Business – 2.2 Motivation – Motivation as a tool | e-Consult
2.2 Motivation – Motivation as a tool (1 questions)
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Both types of incentives can influence employee behaviour, but they differ in impact, sustainability and cost.
- Financial Incentives
- Advantages:
- Immediate and tangible – easy for employees to understand and value.
- Effective for short‑term targets such as sales quotas or seasonal promotions.
- Can be linked directly to measurable performance metrics.
- Disadvantages:
- May encourage a narrow focus on monetary goals, neglecting customer service or teamwork.
- Risk of diminishing returns – once a certain level of pay is expected, motivation may plateau.
- Potentially high cost for the business, especially during low‑margin periods.
- Advantages:
- Non‑Financial Incentives
- Advantages:
- Enhance intrinsic motivation by fulfilling psychological needs (recognition, development, autonomy).
- Often low‑cost or cost‑neutral (e.g., flexible scheduling, public acknowledgement).
- Can improve employee engagement, retention and overall workplace culture.
- Disadvantages:
- Impact may be less immediate and harder to quantify.
- Effectiveness varies with individual preferences; not all staff value the same non‑financial rewards.
- Requires consistent managerial effort to implement and sustain.
- Advantages:
In practice, a blended approach—using modest financial bonuses for hitting sales targets together with non‑financial recognitions such as employee‑of‑the‑month awards and career‑development opportunities—tends to produce the most balanced and enduring motivation in retail environments.