Why do you need the nonfinancial motivation of employees?

Why do you need the nonfinancial motivation of employees?

| Business

Personnel motivation has a direct effect on the efficiency of the personnel - when employees are interested in ensuring that the work output is of the highest quality and also in their own professional development, this mindset has a positive effect on the overall business.

Unfortunately, some entrepreneurs and HR managers still mistakenly rely solely on financial motivation, although it has been proven more than once that non-material incentivization of employees is even more effective.

Let's take a look at what motivation is in principle and how business owners and employees themselves should use its influence to achieve outstanding results in the company.

The essence of motivation: what is it and how did it appear?

The essence of motivation

The German philosopher A. Schopenhauer first used the term "motivation" in his article: Four principles of sufficient cause." In this, he analysed how and why individuals behave the way they do. After that, other philosophers, psychologists and psychiatrists began to actively use the term to explain the reasons and forces driving the actions and decisions of people.

In the most general sense, motivation is a set of reasons and motives that determine human behaviour. Moreover, the factors themselves that affect human actions can be different, both external and internal.

In fact, a deep understanding of the nuances of possible material and non-material motivation of employees can help to achieve the necessary business results for both sides involved in the process. The main thing to remember is that salary increases; one of the most common approaches to motivation, do not always work in isolation. At the end of the day, no amount of money will keep a person in the workplace if, for example, he or she does not have a sense of belonging to the team, or is dissatisfied with the working conditions. Modern-day employees are expecting much more from the job than just money. In particular, it is important for them to feel they are working collectively towards a shared cause, and to do it in a comfortable environment.

Financial and the nonfinancial incentivization of employees

Financial and the nonfinancial incentivization of employees

There are different approaches to motivating and stimulating the desire of employees to perform well. For example, this can include compensation for travel and education expenses, for food, and additionally paid annual leave. However, these are all examples of material motivation, which is tied to money. Raising salaries, paying for services and introducing bonuses for meeting KPIs (Key Performance Indicators) - which, by the way, are ideally suitable for the sales department) are all ways to materially influence the desire of employees to raise the bar of their performance and be "faster, higher, and stronger."

On the other hand, non-material motivation includes everything that makes the employee's work environment more comfortable. Take, for example, flexible office timing. This includes everything related to physical working conditions, social recognition, the organisation of corporate events, and much more. The main goal of nonfinancial motivation is to meet all the secondary needs of the employee since these issues can lead to general dissatisfaction which has a direct bearing on work efficiency. All these elements of non-material motivation can be combined into several large groups.

Types of the nonfinancial staff motivation

Types of the nonfinancial staff motivation

No employee could be chained to the workplace solely with the help of money, while completely ignoring working conditions and a comfortable psychological environment. In addition to decent wages, the nonfinancial incentives are needed to make a person stay and develop within the company. Therefore, the main types of the non-material motivation of personnel include:

  1. Social motivation is health insurance, opportunities for career advancement and professional development, and a sense of one's own professional worth.
  1. Psychological motivation is comfortable, smooth and healthy relationships with colleagues and management, team building and corporate events.
  1. Moral motivation is a sense of self-worth within the company, respect from colleagues and superiors, praise and recognition of merit.
  1. Organisational motivation - a comfortable workplace, a regulated work schedule, the ability to work remotely from home, and so on.

Nonfinancial motivation includes all those incentives, thanks to which the employee feels like an essential member of the team and, as a result, ready to work harder and deliver better. Each company has its possibilities for what it can undertake to stimulate teamwork and this forms the core of a whole system of the nonfinancial stimulus package, which it has to choose and determine for themselves, based on its own experience and the main directions of its development.

System of nonfinancial motivation

System of nonfinancial motivation

As mentioned above, the creation of a system of non-material motivation is an individual process, and its development is based on the goals, objectives and conditions of each specific business. There is as yet no universal rule that could be applicable for everyone from bank employees to sales consultants; nevertheless, there are several general recommendations:

  1. You should be guided by your strategy and main business focus of the company.
  1. While working out the package of motivation system, do not forget to take into account absolutely all employees of the enterprise.
  1. The incentive system should be regularly updated in accordance with the changes that occur within the business.
  1. Tools for the nonfinancial motivation of employees should take into account the requests and needs of the employees.
  1. Document the system thus developed, and make it transparent and accessible to all employees.

