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Journal of Business Leadership Today
2011 • June • Volume: 2 • Issue: 6
The Impact of Financial and
Nonfinancial Rewards on
Employee Motivation
Valerie L. Kisseloff, M.S.
David Cross, Ed.D.
Melanie Shaw, Ph.D.
ABSTRACT
Employees lacking motivation can present a problem for all types of
organizations, and there can be far-reaching impacts when employee
performance is down. The ability to foster a motivating work environment
is essential, and strategies must focus on how employee satisfaction and
performance levels are tied to motivation. There are several ways that
organizations can engage their workforce, and this study allows for an
examination of the impacts of financial and non-financial rewards with
respect to overall levels of employee motivation. To further examine this
topic, prior literature was reviewed and a survey was emailed to graduate
students enrolled in the Master of Science in Management degree program
at Embry-Riddle Aeronautical University Worldwide. Of those surveyed,
186 responses were collected and analyzed to gain additional insight into
workplace motivation. The survey results indicated that non-financial
rewards are valued as more important than financial rewards from nearly
all individuals surveyed. Although non-financial rewards were rated
higher, the survey results concluded that both financial and non-financial
reward elements impact employee motivation levels, which are ultimately
linked to higher levels of satisfaction and performance.
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Journal of Business Leadership Today
2011 • June • Volume: 2 • Issue: 6
There is ongoing discussion in business literature regarding the development of
managerial skills and the characteristics of effective and capable managers. In a period of
economic downturn, fostering a motivating work environment and understanding the
elements of an effective motivation program are critical pieces of human resources
management. Employees lacking motivation present a problem for all types of
organizations and there can be far-reaching impacts when employee performance levels
are down.
Research has shown that top-performing employees are an asset to organizations,
and companies that focus on keeping their productive employees engaged will experience
long-term benefits (Denka, 2009). Similar management studies also support that when
employees are motivated, they tend to perform at higher levels and are more satisfied
with their current position, and both factors have been linked to greater organizational
success and performance (Thomas & Velthouse, 1990; Koberg, Boss, Senjem &
Goodman, 1999; as cited in Drake, Wong & Salter, 2007).
The challenge for managers is to develop a motivating work environment that
reaches out to their employees in a variety of ways. Understanding the definition of
motivation is at the forefront of this challenge. Prior research suggests that motivation
can be summarized as a product of desire and commitment, where both elements are
essential to produce the outcome (Whetten & Cameron, 2007). Thus, employees with a
high level of commitment and desire can be categorized as highly motivated individuals.
Managers that devote daily attention to understanding, assessing, and channeling an
employee’s motivation to succeed are more likely to be effective on both personal and
organizational levels (Whetten & Cameron, 2007).
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2011 • June • Volume: 2 • Issue: 6
Even with a clear understanding of the definition of motivation, managers are
confronted with the challenge of determining how to approach employee motivation on
an individual level. Within each organization, it is likely that one employee will find
different elements more motivating than others will. Additionally, managerial perceptions
of what motivates front-line or lower-level employees may be very different from what
actually motivates particular individuals (Clark, 2009). Arguably the most well known
model on hierarchical needs is from Abraham Maslow, who maintained that people are
motivated to fulfill their most basic unfulfilled needs first, then move on to satisfy
additional unfulfilled needs (Whetten & Cameron, 2007).
In an organizational setting, unfulfilled needs can be addressed by incorporating
distinct motivational rewards. The two types of rewards examined in this study are
termed financial rewards and non-financial rewards. Financial rewards are defined as
having some monetary value attached to them, and examples include yearly salary,
bonuses, stock options, incentives, and other financial benefits. Non-financial rewards are
defined as having no monetary value, and examples include verbal recognition and
feedback, increased responsibilities, work-life balance, opportunities for professional
growth, and other non-financial rewards (Dewhurst, Guthridge, & Mohr, 2009). An
understanding of the relationship between financial rewards and non-financial rewards on
employee motivation can help managers to foster a work environment that increases
productivity.
