A STUDY ON USE OF NON MONETARY INCENTIVES AS A MOTIVATIONAL TOOL IN

THE MANUFACTURING SECTOR.

KSHIPRA SHARMA
INTRODUCTION

The purpose of this study is to demonstrate to what extent non-monetary incentives are utilized in the
Organization and whether non-monetary incentives have the potential to increase the motivation of
employees as much as the monetary incentives. Incentive is any means that makes an employee desire to do
better, try harder and expend more energy. Non-monetary incentives such as participation in decision
making, verbal or written recognition of good work etc. are the kinds of incentives that do not involve direct
payment of cash. To realize the objectives of the thesis, a survey was administered in various departments of
L&T Power. According to the results of the study, most of the employees think that the level of utilization of
the non-monetary incentives in their organization is inadequate. Also, the findings suggest that they value
nonmonetary incentives as much as monetary incentives. Thus, within the limitations of the survey study, it
may be concluded that non-monetary incentives have the potential to increase the motivation of personnel in
this organization.

Statement of the Problem

It is widely accepted by the organizational theorists that manpower is one of the most important assets of an
organization because things are getting done through employees. In other words, the success of an
organization in realizing its objectives heavily depends on the performance of its employees. Therefore, it is
important to focus on the factors affecting the performance of the employees. Performance is considered to
be related with the concepts of ability, opportunity and motivation (Ivancevich & Matteson, 1988). Ability is
a function of skills, education, experience and training. Opportunity refers to the infrastructure needed to
perform a job. Finally, motivation is the desire to achieve a goal and willingness to exert effort for it.
Motivation is something that can lead to better performance when other conditions are met. But, it has an
advantage over others in the sense that while the opportunity and ability tend to be stable and difficult to
change for the personnel, motivation has flexibility, that is, it can be changed by some means. Moreover, it is
apparent that in the absence of willingness to perform; capacity and opportunity will not generate the desired
results. If the situation is to be explained by a proverb; you can take the horse to the water but you cannot
make it drink. All organizations, whether public or private, need motivated employees to be effective and
efficient in their functioning, in addition to the other factors. Employees who are motivated to work
energetically and creatively toward the accomplishment of organizational goals are one of the most important
inputs to organizational success. Consequently, the challenge for organizations is to ensure that their
employees are highly motivated.

Purpose of the Study

The present study aims to demonstrate to what extent non-monetary incentives are utilized in L&T and
whether they have the potential to motivate employees as much as monetary incentives. At the end of the
research, organization will know what motivates employees are and accordingly what are the incentives
which need to be given to increase employee engagement.

METHODOLOGY : Data collection was conducted by a Questionnaire survey. Content of the questions was

checked by the company guide. The 5-point Likert scale questions in the survey measure the degree of
utilization of non-monetary incentives in the organization. To test the validity of the questionnaire it was pilot
tested. It was distributed in all the departments of L&T Power.

Data Analysis:
Data was analysed by calculating the percentage-wise distribution and then making graphs based on the data.
A set of Monetary and Non-monetary incentives were given to the respondents. They were asked to rate them
on a scale of 5 using Likert scale. Their age and Designation were asked to see if the results vary according
to these parameters.

ANALYSIS
Type of Recognition/Reward

Very
imp

Imp

Moderately
imp

Little
imp

Unimp

ii

A Personal "thank you"

11

13

128

80

Recognition by my customer

20

126

79

Public
Recognition/Newsletter/bulleti
n board

10

13

122

76

A formal letter describing my

accomplishments

12

122

76

An Award, Certificate or gift

14

129

81

Cash

10

121

76

Loyalty award

10

14

127

79

Celebration of success/picnic

12

10

110

69

opportunity to work on an
interesting assignment
Seeking your expert advice

16

12

137

86

17

125

78

Training & Development

11

16

131

82

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Paid Vacation

12

122

76

Pat on the back by your

supervisor
Smile by your boss

14

119

74

11

10

122

76

Job Rotation

10

11

118

74

Stocks

105

66

Early time off with pay

10

11

111

69

Extended Breaks

103

64

Free lunches

11

89

56

Dinner for family on the

company
After work wine & cheese
parties
Stock options

10

104

65

10

85

53

105

66

Paid up Insurance policies

13

124

78

Private office

10

95

59

Feedback about performance

15

13

137

86

Company car

11

110

69

Watches

14

94

59

Coupons redeemable at local

stores
Profit Sharing

12

110

69

12

11

120

75

Clothing

107

67

Appliances & furniture for

home
Club privileges

11

100

63

102

64

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Use of company machinery or

facilities for personal projects
Extended lunch period

10

83

52

81

51

Office with a window

91

57

Bonus

19

142

89

Ono to one coaching

15

124

78

Giving leadership roles

17

11

139

87

Group Award

11

12

128

80

Good work environment

20

144

90

Executive Recognition

13

12

134

84

Opportunity to attend outside

seminars
Cardboard stars for star
studded performance
Special mountain dew can for
that person who exemplifies
the "can do attitude"
Task Autonomy

16

129

81

104

65

84

53

12

10

97

61

Pizza/Popcorn/Cookie Days

11

91

57

Wish them on their Birthday

12

11

124

78

Employee of the month/year

13

119

74

Month end activity

12

110

69

Felicitation prg for children of

emps. Excelling in academics

17

116

73

NOTE:-i

= (B X 4)+(C X 3)+(D X 2)+(E X 1)

