Financial incentives play strong role in motivating employees

An organisational survey on corporate attitudes carried out by the professional services company KPMG in early 2007 reveals the leading role of financial rewards and bonuses in motivating workers and increasing their commitment to the company they work for. Nevertheless, the combined influence of non-financial incentives, such as showing recognition to employees and seeking their opinions, is also an important factor influencing workers’ motivation.

On 5 March 2007, the professional services company KPMG Bulgaria presented its organisational survey on corporate attitudes (542Kb PDF) at a press conference with human resources (HR) professionals. In its presentation, KPMG highlighted the important role of such surveys in collecting information on employees’ views and experiences and on individual and group factors influencing commitment to the company and workplace performance.

Research methodology

The survey was based on a questionnaire containing 10 questions. Participants in the research were asked to choose from a number of predefined answers for each question and had the opportunity to select more than one answer, ranking them by significance. Survey respondents also had the opportunity to share opinions and comments on each question.

Survey participants

In total, 58 participants from four different sectors of the economy took part in the survey:

  • financial services – 7% of respondents;
  • consumer and industrial markets – 29% of respondents;
  • information technology (IT), communications and entertainment – 38% of respondents;
  • infrastructure, government and healthcare – 14% of respondents.

According to the approximate number of staff in each case, the institutions and companies are also grouped into four categories according to size – that is, the number of people employed (Figure 1). In all, 45% of the companies are partly foreign owned.

Figure 1: Companies surveyed, by size (%)

Figure 1: Companies surveyed, by size (%)

Source: KPMG, The organisational survey, Research on corporate attitudes, 2007

Main survey findings

Workers’ commitment important for business success

Most of the survey respondents recognised that the success of the business is highly influenced by the professional capacity and level of motivation of the company’s workforce. In all, 53.4% of the respondents consider that there is a significant relation between employees’ commitment and the company’s success while 27.6% of them state that there is a direct relation between the two factors. Only 6.7% of the survey’s participants emphasise an indirect relation between both elements. None of the respondents argued that such a relation does not exist or is insignificant (Figure 2).

Figure 2: Relation between employees’ commitment and company success (%)

Figure 2: Relation between employees’ commitment and company success (%)

Source: KPMG, 2007

Factors influencing employee motivation

Survey respondents indicated the following tools as being the most frequently used by organisations for improving employees’ commitment to the company, namely:

  • offering financial rewards and bonuses – 31% of respondents;
  • showing recognition – 20.7% of respondents;
  • providing career development opportunities – 17.2% of respondents;
  • seeking workers’ opinion – 13.8% of respondents.

Figure 3: Factors influencing employee motivation (%)

Figure 3: Factors influencing employee motivation (%)

Source: KPMG, 2007

Variation in incentives used in companies

The breakdown of companies by sector, size and ownership type shows some divergence in the incentives used to encourage employees’ commitment and performance (Table 1). In general, financial rewards and bonuses seem to be the most frequently used type of incentive for increasing employee’s motivation across all sectors and companies surveyed.

According to the survey findings, financial rewards seem to be increasingly used as a motivational incentive by companies in the financial services, infrastructure, government and healthcare sectors, with 50% of the respondents indicating this information. Financial services companies also rely on showing recognition to employees to improve their commitment to the job. For companies in the IT, communications and entertainment sector, career development opportunities are as important for motivating employees as financial incentives.

In companies employing more than 100 workers, financial incentives are most frequently used to motivate employees. Small enterprises equally opt for financial incentives while also seeking employees’ opinion and taking into account career development opportunities. Showing recognition is of primary importance after financial incentives in large companies (33.3%) and in those with international ownership (26.9%).

Table 1: Incentives to encourage employees’ commitment and performance, by sector, company size and ownership (%)
Incentives most frequently used by companies of different sectors, size and ownership to ensure and improve employees’ commitment and performance.
  Financial rewards/bonuses Employee benefits Career development opportunities Seeking employees’ opinion Showing recognition
Sector          
Financial services 50.0       50.0
Consumer and industrial markets 29.4 5.9 23.5 11.8 23.5
IT, communications and entertainment 22.7 13.6 22.7 13.6 18.2
Infrastructure, government and healthcare 50.0   12.5 25.0 25.0
Company size          
Up to 50 employees 20.0 6.7 20.0 20.0 6.7
51 to 100 employees 28.1 3.1 12.5 18.8 18.8
101 to 500 employees 50.0 6.3 18.8 12.5 18.8
Above 500 employees 40.0 6.7 20.0 6.7 33.3
Ownership          
International ownership 30.8 15.4 23.1 7.7 26.9
National ownership 28.1 3.1 12.5 18.8 18.8

Source: KPMG, 2007

The survey respondents also highlighted the importance of the company’s organisational culture, with 82.2% of them stating that it has an impact on employees’ motivation.

Commentary

In recent years, many employers recognised that the success of their business is highly influenced by the professional capacity and motivation of their workforce. Companies must face the challenges of increasing the level of commitment, motivation and job satisfaction among their employees. In this regard, it is important to take into consideration the impact of employees’ needs, motives and ambitions and to negotiate more flexible schemes for financial participation, career development opportunities and performance recognition as part of the quality of work agenda.

Nadezhda Daskalova, Institute for Social and Trade Union Research (ISTUR) of CITUB

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