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2011 • June • Volume: 2 • Issue: 6
Statement of the Problem
The previously mentioned variables, namely financial rewards and non-financial
rewards, are hypothesized to affect employee motivation levels, which in turn, are
hypothesized to be positively related to improved performance. Specifically, this research
seeks to explore and investigate whether financial rewards or non-financial rewards have
a greater impact or relationship with respect to employee motivation levels. These
predictions are organized into hypotheses that will be introduced later in the study.
Significance of the Problem
The ability to determine whether financial rewards or non-financial rewards have
a greater impact on employee motivation could help managers better understand what
motivates their employees and can enable managers to apply certain motivational
elements to particular groups in the workplace. Managers who understand workplace
motivation can then formulate strategies that reach out to their teams and prove beneficial
in terms of increased overall employee motivation, and ultimately firm productivity and
organizational success.
History of Motivational Theory
The academic disciplines of human resources and organizational behavior had a
dramatic impact on the study of employee motivation in the workplace. Running an
organization requires planning and strategy and managers are continuously searching for
ways to motivate their employees with the goal of increasing overall firm productivity. In
a study by Hanson (1986), the following five factors were identified as powerful
predictors to explain the financial success of highly effective organizations: (a) market
share, (b) capital intensity, (c) firm assets, (d) return on sales, and (e) the ability to
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2011 • June • Volume: 2 • Issue: 6
effectively manage people (Whetten & Cameron, 2007). Of the five factors, Hanson’s
study showed that having a team of executives that effectively managed people was three
times more powerful than any of the factors when it came to financial success and firm
profitability (Whetten & Cameron, 2007). For this reason, management teams in any type
of organization should be concerned with developing competent managers who can lead
their workforce.
However, leading a productive workforce requires a set of managerial skills that
must be developed and improved over time. A study by Cameron and Tschirhart (1988)
evaluated characteristics of more than 500 middle and upper level managers. From the
study, they generated a list of 25 management skills that were critical in determining
success. The results of their study included managerial skills such as creativity, team
building, technical competence, authority sharing, the ability to create a motivated
workplace, and more (Cameron & Tschirhart, 1988, as cited in Whetten & Cameron,
2007). Although there are a number of managerial skills that are critical to organizational
success, this paper focuses on the ability to foster a motivating work environment as a
critical management skill.
Maslow’s Study of Hierarchical Needs
To effectively motivate a workforce, one must first understand the building blocks
of human motivation. Perhaps the most well known model of motivation is from
Abraham Maslow’s study of hierarchical needs. Maslow’s theory on motivation was that
humans share a number of common goals, which were organized into five levels
including “basic physiological and safety needs to more refined needs for social relations,
self-esteem and the highest level of need that he termed self-actualization” (“Motivation
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2011 • June • Volume: 2 • Issue: 6
& Commitment,” 2007, para. 4). According to Maslow’s theory, all humans are typically
motivated by their lowest level need first, before moving on to fulfill higher level needs
only after the lower need has been satisfied. Although Maslow’s work is still debated,
this study sparked additional research into the elements of human motivation.
Extrinsic and Intrinsic Motivators
Research that followed after Maslow also helped to introduce the concept that
“motivation to work is not only about gaining financial rewards, but also about
undertaking work that develops social relations…self-esteem and…creativity and selfexpression” (“Motivation & Commitment,” 2007, para. 4). To address motivational needs
on an individual basis, managers have to identify motivation elements that provided a
mix of extrinsic and intrinsic outcomes for their employees. Extrinsic outcomes are
controlled by someone other than the individual employee and are often in the form of
pay, promotions, and praise from a supervisor (Whetten & Cameron, 2007). Conversely,
intrinsic outcomes are a direct result of an individual’s success and performance. A
completed task often results in positive internal feelings and motivation to achieve greater
goals in the future (Kreitner & Kinicki, 2008). Unfortunately, limited academic literature
had been published when motivational theory was first documented and researched;
therefore, managers failed to provide an adequate mix of motivation elements in the
workplace.
