Financial versus Nonfinancial Rewards
Rewards may or may not enhance the employee’s financial well-being. Those that do, do so directly—through wages, bonuses, or profit sharing—or indirectly, through employer subsidized benefits such as retirement plans, paid vacations, paid sick leaves, and purchase discounts.
Nonfinancial rewards present a variety of desirable extras for employees and organizations. These do not directly increase the employees financial position, but make life on the job more pleasant. We will identify a few popular and innovative examples, but creation of these rewards is limited only by HRM’s ingenuity and ability to use them to motivate desirable behavior.
The saying, “One person’s food is another person’s poison,” applies to the entire subject of rewards, but specifically to nonfinancial rewards. What one employee views as “something I’ve always wanted,” another might find relatively useless. Therefore, HRM must take great care in providing the right nonfinancial reward for each person. With proper selection, organizational benefits should produce significant increases in employee engagement and productivity.
If an employee is status conscious, a fancy office with a large desk, or signed artwork may be just what stimulates her toward top performance. Other status-oriented employees may value an impressive job title, access to the latest technology, their own administrative assistant, or a well-located parking space with their name clearly painted underneath the “Reserved”' sign. Other employees may value opportunities to dress casually while at work or even work in part at home. Such incentives are within the organizations discretion and, carefully used, may enhance performance.