Effects Of Financial Methods And Employee Motivation Commerce Essay


Recently, many companies would rather apply financial motivation methods to improve work efficiency of their staff than non-financial methods,whose effect on motivating employees in a company is now highly suspected. It is widely recognized that financial methods have some positive effects in efficiently encouraging workers and setting up a fair management system. Yet, it is also suspected that non-financial methods are more beneficial in the long run and more adaptable to companies in various situations. Both approaches seem to have theirs own irreplaceable benefits.

Financial methods, which means employers' or managers' using money to motivate their sub-workers (Andrew Gillespie,2008), is believed to have merits on employee maintenance and inspiration on corporation management. One convincing reason of this is that financial assist given by a company is most likely to drive its employees for hard work. It is not difficult to understand that most of the employees,if not all,work for the paid,with which they can cover their daily expenditure and maintain their living standard.

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"Fair day's pay, which link with production efficiency, for fair day's work, and this fair system could help the employees get fair payment."(Taylor, 2008:22)

A raise in the salary or an additional bonus is might encourage a lady to purse a handbag she has been longed for or offer a gentleman a luxury vocation he high appreciates. That people are personal thinking animals,as Taylor claimed in his theory, means that they care about their own benefits most. Once they figure out a fair formula between work and paid,they would drive themselves for a well paid by exchanging with industrial work. In this way,a company can succeed in keeping its people and driving them for better conduct. As a sense of satisfaction on material goods is easy to be recognized, financial reward seems to be the most direct and beneficial warfare an employer could provide.

Promoting a clear management system by fairly offering the employees financial allowance without evolving complex emotional elements is another advantage financial methods can offer to a company. A visible financial scheme can avoid the managers' abusing their position and disserving their interest. Thus,based on just,a clear system of rewards and penalties is badly needed to encourage or punish the employees,without giving irrational explanations,for better management. For instance, reported by Lianke Song (2010), each employee of IBM is asked to set an annual goal, which would be recorded at the beginning of the year; and the manager would use a system called personal business commitments (PBC) to evaluate the fulfillments of their goals at the end of that year. This approach is widely used in this company for fair evaluation on bonus-related achievements. In this way, members of IBM find the reward and penalty scheme justified and their work procedure under-controlled, which are efficient in driving them to be independent and industrious at work through the year.

However, according to The Theory of X,advanced by McGregor(2006),who considered financial methods as theory X, and Non-financial methods as theory Y:the situation will go to an extreme if the employees only be influenced by one theory.

"Most of employees, which has work enthusiasm, may be motivated between money and other non-financial elements. Without one of these elements, employees would not be encouraged successfully"(McGregor,2006: 106).

Therefore, it is unsurprisingly that under some circumstances,with financial motivation methods successfully introduced into a company,the overall effect is still unsatisfactory. Non-financial methods are essential in this case with amply embedded benefits. One of its major advantages is budget-friendly. When we consider a company's budget, non-financial theory plays a much superior role to the other,as its name reflects,as it loads less stress on a company's interest. For example,New Oriental Company is one of the largest education institutions in china nowadays. In its early days, the company only had several employees. A nice relationship was established within the company. Each member of the company worked hard for the future of New Oriental as if for their own business. By uniting the whole company, the boss succeeded in overcoming many difficulties and leading his company to the first place in the field finally. As can be seen from this case, the non-financial methods, such as a harmonious atmosphere, can be more realistic on motivating employees in some situations. It costs the company less financially,and it suits not only strong corporations but also less-competitive ones. Hence, for decreasing the expenditures on motivation budge, non-financial methods are the most suitable choice.

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Despite a reasonable price,non-financial motivation is long-lasting and is more beneficial in the long run. "Self-developing opportunities, team working and employee assistance program are all considered to be forms of non-financial theory, which means motivating employees without money."(Dave Hall.ect, 2008:389) Maslow's hierarchy of needs is able to analyze and support the claim. Maslow(1954) believes that food and sleep are the basic needs of human beings,after the fulfillment of which they will start to pursue safety, social needs, Esteem and self actualization. In the discussed situation,this theory implies that once daily expense can be ensured, other non-financial related elements would be the main concerns of employees. To make it clear,if one's normal income is enough to feed himself,he is likely to look for other emotional achievement,such as an opportunity for career development,rather than money solely. With reference to Baidu (2010), Kaife Lee,who is the ex-vice president of Google, left the corporation and started his own business in July, 2009,giving up a considerable sum offered to him. The reason of his resignation is that he wants to seek a better chance for self-development after a long period struggling in one position. In addition, since a sense of belonging to the company is also a crucial element concerned,many employers carry out some employee assistance program(programs provided by the companies to help its staff in reducing living and working stress, and solving psychological problems) in order to arouse a harmony working atmosphere and thus unite their employees. Nokia is one of these companies,according to qyglzx website (2010), it promotes activities called "livelife" as a form of welfare to its employees,during which the sense of belonging are supposed to be built by trust-oriented cooperation of team members. Therefore, we can deduce to the conclusion that non-financial approaches are not less practical in maintaining employees and motivating work efficiency.

In conclusion, financial theory has merits of efficiently encouraging sub-employees and setting a clear management system, while non-financial theory also has positive effects, such as more favorable to encourage and maintain the employees in the long run and more pragmatic to give confidence to employees. From my point of view, considering the long-lasting character and budget friendly benefits, non-financial methods is more practical and economic. We should not focus less on the influence of it and make good use of it to improve the general management on employee motivation,with financial methods assisted.

Reference section

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Frederick, W, Taylor (2008). The principles of scientific management Forgotten Books Publisher

Gillespie, A. (2007). Advanced Business Studies (Sixth Edition). Shanghai: shanghai Foreign Language Education Press.

Hall, D. et al (2008). Business studies (Fourth Edition). Ormskirk: Causeway Press Ltd.

Maslow, A (1954). Motivation and Personality (1st ed). New York: Harper & Row.

McGregor (2006). The human side of Enterprise (Annotated Edition). McGraw-Hill Companies.

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