McGregor’s Theory X and Theory Y Management Styles
In the years following Maslow’s study of human needs and extrinsic and intrinsic
motivators, additional research was published that further explored elements of a
motivating work environment. McGregor contributed to the fields of human resources
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2011 • June • Volume: 2 • Issue: 6
and organizational behavior with the Theory X and Theory Y management styles.
According to Kreitner and Kinicki (2008), McGregor used the term Theory X to describe
a management style that was indicative of close supervision and included the assumption
that most employees disliked and avoided work. Conversely, McGregor termed Theory Y
to describe a management style that included positive assumptions about employees, in
which managers viewed workers as self-motivated, responsible, and creative (Kreitner &
Kinicki, 2008). Although McGregor published the research nearly 50 years ago, a
significant disconnect still remains between managerial perceptions of employee
capabilities and actual employee potential, which ultimately affects overall organizational
ability (Bates, 2004).
Elements of Employee Motivation
Based on the aforementioned findings, unlocking potential and identifying ways
to empower employees are crucial elements of an effective motivation program.
According to Whetten and Cameron (2007), theory on employee motivation and
performance has evolved from academic models that suggested satisfaction led to
motivation which led to performance. This model has evolved and has been revised to
show a relationship where motivation drives performance, performance drives outcomes,
and outcomes drive satisfaction. Drake, Wong, and Salter (2007) have also attempted to
define the relationship that exists between motivation and performance, and they also
hypothesized that rewards drive empowerment, which drives motivation, and ultimately
performance.
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2011 • June • Volume: 2 • Issue: 6
Reward Elements
Reward elements can be broken down into two categories defined as financial
rewards and non-financial rewards. As shown in Table 1, financial rewards are
considered to have monetary value, and examples range from yearly salary, bonuses,
stock options, and other financial benefits. Conversely, non-financial rewards are those
that have no monetary value, and examples include verbal recognition, increased
responsibilities, work-life balance, and other non-financial rewards (Dewhurst,
Guthridge, & Mohr, 2009).
Table 1
Classification of Reward Elements
Motivational Reward Elements
Financial Rewards
Non-Financial Rewards
Base salary
Verbal recognition/performance feedback
Bonuses
New responsibilities
Stock options
Challenging job assignment
Promotional raises
Work/life balance
Retirement plans
Training/professional development
Performance incentives
Educational opportunities
Financial rewards
There is little argument against the notion that employees come to work in search
of monetary compensation in return for their labor. Employees often depend on their
salary to maintain a particular lifestyle; therefore, financial rewards in the form of an
employee’s base salary could be viewed as a basic motivating element. In high stress
environments, financial rewards in the form of bonuses and stock options may also be
critical to keeping employees motivated. For example, individuals employed by an
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2011 • June • Volume: 2 • Issue: 6
organization in the financial services sector may find that large bonuses fuel their “work
hard, play hard” attitude (“Feeling Valued,” 2008, p. 28). Without financial motivators, it
could be argued that employees may not reach individual or organizational goals.
However, research published by McKinsey Quarterly (2009) indicated that “for
people with satisfactory salaries, some non-financial motivators are more effective than
extra cash in building long-term employee engagement” (Dewhurst, Guthridge, & Mohr,
2009, p. 2). According to the study, financial rewards were often short-term motivators
and could even lead to consequences that negatively impacted the organization. A similar
study by Topper (2009) also argued that monetary rewards did not lead to long-term
performance and productivity; instead, Topper contended that financial rewards could
reduce employee motivation as monetary rewards take the place of a sense of
accomplishment.
Although prior research noted that financial rewards may not lead to motivated
and satisfied employees, organizations continued to link employees’ satisfaction with
financial rewards, often turning to salary, bonuses, and other fiscal motivators
(Manolopoulous, 2007). Essentially, management teams attempted to drive higher levels
of employee performance through the use of various financial rewards (Cameron &
Pierce, 1977, as cited in Milne, 2007). Despite the published literature that pay for
performance could undermine productivity, companies continued to integrate and align
their pay systems with the achievement of organizational strategic objectives (Milne,
2007). However, tough economic times have forced employers to cut back on financial
incentives. As a result, organizations have reevaluated how they address employee
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2011 • June • Volume: 2 • Issue: 6
motivation and managers have been more creative in choosing which elements will best
motivate their employees.
