Financial and Non-Financial Methods of Motivation

Having examined the theoretical foundations of motivation, this lesson focuses on the practical methods businesses use to motivate their workforce. These methods fall into two broad categories: financial (monetary rewards) and non-financial (intrinsic and organisational methods that do not directly involve additional pay).

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Financial Methods of Motivation

Financial methods of motivation use monetary incentives to encourage higher performance, greater output or specific behaviours.

1. Piece Rate

Employees are paid a fixed amount for each unit of output they produce.

Advantages	Disadvantages
Direct link between effort and reward — motivates hard work	May sacrifice quality for quantity — workers rush to produce more
Easy to understand and calculate	Income is unpredictable — varies with output, making budgeting difficult for workers
Aligns with Taylor's view that money is the primary motivator	Not suitable for service-based or creative roles
Reduces the need for close supervision — output is self-monitored	Can create a stressful, competitive environment

Example: Garment workers in a clothing factory paid £0.50 per item completed.

2. Commission