Article: Monetary Vs Non-monetary incentives: Which ones actually work?

Compensation & Benefits

Monetary Vs Non-monetary incentives: Which ones actually work?

Employees will remember non-transactional incentives more than monetary ones. It pays for the HR to develop bonds beyond bonus schemes.
Monetary Vs Non-monetary incentives: Which ones actually work?

Attrition is a word that most companies hate – more so if the person leaving the organisation is a productive one. The HR of any organisation doles out a number of incentives – mainly rewards, promotions, bonus to retain their valuable employees.  In the long run, these monetary schemes might not really help the organisation to keep their important employees with them. Along with these transactional incentives, there are a few things that HR needs to unconditionally engage in, to have a greater impact upon their employees – and those are all related to one aspect of human engagement i.e. emotional connect.

Employee engagement doesn’t necessarily mean having fun at a company event. It transcends beyond the superficial smile-and-greet behaviour. It doesn’t cost much to develop these emotional bonds but, once it has been established and evolved, this will reap greater benefits for the company than giving out monetary compliments. These days, the popular incentives are usually cash rewards, promotions, Employee Stock Option Plans (Esops), Joining bonus and the likes. 

All of the above mentioned ones talk about appreciating employee hardwork, no doubt. And needless to say, these have become part of the standard acknowledgment of the back-breaking work employees do. But, a sense of purpose, real responsibility, meaning, caring, fairness, and authenticity are reasons to increase commitment. A company with such policies and practices will be indispensible in the longer run. For e.g. a grieving employee – all major companies have a bereavement policy, but an empathetic HR will gain an employee’s trust more than an HR who just mechanically manages the situation. Understanding the gravity of the situation, giving them work from home option (if asked and required), will retain the most productive ones even when they are lured with better options later. 

Appreciating employees’ work with a thank-you note, writing about their work in a chain email, featuring them in their monthly newsletters, sending flowers at home to thank their spouses/parents (for the support they gave for the long-working hours), these will strengthen the bond with the company. If it was mere monetary, then the staff might think it’s something that they ought to get because of their laborious work.

Companies have a lot many schemes for their employees – corporate discounts, giving them iPods/X-box or other similar products. However, if the HR strategically comes up with the tax saving incentives for its employees apart from HRA, transportation tax saving allowance, food coupons, then the latter will understand how the organisation cares for them. Additionally, if they start allowing employees to reimburse a part of their children's education bill and family telephone bills, which are non taxable and hence allowing maximum savings. 

Once a company starts to operate on these policies, then it will be rewarded with employees who will deliver amazing performance over the long haul.

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Topics: Compensation & Benefits, Benefits & Rewards

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