Non-financial rewards
Even as current economic conditions are changing and impacting the way
organizations now structure their reward programs, prior human resource management
and organizational behavior literature has suggested that non-financial motivators play an
important role in motivating employees. According to Whetten and Cameron (2007),
rewards of any kind must link desired behaviors with employee-valued outcomes that
leave employees feeling appreciated for their work.
Significant research has been published on non-financial rewards and findings
showed that managers could incorporate a wide variety of reward elements to motivate
their staff. Clark (2009) encouraged non-financial rewards that (a) promoted individual
growth and development, such as educational benefits and on-site training; (b) provided
perks, such as corporate gym memberships and on-site child care; and (c) encouraged
non-work related activities, such as annual picnics and holiday parties. The
abovementioned non-financial rewards were unique and creative when attempting to
motivate employees without the use of direct financial compensation.
Denka (2009) supported a parallel view on non-financial rewards, noting that
organizations with engaged employees have higher retention rates. The key to engaging
employees was to focus on communication, praise, delegation, and training (Denka,
2009). Surveys conducted by Accountemps also found that a third of participants cited
lack of communication as a significant contributor to low morale (Denka, 2009).
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2011 • June • Volume: 2 • Issue: 6
Financially speaking, communication and praise were reward elements that are
critical to employees at little or no cost to the organization, and the use of information
sharing and positive performance feedback were two reward elements leave employees
feeling informed and valued. Delegation is another non-financial reward element that
created a feeling of employee ownership and could lead to a sense of accomplishment for
the employee. However, Denka (2009) warned that managers must be selective when
delegating tasks to ensure that the employee will benefit from the experience; passing off
routing tasks will most likely have an undesired effect on motivation levels. Finally,
investing in training gave employees an opportunity for professional growth, which in
turn stimulates loyalty and improves morale.
To further explore the link between non-financial rewards and motivation, Milne
(2007) maintained that celebrating successes can be a powerful motivator. A manager
that acknowledged an achievement also recognized an individual’s commitment to
learning. In turn, this could be used to reinforce “an organization’s values, promote
outstanding performance and foster continuous learning by openly acknowledging role
model behavior and ongoing achievement” (Milne, 2007, p. 30). Celebration of
departmental or organizational milestones could also be an important motivational
element to maintain enthusiasm within an organization. Milne (2007) also stressed the
importance of asking employees for input regarding reward programs, as it encourages
engagement and accountability.
Statement of the Hypothesis
If managers can determine whether financial rewards or non-financial rewards
have a greater impact on employee motivation levels, they can begin to apply certain
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2011 • June • Volume: 2 • Issue: 6
motivational elements to particular groups in the workplace. Therefore, this research
seeks to explore and investigate whether financial rewards or non-financial rewards have
a greater impact or relationship with respect to employee motivation levels. These
predictions are organized into the following hypotheses as shown below:
H0:
There is no significant difference between financial rewards and nonfinancial rewards on employee motivation.
H1:
There is a significant difference between financial rewards and nonfinancial rewards on employee motivation.
Referring back to Hanson’s (1986) study, the ability to effectively manage people
is one of five critical predictors that explain the financial success of highly effective
organizations (Whetten & Cameron, 2007). Therefore, organizations should be investing
in training and development for their managers, which ultimately produces leaders that
are capable of fostering highly motivating work environments for their employees.
Research Model
A survey was utilized as the main research tool to test the hypotheses of the study.
The survey research was in the form of a questionnaire that collected quantifiable data in
connection with the financial and non-financial reward variables and the impact they had
on employee motivation levels. To test the level of statistical significance, results were
analyzed in Microsoft Excel to identify the difference in rating averages.
Survey Population
The survey population consisted of a convenience sample as a result of limited
resources and ease of accessibility. The sample consisted of Embry-Riddle Aeronautical
University (ERAU) Worldwide graduate students who were enrolled in the Master of
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2011 • June • Volume: 2 • Issue: 6
Science in Management (MSM) degree program at the time the survey was conducted.
