little compared with the value the employee places on them, such as a discount on goods the staff buy anyway.
- Benefits are quickly treated as a right rather than a reward, so their effect on day-to-day effort fades even while they still help the business hold on to staff.
Common Mistake
Fringe benefits are a non-financial method even though they cost the business money, because the employee is not handed extra cash, so never list a company car alongside commission and profit sharing.
Exam technique
- Questions often say explain one non-financial method the business could use to motivate its employees, so name the method, then trace how it changes the way the employee feels and then what they do.
- Pick the method that fixes the problem described, such as job enrichment for a bored but capable worker, or a more democratic style where staff say their ideas are ignored.
- Avoid the answer that says the manager should be nicer to people, because it names neither a method nor a mechanism.
Self review
- Name four non-financial methods of motivation.
- How does a democratic style of management raise motivation?
- Why can training motivate an employee who is already well paid?
- What is the difference between delegation and promotion?
- Give one reason a fringe benefit may stop motivating over time.