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ii = ( I / STRENGTH FACTOR )*100

STRENGTH FACTOR= (TOTAL PARTICIPANTS)*
(MAX. WEIGHTAGE )
100
90

86

81 79
8079
80
7676 76
70
60

69

89

86

82
78
76 76
74 74

78

69
66 64 65 66
59
56

78

75
69 69

53

50

59

87
80

67
6364
57
5251

40
30
20
10
0

Total options of 51 rewards were given to the respondents. Out of which 36 were Non-Monetary incentives
and 15 were monetary incentives. Out of 36 Non-Monetary incentives the incentives which were most
preferred by them were:
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a)
b)
c)
d)
e)
f)
g)
h)
i)
j)

Good work environment (90%)

Giving leadership roles (87%)
Feedback about performance (86%)
Opportunity to work on an interesting assignment (86%)
Executive recognition (84%)
Training and Development (82%)
Opportunity to attend outside seminars (81%)
Loyalty award (79%)
Recognition by my customer (79%)
One to one coaching (78%)
90
88
86
84
82
80
78
76

RESPONSE

74
72

Monetary incentives are categorized as Direct Monetary incentives and Indirect Monetary incentives.
Direct Monetary incentive:

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a) Cash
b) Bonus
Indirect Monetary incentive:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)

Paid vacation
Stock
Free lunches
Dinner for family on company
Paid up insurance policies
Company car
Watches
Coupons redeemable at local stores
Profit sharing
Clothing
Appliances and furniture for home
Club Privileges

Out of these the most important incentive which the employees preferred is:
a) Bonus (89%)
b) Paid up insurance policies (78%)
c) Paid vacation (76%)

90
85
80

RESPONSE

75
70
65
Bonus

Paid up insurance policies Paid Vaccation

The above analysis shows that employees prefer non-monetary incentives as much as monetary incentives.
The rewards given in L&T are:

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a) Opportunity to attend outside seminars

b) Training and Development
c) Feedback about performance
The responses also vary according to their age and designation. Respondents falling in the age bracket of
20-30 prefer monetary incentives as much as Non-monetary incentives. Respondents in the age bracket
of 30-40 and above prefer Non-monetary incentives more as compared to monetary incentives. Also
respondents having higher level (designation) prefer Non-monetary incentives as compared to those
respondents having lower level (designation).

CONCLUSION
To conclude, Non-monetary incentives have a high motivational power in this organization esp. for the age
bracket of 30-40 years as their needs fall on the third and fourth steps (social need and self-actualisation
need) of Maslows hierarchy so for them motivational incentives like recognition by customer, good work
environment etc. are more important as compared to the people falling in the bracket of 20-30 years, for them
cash incentives, job security are more important as their needs come on the first and the second ladder of
Maslows hierarchy (psychological and safety needs) but still they feel that non-monetary incentives are also
important. Also this is supported with Maslows concept of prepotency which says, if a need is important to
the individual and presently a deficiency exits between what is perceived as an appropriate level and what is
presently provided, then it has a great motivating potential.
In this case as the responses indicated that the employees value Non-monetary incentives and the level of
Non-monetary incentives in the organization is inadequate. It may be concluded that Non-monetary
incentives may have a high motivating power in this organization

RECOMMENDATIONS
1. In order to create and improve the feelings of employees towards their workplace, their feelings about
management needs to be improved. For this following is necessary:

Developing and improving face-to-face communications with employees and giving them enough
information, as well as proving their credibility and improving it through honesty and good morals.
Showing care for and respect to employees by expressing appreciation and gratitude, creating chances
to improve, getting employees involved with solving Organizational problems, being receptive to new
ideas, and caring about the Employees problems.
Encourage open book managing. Build trust. Show employees that they are worth of it.
Maintain their dignity &self-respect.
Ensure that successful performance is recognized
2. To maintain employees loyalty in the organization:
Know your competition
Help employees to compete in the workplace by providing them enough resources

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Showing fairness through fair salaries and rewards, behaving towards employees as a family, being
unbiased in recruitment and promotion, and handling grievances seriously and fairly.
Making jobs worthwhile and meaningful, encouraging and facilitating teamwork, creating situations in
which employees get a sense of pride about working as members of the organization, and making the
work environment friendly through sincerity and sympathy, all of which increase employees' loyalty to
the organization.

3. Usually organizational and personnel assessments are performed top to bottom, with every employee being
appraised by his or her direct manager. The problem with this usual approach is that a manager may not have
complete insight about his or her employees or not specialized enough to accurately assess what a particular
employee does. The solution to this problem is the 360-feedback approach. With 360-feedback, employees
are appraised using various sources of information, and managers' assessments are just one, used in
conjunction with assessments from peers, direct reports, and everyone who receives services from an
employee.
4. Organizations usually focus on recruiting employees with highly specific skills. To get more efficiency and
productivity; organizations should consider EI when recruiting, especially at high levels such as managers, and
for the staff whose jobs require social skills. In other word, EI should be a criterion for selecting employees
who must work in teams, lead others, and have efficient relationships to other departments and the community.
5. For giving the chance to employees to attend outside seminars they should be aware of what seminars are
going on the topic relevant to them and what value addition they will get on their skills set.

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