The ERAU Worldwide campus caters to non-traditional learners, with a large percentage
of the population completing their education while working full time. The MSM roster
consisted of approximately 900 students that were accessible via email as part of the
MSM online organization. Prior approval from the MSM Program Chair was obtained in
order to survey this group of individuals.
The Data Collection Device
Data were collected using an online survey research tool, which was pilot tested
prior to use in this research. The survey was constructed and administered using
SurveyMonkey online software. Survey questions were researcher-designed questions,
based on prior relevant research. Data collected was quantitative and was analyzed using
Microsoft Excel software.
The survey was used as the data collection device and was distributed to ERAU
Worldwide graduate students via email. The SurveyMonkey research tool served as an
electronic survey instrument and allowed participants to access the survey from a direct
link. The direct link to the survey was provided to the sample population using a link
embedded in an email notification to the potential participants of the research.
Procedures
To test the hypothesis of the study, survey questionnaires were emailed to ERAU
graduate students who were actively enrolled in the MSM degree organization at the time
of the survey. All participants were emailed and provided with background information
regarding the intent of the study. The email included specific details advising participants
that their anonymity was ensured and the data collected would remain confidential.
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2011 • June • Volume: 2 • Issue: 6
Prospective research participants were given as much information as might be needed to
make an informed decision about whether or not they wished to participate in the study,
to ensure informed consent.
Treatment of Data
Data were analyzed using Microsoft Excel software in order to test the research
hypotheses. To determine if a significant relationship existed between financial-rewards
and non-financial rewards on employee motivation level, data were analyzed and the
percentage of difference was measured between the financial and non-financial reward
responses. This helped to establish the strength of the relationship between the variables
(Levine, Stephan, Krehbiel, & Berenson, 2008). Additional data analysis was conducted
using the crosstab demographic data, and reviewed to determine if there was a difference
in preference between financial and non-financial rewards elements and employee
motivation. These methods assisted in determining if the null hypothesis should be
rejected.
Results
The goal of the survey was to identify if there is a significant difference between
financial rewards and non-financial rewards on employee motivation levels. The survey
yielded 186 responses, providing a response rate slightly greater than 20 %. The first
question asked participants to rate the level of importance of six financial rewards,
identified as base salary, bonuses, stock options, promotions/raises, retirement plans, and
performance-related pay. Of the six financial rewards, respondents ranked base salary the
highest with a score of 9.12, followed by promotions/raises at 8.84, retirement plans at
8.46, performance-related pay at 7.78, bonuses at 6.97, and finally stock options at 5.53.
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2011 • June • Volume: 2 • Issue: 6
Overall, financial rewards scored an average rating of 7.78 out of 10 possible points. The
results indicate that the majority of participants value salary, promotions/raises, and
retirement plans as most important, all scoring above 8 points. Participants scored the
remaining financial rewards lower, indicating that performance-related pay, bonuses, and
stock options are less motivating. The top three financial rewards are more concrete
financial measurements, whereas performance-related pay, bonuses, and stock options are
less reliable forms of income on a yearly basis, which shows that participants tend to
value more reliable, tangible forms of financial rewards.
The second question asked participants to rate the level of importance of seven
non-financial rewards, categorized as verbal recognition/performance feedback, new
responsibilities, challenging job assignment, work/life balance, training/professional
development, educational opportunities, and growth/management opportunities. The
highest rated reward was growth/management opportunities at 9.05, followed by
work/life balance at 9.04, educational opportunities at 8.52, training/professional
development at 8.47, verbal recognition/performance feedback at 8.30, challenging job
assignment at 8.13, and new responsibilities at 7.78. Overall, non-financial rewards
scored an average rating of 8.47 out of 10 possible points. The results indicate that survey
participants’ value growth and opportunities that will keep them engaged in the
workplace. Consistent with the findings in detailed in the literature, survey responses also
revealed that work/life balance, educational opportunities, and training/professional
development keep employees motivated, in turn creating more loyal and productive
employees.
