Companies across the globe recognize the importance of motivating their staff to work more productively. Some think that increasing salaries is the most effective incentive. I disagree with this opinion and argue that other methods tend to yield even better results.
Although it may seem fair to say that well-paid employees generally work better, I do not believe that increasing salaries is the optimal way to motivate them. This is because over a certain period of time, they will become accustomed to the new pay and their motivation will decrease again. In order to keep the staff motivated, the company will have to change their compensation regularly, thus driving business expenses higher and higher. As such, this strategy is unsustainable in the long term.
As an alternative to increasing salaries, companies could introduce performance-related bonuses. For example, in banking most people work hard because their annual bonuses are closely linked to their performance and may vary between zero for those who underperform to a significant share of the annual salary for top performers. Therefore, this method of remuneration maintains employee motivation year after year while keeping the company’s expenses under control.
In addition to bonuses, it is possible to offer non-monetary incentives. One example is an “Employee of the month” award to those who showed the best result in that particular month. Such awards do not cost the company anything, yet they make people feel that their efforts are recognized and appreciated.