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Effects of Monetary and Non-Monetary Rewards on Employee Job Satisfaction

Effects of Monetary and Non-Monetary Rewards on Employee Job Satisfaction
 

Introduction

History of all economies defines organizations as the stepping-stones towards growth and development. Organizations effectively execute production factors in a bid to meet societal needs and in turn catapult a prosperous society. To reach that goal, human labor must be effectively utilized in the production process (Dessler, 2013, p.5). Unlike machines which can be subdued to pressure and manipulated as wished, humans work best only when satisfied with their jobs (p.25). According to statistics published at Gallup.com, only 31.5 % of the U.S. working population is engaged at work (Adkins, 2015). Narrowing down the scope to a specific niche, a 1999 research conducted on accountants reveal the fact that employee satisfaction boils down to incentives offered by the organization (Brierley, 1999). According to the research, 65% of accountants are more incited by benefits and recognition then by money. Concisely, Gallup defines a satisfied employee as one who works passionately and maintains a profound connection with his employer. This paper reviews how monetary and non-monetary rewards lead to job satisfaction and further explains why non-monetary rewards are more desirable.

Body

Definition of Focal Concepts and Establishing Linkages

Monetary rewards in this view refer to liquid resources passed on to employees as appreciation for services rendered. Generally, monetary rewards refer to weekly or monthly salaries or wages and other commissions paid to the employee. On the other side, non-monetary rewards refer to benefits other than liquid money. These are recognition at work, job vacations, appreciative notes, awards and so on. Job satisfaction is defined as a level, on which an employee works passionately, maintains a positive attitude towards work and his or her employers, and in turn produces optimally.

The Linkage between Monetary Rewards and Employee Job Satisfaction

More than two decades ago Lazear (1986) positively affirms that by increasing monetary benefits in forms of salaries employees get more satisfied and work more. This is particularly true, especially in well-defined work place organization where employees’ performance can be easily monitored. According to Mondy and Mondy (2014, p.54), commission based worker compensation schemes have proven to be fruitful both for the organization in terms of earning revenue and for employees in terms of salary satisfaction. Employees work to meet their unlimited daily needs, therefore with a large salary they can comfortably acquire their consumer basket (Schreurs, Guenter, Schumacher, Van Emmerik & Notelaers, 2013).

Gambacorta & Iannario (2013) did a measuring of job satisfaction on a sample encompassing 567 accountants using CUB models. They conclude that employees surel cannot work if monetary rewards are cut off from the contract. A zero monetary reward variable resulted in zero job satisfaction. They also noted that extremely high levels of monetary incentives in the short run derailed job satisfaction and brain washed individuals towards more earnings.

The Linkage between Non-Monetary Rewards and Employee Job Satisfaction

On the other side of job satisfaction, the quote “money doesn’t buy everything” holds true. Intrinsic rewards which are non-monetary in nature are fast gaining ground. Considering the employee engagement for business success, Stevens (2013) states that employees get satisfied only after self-actualization has occurred. That is, the work environment must be supportive, and the employer-employee relationship is a tipping point. Therefore, in its purest form, intrinsic rewards reinforce job satisfaction by creating positive feelings among junior officers and top management (Stevens, 2013). According to the author, monetary benefits make people chase the dollar while delivering poor quality labor. At the end, employees who work for monetary benefits do not hold a connection with job satisfaction.

According to Chinomona and Mofokeng (2014), satisfied workers hold two major reasons for being motivated and conversely being satisfied with their job. Even though these reasons are purely intrinsic, they must be met by the organization in its means to realize profits. First of all, a good working environment comes second to none in getting employees on board (Chinomona & Mofokeng, 2014; Terera & Ngirande, 2014). Although, the office and work environment belongs to the organization, it is an indirect reward to employees. In fact, very educated and highly skilled employees prefer non-material aspects compared to monetary benefits (Mondy & Mondy, 2014).

Effects of Monetary and Non-Monetary Rewards on Job Satisfaction in the Short Run and Long Run

In his study aimed at analyzing monetary and non-monetary incentive plans, Sorauren (2000) found out, the later plan is deeply embedded to an employee’s psychological needs (Gambacorta & Iannario, 2013). Therefore, non-monetary incentives are long term compared to its monetary counterparts. Sorauren (2000) calculated the Trophy Value Index associated with non-monetary incentives. His study discovers that employees enjoy non-monetary gifts or tips, organizational recognition and respect for a longer time and equally with a higher utility level. Recognized employees go ahead to tell their families and friends about their recent presents and gifts eliciting a good sensation (Merino & Privado, 2015; Khan, Aslam & Lodhi, 2011). On the other side, Sorauren (2000) explains that monetary incentives work but in the short term. He observes this period to exttend maximum to 7 months after receiving the loot.

Aimed to understand these two variables, Stevens (2013) says, employees vigorously look to expand their knowledge, experience and work in a system that recognizes their work as opposed to being paid greatly which is short lived. Specifically, these professionals preferred medical cover, flexible leave periods, thank you cards or letters, company vacations, trophies, recognition in the office and a company car. All these incentives have a long term impact to a person’s job status and guarantee satisfaction. In contrast, 98 % of those employees whose efforts were not effectively recognized, for instance, receiving only a thank you note after accomplishing a multifaceted errand, felt dissatisfied (Stevens, 2013). Such employees contemplate shifting careers or transferring to other organizations which greatly reduce the organization’s productivity (Mondy & Mondy, 2014).

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According to Gambacorta & Iannario (2013), being recognized at work and having monetary rewards is very important and should be the main focus of all organizations. This is especially true for upcoming organizations that need to attract and maintain a quality workforce. The authors assert the fact that job satisfaction can only be attained by balancing between monetary benefits and non-monetary incentives. To back up their argument they quote the Maslow’s hierarchy of needs. Maslow argues that employee can only be satisfied when both his physical, psychological and social needs are met. To reach this end, physical needs have to be met by money while psychological and social needs are quenched by non-monetary incentives (Gambacorta & Iannario, 2013).

Conclusion

Both monetary and non-monetary incentives are critical in maintaining employee satisfaction. Monetary incentives help employees meet life’s daily demand and in turn lead to a better quality of life (Kelleher, 2014; Gambacorta & Iannario, 2013). Everyone will always strife to work towards this point (Kelleher, 2014, p.25). However, monetary incentives are short termed. They only aim at the present, compared to peoples focus on a better tomorrow and that is where non-monetary incentives come in. People always want to be recognized after achieving a milestone. Depending on what has been achieved, this could range from a simple thank you note to company vacations or printing one’s name on the profile of the company (Mondy & Mondy, 2014). This category of incentives is long term and thus offers more job satisfaction when coupled with monetary benefits. Thus, in conclusion, monetary and non-monetary incentives strategies are equally important to an organization’s performance, however, more emphasis should be laid on non-monetary incentives as they manifest in the long term.

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