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2011 • June • Volume: 2 • Issue: 6
Questions #3 through #11 asked participants to indicate their level of agreement
or disagreement with the statement provided. To identify the level of agreement or
disagreement with each statement, the percentages were grouped strongly agree, agree,
or somewhat agree together, and somewhat disagree, disagree, or strongly disagree
together. Questions #3-6 addressed financial rewards and Questions #7-11 addressed
non-financial rewards.
Question #3 responses indicated that 96.2% of participants agreed to some level
that salary plays a significant role in their decision to accept a position or promotion; only
3.8% of participants disagreed with this. Question #4 responses identified that 84.4% of
respondents agreed to some level that the ability to earn bonuses and/or stock options
motivates them to work harder, while 15.6% disagreed to some extent. Question #5
returned a response rate of 91.9% in agreement with the statement that the potential to
earn financial incentives motivates them to work harder, while 8.1% disagreed. Question
#6 indicated that 79% of survey participants agreed to some level that financial rewards
are more motivating to them on a short-term basis, whereas 21% disagreed.
Question #7 asked respondents if they are motivated to work harder when they
receive verbal recognition and/or performance feedback from their manager, to which
95.6% agreed to some level, and 4.4% disagreed. Question #8 responses identified that
96.3% of respondents agreed to some level that the opportunity to take on new
responsibilities or challenging assignments is motivating, while 3.7% disagreed to some
extent. Question #9 responses indicated that 97.8% of participants agree to some level
that working for and organization that values work/life balance and flexibility motivates
them to work harder; only 2.2% of participants disagreed with this. Question #10
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2011 • June • Volume: 2 • Issue: 6
indicated that 97.3% of survey participants agreed to some level that the opportunity to
take advantage of training and professional development motivates them, whereas 2.7%
disagreed. Question #11 returned a response rate of 100% of participants in agreement
with the statement that they are motivated to work for an organization that offers growth
and management opportunities.
The previously mentioned survey response rates are consistent with the findings
presented in the literature, as there is little argument that employees come to work in
search of monetary compensation in return for their labor. Employees depend on a salary
to maintain a certain lifestyle and standard of living; therefore, financial rewards can be
viewed as basic motivating elements. However, individuals also place significant value
on rewards that leave them feeling appreciated for their work. Non-financial rewards can
accomplish these feelings, as they help promote growth and development and are unique
and creative when attempting to motivate employees without the use of direct financial
compensation. Additionally, non-financial rewards have been linked to more engaged
employees and higher retention rates.
Overall, the results of Question #1 and Question #2 showed that non-financial
rewards were regarded as more important than financial rewards. The percent difference
calculated between financial rewards and non-financial rewards indicate a preference of
non-financial rewards by 8.14%.
Additionally, a review of the Likert-scale questions relating to financial reward
elements (Questions #3-6) yielded an average response percentage of 87.9% in agreement
with the statements, and the questions relating to non-financial reward elements
(Questions #7-11) generated an average response percentage of 97.4% in agreement with
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2011 • June • Volume: 2 • Issue: 6
the statements. The percent difference calculated between these numbers is 9.75%, again
showing a significant preference for non-financial rewards over financial rewards.
Finally, Question #12 asked participants to indicate which type of rewards their
employer used most frequently. Results identified that 36.6% of organizations use
financial rewards versus 63.4% that use non-financial rewards. Question#13 returned a
98.3% response rate of individuals in agreement with the statement that when they are
rewarded at work, they are more satisfied and motivated to perform. Although the survey
results reveal that participants prefer non-financial rewards more than financial rewards,
Question #13 indicates that there is a definite correlation that when employees are
rewarded and recognized at work, they are more motivated to perform, in turn leading to
greater levels of productivity.
Review of Demographic Crosstab Data Results
Survey respondents were also asked to answer questions that would provide
demographic information for further data analysis regarding their reward preferences.
The demographic questions covered gender, age, level of education, length of
employment, work status, position type, and yearly salary.
