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How are employees motivated?

Updated: Jun 18

There are two methods of motivating employees. They can be motivated either through financial or non-financial rewards or both.

Most employers provide both financial and non-financial rewards.

Financial rewards are;

  1. Wages – time rate, piece rate

  2. Salaries

  3. Performance-based financial rewards

  4. Profit sharing

  5. Performance-related pay

  6. Employee share ownership

Non-financial rewards/Fringe benefits

  1. Medical insurance

  2. Discounts on products or services

  3. Discounted interest on mortgage loan

  4. Holiday incentives

  5. Company car

  6. Free accommodation or allowances

  7. Entertainment allowances

  8. Country Club, Gym or Spa memberships

As important as motivation is important to a firm, the cost of financial rewards are also a cost to the firm. As such, most firms would aim to reduce cost, while increasing productivity by providing non-financial rewards.


  1. Job Satisfaction

  2. Motivation

  3. Financial Rewards

  4. Non-Financial Rewards


  1. Identify and explain two non-financial methods of motivation (6 marks) Feb/Mar 2018/12

  2. Explain two ways to improve employee motivation (6 marks) May/June 2018/11

  3. State two ways of motivating employees (2 marks) May/June 2020/11

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