why non-monetary rewards have a big impact on employee motivation.

why non-monetary rewards have a big impact on employee motivation 

Every individual is unique, with a distinct set of needs and preferences for enhancing workplace morale and job satisfaction. Understanding this distinction is vital for shaping your employee offerings to motivate your team effectively. Non-monetary incentives often play a significant role in this equation, frequently outweighing traditional pay raises and cash rewards.

This article explores why non-monetary benefits can play a major role in boosting employee motivation and overall engagement.

Over the past century, various theories have emerged exploring how individuals' motivations influence their actions, both in the workplace and in life. One of the most famous is of course Maslow's Hierarchy of Needs, which claims that people can achieve self-actualization only after fulfilling a series of needs – beginning with basic physiological requirements and progressing through safety, social belonging, and esteem.

the modern workplace requires a modern approach

However, in the modern workplace, other theories have gained relevance, offering more tailored insights into what motivates today's skilled professionals. One such theory is Deci and Ryan's Self-Determination Theory (SDT), which asserts that all individuals share three universal psychological needs: Competence, Relatedness, and Autonomy. These needs reflect a person’s desire to grow and improve, connect with others, and have control over their decisions.

the impact of non-monetary perks 

Non-monetary benefits, in particular, can play a key role in fulfilling the need for Relatedness, as they help foster a sense of belonging and connection in professional environments. By offering an employee benefits program that includes personal recognition, workplace comfort, wellness initiatives, and social and team-building activities, companies can create a supportive atmosphere where employees feel appreciated and part of a workplace community, thereby increasing engagement and overall job satisfaction.

A recent survey conducted by McKinsey & Company highlights this point, showing that over half of employees who left their jobs felt a lack of belonging. In addition, nearly 46% mentioned that their decision to quit was influenced by a desire to work with colleagues who trust and care for one another.

The needs for competence and autonomy can also be effectively met through non-monetary workplace incentives. Offering career growth opportunities, cross-departmental projects, mentorship programs, and job rotation fosters skill development and personal growth. In addition, flexible work arrangements – such as adjustable hours, remote work options, and compressed workweeks—enable employees to take control of their schedules, further enhancing their sense of autonomy and work-life balance.

intrinsic vs extrinsic motivation

Similar to Deci and Ryan's Self-Determination Theory (SDT), Daniel Pink highlights the distinction between intrinsic and extrinsic rewards in his work on motivation. Extrinsic rewards, like bonuses or pay raises, can be effective for simple, routine tasks but often fail to inspire creativity or long-term engagement. In contrast, intrinsic rewards—stemming from autonomy, mastery, and purpose—drive deeper motivation.

Pink argues that people are more likely to thrive when they feel ownership of their work (autonomy), are challenged to improve (mastery), and believe their efforts have meaningful impact (purpose), aligning closely with SDT principles. Overreliance on extrinsic incentives can undermine intrinsic motivation, leading to lower satisfaction and performance, particularly in complex, creative work.

work-life balance as important as pay

Our latest Workmonitor study reinforces these modern theories, revealing that work-life balance is now just as important as salary for skilled professionals, with 93% ranking it as a top priority—well above any other factor. Furthermore, 72% of respondents consider training and development important for current and future jobs.

In today’s rapidly changing workplace, it is evident that employee motivation extends well beyond financial compensation. While competitive salaries remain important, non-monetary incentives are becoming increasingly vital in addressing employees' deeper psychological needs for belonging, personal growth, and autonomy. By emphasizing non-financial rewards, such as career development programs, flexible work options, and initiatives that nurture a sense of community, companies can foster a more engaged, loyal, and productive workforce. 

In conclusion, a comprehensive approach that integrates both financial and non-financial incentives is crucial for driving long-term employee satisfaction and organizational success.

key takeaways

• employees value rewards that go beyond traditional monetary compensation
• non-monetary benefits can have a great impact on motivation and job satisfaction
• over half of employees who left their jobs cited a lack of belonging as a key reason
• work-life balance ranks as a top-priority, as important as pay
• a balanced approach combining financial rewards with non-monetary perks is key to long-term success
   

Do you want to gain insight into how your employees feel about your current non-monetary benefits program and explore their suggestions for improvement?