The first crosstab addressed in the survey allowed for an analysis of the results
based on gender. Survey results indicated that both men and women rated non-financial
rewards higher than financial-rewards. The percent difference between non-financial and
financial rewards was 7.97% for men, and 8.41% for women, indicating that there is not a
large difference in preference between genders.
The age range crosstab provided data analysis based on the ages of respondents.
Non-financial rewards were rated the most important by participants over the age of 60 at
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9.57, followed by ages 51-60 at 8.91, then by ages 31-40, 21-30, and 41-50. Conversely,
financial rewards were ranked highest by participants ages 51-60 at 8.25, followed by
ages 41-50, 31-40, over 60, and 21-30. The greatest difference in preference between
non-financial and financial rewards was between those ages 60 and over, with a 21.64%
difference, followed by those ages 21-30 with an 11.57% difference.
The education level demographic responses were as expected, given that the
surveyed students were currently enrolled in the MSM graduate degree program at
ERAU. Nearly 85% of respondents fell into the category of having completed some
graduate level coursework, with the remaining 15% having completed an undergraduate
degree, a graduate degree, or doctoral level coursework. Given the crosstab results for
level of education, the greatest percentage of respondents were those with some graduate
level coursework and the percent difference between non-financial and financial rewards
was 8.45%, again showing a significant difference in preference.
The next crosstab section covers the length of time participants have been
employed with their organization. Participants employed with their organization for six to
ten years had the greatest percent difference between their preferences of non-financial
rewards over financial rewards at 12.63%, followed by those employed three to five
years, then less than one year, more than ten years, and finally those employed between
one and two years.
Position type was also reviewed as a crosstab and asked respondents to indicate if
they hold a management or non-management position. The number of management level
and non-management level participants was nearly equal; management level participants
represented 50.3% of the responses, while non-management level participants
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2011 • June • Volume: 2 • Issue: 6
represented 49.7% of the responses. The crosstab data indicated that non-management
level participants rated both financial and non-financial rewards higher than management
level participants, and they also had a greater percent difference between their
preferences of non-financial rewards over financial rewards, at 8.67% vs. 7.64%.
The demographic questions asked participants to indicate their salary range and
the available response categories included under $25,000, $25,000-$34,999, $35,000$44,999, $45,000-$54,999, $55,000-$64,999, $65,000-$74,999, $75,000-$84,999,
$85,000-$94,999, and $95,000 or greater. The greatest number of participants indicated
their salary range was $95,000 or greater at 16.9%, followed by those making $55,000$64,999 at 15.3%, then $35,000-$44,999 at 14.2%. Overall, approximately 48% of
respondents are making $65,000 or greater, while nearly 52% of respondents make
$64,999 or less per year. The crosstab data for salary range showed the first disparity in
preference of financial rewards over non-financial rewards for participants indicating
their salary is less than $25,000 a year. All other response categories indicated a greater
preference for non-financial rewards, with percent differences ranging from 4.93% for
those making $35,000-$44,999 a year, up to an 18.27% difference for those making
$85,000-$94,999 a year.
The final demographic crosstab addressed the work status of participants, asking
respondents to indicate if they are employed full-time, part-time, temporary or contract
workers, unemployed, home-makers or other. Full-time employees represented 94.1% of
the survey respondents, followed by temporary/contract workers at 3.2% of respondents,
then part-time employees and home-maker/other each accounted for 1.1% of responses,
and unemployed respondents represented 0.5% of responses. The crosstab data analysis
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2011 • June • Volume: 2 • Issue: 6
continued to show a greater preference for non-financial rewards over financial rewards
by full-time, part-time and temporary/contract workers; however, participants that
indicated they were unemployed or home-makers/other both showed a greater preference
for financial rewards instead of non-financial rewards.
Those individuals that indicated they are currently unemployed rated financial
rewards higher than non-financial rewards by a percent difference of 7.14%, and the
home-maker/other category showed a preference of financial rewards by 23.6%.