Pros and cons of material and non-material motivation of the personnel

Pros and cons of material and non-material motivation of the personnel

It is vital to bear in mind that material and non-material motivation are not mutually opposing, rather complementary methods. You cannot instill the love of work with the help of bonuses alone, and on the other hand, without a decent salary, retaining employees will be equally difficult. So, let's analyse the main advantages and disadvantages of both approaches.

Material motivation


  • A convenient and straightforward scheme to implement - employees are always happy to receive additional cash benefits, bonuses and discounts.
  • Awards distinguish the personal achievements of each employee.
  • Use of the percentage of revenue as an incentive for sales managers - This leads to an increase in the volume of sales.


  • The financial outlay on incentives is not always a profitable investment.
  • A fixed amount of bonuses, for example, for the sales department, sets a ceiling beyond which employees may not strive.
  • It is at times difficult to decipher the reason behind a spontaneous award, and what the employee must do to receive it again.

Nonfinancial motivation


  • It's much cheaper and requires less outlay.
  • Improves the atmosphere in the team and raises moral.
  • It promotes team building and the spread of corporate culture.


  • The selection of tools for determining the nonfinancial motivation of employees is a complex process requiring individual approach and consideration of a large number of diverse factors.
  • There is a need to take into account the interests of all the different categories of personnel.
  • There is a high personnel cost of professional HR managers, who are usually the main drivers and controllers of nonfinancial motivation in the workplace.

Methods of the nonfinancial motivation of employees

Methods of the nonfinancial motivation of employees

There is a vast multitude of methods for the nonfinancial motivation of employees, so we have identified the most general and well-known ones which can be incorporated.


The method is suitable for motivating young professionals and new employees - if you assign them a professional who is passionate about his work as a mentor. The so-called trainees too will develop a similar attitude to work. Moreover, they will not feel as if they have to fend for themselves in an unfamiliar place, and will always know who to turn to for advice. Mentoring thus ensures the primary goal of nonfinancial motivation, thus maintaining the mental peace of the employees is achieved.

Places for relaxation

To make the physical environment more comfortable for employees, create a separate recreation area where colleagues can meet during breaks and generally relax, without the stress of their current tasks.

Collecting feedback

Conduct regular surveys in which employees can be honest about their needs, wants, and concerns. If the level of trust amongst the employees is lacking, which by itself is a matter of concern, (and also an important signal to management that it is time to destress the people within the company) you can do it anonymously. Be sure to take into account all the feedback received so that employees feel that their opinion matters, and that they can really make a difference.

Public praise

Do not hesitate to highlight the merits and achievements of your employees - both in personal conversations with them and in general meetings. That stimulates the desire to strive for more success and more praise.

Events and team building

Conduct a variety of informal meetings in or out of the office where the team can relax and learn new things and be glory in the achievements of the united teamwork.

Examples of large companies

Examples of large companies

Google and Facebook

The two largest IT companies are traditionally famous for their glowing examples of the cleverly using methods of nonfinancial motivation. For instance, company offices are equipped with everything necessary for employees to feel at home there and to be able to spend almost the entire day on the campus. Fitness, relaxation and sleeping areas, free meals and many such measures ensure the comfort of employees at the highest level.

Full Contact

This company, which specialises in business contact management, offers fully paid leave to all its employees once a year. There is only one condition - employees really travel somewhere, turning off all work-related communications and not answering emails and calls. Such approach to employee motivation demonstrates the company's attitude to holidaying: taking annual leave is not a bad thing to do, on the contrary, it is important to relax, and free oneself from the sense of responsibility for oneself and others.


According to Apple, their employees are real workaholics, so the company creates every opportunity for them to have a good rest and relaxation. For example, Apple has its brasserie with free beer and snacks, and the company regularly hosts events for its employees with famous musicians. OneRepublic, Demi Lovato, and Stevie Wonder are just a few of the celebrities who have already performed at Apple events.


In 2019, the company gamified the workflow of the warehouse staff. Volunteers in the motivational "experiment" received work assignments, for which they were awarded points and virtual merit points. Nothing fancy, but it made the process of product delivery more fun and efficient.