Although these results differ from the overwhelming preference of non-financial rewards
over financial rewards, the results are justified as these respondents are set apart from the
majority of the survey population. Individuals that fall into the category of unemployed
or home-maker/other are likely to place greater weight on financial rewards, as they may
be looking to fill a more basic need, and financial rewards can often be viewed as basic
motivating reward elements.
Conclusions
After review of the survey data and additional crosstab results, the findings are
consistent that non-financial rewards are more important to employees than financial
rewards. Of all of the financial and non-financial reward elements, base salary scored the
highest at 9.12 points; however, four of the six remaining financial reward elements
scored below the average rating of 8.47 for non-financial reward elements. This indicator
reiterates the preference of non-financial rewards over financial rewards.
The percentage of difference between the non-financial reward ratings and
financial-reward ratings also reiterate a clear preference of non-financial rewards. Survey
questions relating to non-financial reward elements (Questions #7-11) yielded 9.75%
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2011 • June • Volume: 2 • Issue: 6
difference over questions relating to financial reward elements (Questions #3-6),
confirming the results of the initial two survey questions.
Question #12 and #13 also provided valuable data, asking participants to indicate
which type of rewards they find their employer uses most frequently. Results showed that
the employees think their organizations use non-financial nearly two-thirds of the time,
while they use financial rewards roughly one-third of the time. Given the current
economic downturn, the survey results are consistent with the research in the literature,
which argues that many organizations shift their use of reward elements towards nonfinancial rewards. The current financial status of many organizations may have forced
employers to cut back on financial incentives, and they now rely more heavily on nonfinancial motivators. As the economy shifts, it is likely that this percentage will also
change.
Although participants indicated their preference for non-financial rewards over
financial rewards, there is little debate that employees require all types of reward
elements in the workplace to remain motivated, satisfied, and productive. The response
rate of Question #13 stresses the importance of motivating reward elements in the
workplace, as 98.3% of participants agreed with the statement that when they are
rewarded at work, they are more satisfied and motivated to perform. Consequently, there
is also a distinct connection that when employees are rewarded and recognized at work,
they are more motivated to perform, in turn leading to greater levels of productivity.
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2011 • June • Volume: 2 • Issue: 6
Conclusion of the Hypothesis
There is a statistically significant difference between financial rewards and nonfinancial reward elements, which is in favor of the alternative hypothesis. Accordingly,
the null hypothesis was rejected.
Recommendations
The results of the study provided valuable information for individuals interested
in learning more about what motivates employees. Prior research presented in the
literature has concluded that when employees are motivated, they are typically more
satisfied and more productive, in turn leading to higher-performing organizations. The
decision to study the impact of financial and non-financial rewards on employee
motivation yielded useful results, as it identified that individuals have a greater
preference for non-financial rewards than financial rewards.
The majority of survey participants rated non-financial rewards higher than
financial rewards on all accounts. There were exceptions with three participant categories
identified in the crosstab data analysis, namely respondents making less than $25,000 a
year, respondents that are unemployed, and those that are home-makers/other. The
abovementioned categories of participants showed that they valued financial rewards
more than non-financial rewards; consequently, it can be concluded that these individuals
may be lacking a more basic financial need. To better understand the differences in
preference, further research could be conducted for this group of individuals.
For researchers looking to explore the topic of reward elements and motivation in
greater detail, it would be recommended that they use a more diverse survey population.
Limitations resulted in a survey population that consisted of a convenience sample as a
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2011 • June • Volume: 2 • Issue: 6
result of limited resources and ease of accessibility. The survey sample consisted of
ERAU Worldwide graduate students enrolled in the MSM degree program; therefore, the
general demographic of participants favored well educated, full-time employees. In order
to conduct further and more extensive research on reward elements and the link between
employee motivation, it is suggested that future researchers expand the survey population
to cover a broader demographic.
In closing, results of the survey are valuable for any individual in a professional
setting, especially for those with current or future managerial responsibilities. The ability
to understand and identify what reward elements are most important to employees can
help provide additional insight into workplace motivation, for greater levels of employee
satisfaction and organizational performance.
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2011 • June • Volume: 2 • Issue: 6
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