After the completion of a major project, the company throws a party for all employees (of course, at the company's expense. That's the company's way of recognizing their hard work and contribution to the common cause. In addition to rest, relaxation and feeling of being rewarded for hard work, employees also get to network and mingle, sharing their ideas and achievements, which contributes to team building.


One a week, this large UK retailer of household goods allows its employees to voice their opinions to management on absolutely any topic - from leadership style, to advice on a new product launch. In this way, the company demonstrates its interest in the opinions of its employees, also makes available to them the opportunity to be heard.

Legal monkeys

The law firm Legal Monkeys uses a variety of methods of nonfinancial motivation, but one of the most interesting is, perhaps, the Honor Board, or the Board of Gratitude. Any employee can write a wish or compliment to another employee on it. They, in turn, can display this message in their workplace or erase the inscription, write their own and thus spread the positive feeling further.

Southwest Airlines

The American airline is famous for its deep interest in motivating its employees. For example, employees in every department - not just pilots and cabin crew, but even the most junior sales managers - were allowed to design their uniforms. That is how Southwest Airlines encourages its employees to be creative. The company's management style is not to exercise total control over all work issues and has instead opted to give freedom to its employees to openly express their opinions and come up with any suggestions and ideas.


During the FIFA World Cup, this Russian consulting agency set up its own fan zone, where employees were allowed to watch live matches even during business hours a direct manifestation of caring for the values ​​and interests of their staff.


The rubber coating manufacturer's franchise has invented its own currency. For good work, employees receive coins, in exchange for which they can buy any service from the company. For example, 50 coins can be exchanged for a trip to Australia.

Based on the examples of large companies that have reached the zenith of success in their respective fields, it can be deduced that employee motivation is a crucial component of any business. Regardless of the area in which you develop your business, expenditure on taking care of your employees is not something to skimp on. This caring attitude of the management will be appreciated across the board by all employees; be it top IT specialists, bank employees and warehouse workers. After all, better working conditions and the more caring management in a company is a sure recipe for higher the overall performance.

When employees are not afraid to express their opinion, large and highly profitable projects are conceived. When they have this sense of belonging, employees won't want to leave their place of employment.

Mila Smart Semeshkina and Lectera make it to the finals of the international EdTech Awards 2024

This year, there were over 60 nominations at The EdTech Awards | Future Focused For the Win. The online educational platform Lectera, led by its founder and CEO, Mila Smart Semeshkina, is among the winners.

| News

Mila Smart Semeshkina in the 100 Most Influential People in Dubai list

Mila Smart Semeshkina, CEO of the Lectera platform, was for the second time in a row included in Arabian Business’s 100 Most Influential People in Dubai ranking.

| News

According to Forbes columnist Mila Smart Semeshkina, "Startup success is a product of courage and foresight."

The founder and CEO of the Lectera platform, Mila Smart Semeshkina, told in her new article for the Forbes op-ed how to guarantee your startup a successful launch and a stable position in the market.

| News

Mila Smart Semeshkina receives the CEO of the Year at CEO Middle East Awards 2023!

On December 13, the annual Arabian Business’s CEO Middle East Awards ceremony was held in Dubai (UAE).

| News

Mila Smart Semeshkina Leads Inspiring Workshop on Personal Branding at UN Women Entrepreneurship Expo

Mila Semeshkina, CEO of Lectera and founder of the WE Convention, recently spearheaded a hands-on workshop on personal branding at the Women's Entrepreneurship Expo 2023.

| News

Mila Smart Semeshkina's article for Forbes: how business can make education accessible

In the 21st century, quality education is no longer a luxury; it should be a right. Everyone in the world, regardless of location, residence, gender, or financial status, should have the opportunity to obtain essential skills and knowledge to develop a career and realise one’s potential.

| News

Mila Smart Semeshkina is in the top 20 most inspiring female leaders in the Middle East

The Italian women's magazine Grazia has published an article about businesswomen in the Arab world.

| News

Mila Smart Semeshkina for Forbes: "Stories of accomplished female leaders can serve as beacons"

Mila Smart Semeshkina has published an author's column in Forbes.

| News