After reading this article you will learn about the meaning and types of motivators.

Meaning of Motivation:

While motivation is an effort to direct human behaviour towards need satisfaction, motivators are the factors that motivate people. They include both incentives and disincentives that influence human behaviour. Incentives satisfy the needs of people and improve their performance at work. They cover both financial and non-financial rewards.

“An incentive scheme is a plan or programme to motivate individuals for good performance. An incentive is most frequently built on monetary rewards (incentive pay or a monetary bonus) but may also include a variety of non-monetary rewards and prizes.”

— Burack and Smith


In the narrow sense, incentives include only monetary rewards. In the organisational context, incentives are used in both monetary and non-monetary terms. Motivation reflects wants and desires; motivators are the rewards that satisfy these wants. Motivators change need perception of employees and direct their behaviour towards organisational goals.

The motivators can be in the form of incentives and disincentives. When rewards are given in recognition of employees’ behaviour, motivators are in the form of incentives and when penalties are imposed for non-performance of work, motivators are in the form of disincentives.

Motivators serve important purpose in the organisation. They aim at improving organisational performance through better utilisation of human resources. If human beings are satisfied, it also results in optimum utilisation of physical resources.

The Carrot and Stick approach:


Use of rewards and penalties or incentives and disincentives to promote desired behaviour find their reference in the carrot and stick approach to motivation. This approach comes from a story that use of carrot is made to make a donkey move and stick is used when he does not move.

The ‘carrot’ refers to rewards. Rewards may be financial or non-financial. When workers perform well, managers recognise their activities and offer them rewards in the form of increase in pay, bonus, vacation or promotion to a higher grade. There can be many other forms in which employees can be rewarded.

Conversely, the ‘stick’ refers to penalties and punishments. The fear of loss of job, transfer to the other office, demotion, cut in salary and other disincentives act as strong motivators that influence behaviour in the desired direction. Though effective in use, this approach should not be used as it develops fear, resentment and agony amongst employees. Workers’ behaviour, in such cases is not ‘satisfying behaviour’.

Use of this approach is regulated as follows:


1. Rewards are for good performance.

2. Penalties are for poor performance.

3. Penalties should be used in extreme cases. They should not act as deterrents for good performance.

4. Penalties should convert poor performance into positive performance.


5. Rewards and penalties should be used together. A judicious mix of rewards and penalties can have positive effect on motivation of employees.

Types of Motivation:

1. Financial Motivators:

Rewards can be financial or non-financial. Financial rewards are in the form of money. Money has great value in satisfying numerous needs of a person. When a person joins an enterprise, he works for money. His need-based behaviour makes managers use financial and non-financial incentives as motivators. People who want their primary needs to be satisfied are motivated by financial motivators.

Normally workers at lower levels are influenced by financial motivators like salary or bonus. People at managerial and higher administrative levels with dominant secondary or higher-order needs of acceptance, recognition and esteem are motivated by non-financial motivators such as praise, better working conditions, job enrichment and participative decision-making.


Financial motivators can be distinguished from non-financial motivators as follows:

Financial motivators

1. They are normally used to satisfy employees’ lower-order needs.

2. They are generally used to satisfy needs of employees working at lower-levels of management.


3. They are tangible and directly influence individual and organisational performance.

Non-financial motivators:

1. They are meant to satisfy their higher-order needs.

2. They are used to satisfy needs of employees working at higher levels.


3. They are intangible benefits that indirectly influence individual and organisational performance.

Money as a motivator:

Money plays important role in the lives of people. At the foremost, their primary or physiological needs can be satisfied through money. To some extent, even the higher-order needs of ego, esteem and recognition are satisfied through money.

Money helps in buying everything material that a person wants to buy. Having a luxurious house, a big car, club membership, foreign passport, exquisite jewellery and apparels, all can be acquired through money. Gellerman defines money as a symbol of power. Money is a symbol of status.

Over a period of time, people form groups and group behaviour becomes more powerful than money in influencing their behaviour. Once the basic needs are satisfied, people are influenced by the desires of their co-workers, job enlargement, job security, growth opportunities (personality development), recognition and many other factors other than money.

Money can only fulfill our needs but non-monetary incentives like recognition, praise and acceptance develop us to assume positions of higher importance. Non-monetary rewards shape the culture of the individual and the organisation.


Money, thus, can be used as a motivator only to some extent. So long as an individual perceives monetary rewards as more than the cost of his additional efforts put towards organisational goals, he will be motivated by monetary rewards. If, however, he perceives that cost of additional efforts is more than the monetary rewards he receives for those efforts, he will not be motivated by monetary rewards.

Cost of additional efforts > monetary rewards = motivators can be non-financial in nature

Cost of additional efforts < monetary rewards = motivators are usually financial

2. Non-financial motivators:

The simple motivational tools of early years which focus on only financial benefits prove to be an ineffective method of motivation beyond physiological and safety needs because of the unique aspects of an employee’s job. The non-financial incentives become an important component of the motivation mix of a company.

Some of the important non-financial motivators are as follows:


(i) Goodwill:

Employees of a reputed firm feel motivated to contribute towards its goals and plans.

(ii) Work environment:

A healthy and friendly environment where managers and employees work as a team is motivating for workers to contribute towards organisational goals.

(iii) Participation:

Managers should encourage participation of subordinates in organisational matters. Though the ultimate decision-making power vests with the managers, participation of those who are directly affected by the decisions of managers promotes loyalty and commitment amongst employees towards organisational goals.


Employees develop understanding and cooperate with the management. It develops the decision-making talent of employees and helps to develop future executives. It also promotes the quality and speed of implementation of decisions.

(iv) Quality of working life:

Improvement in the quality of life through job enlargement and job enrichment can be motivating for employees to positively contribute towards organisational productivity.

(v) Setting of goals:

If employees are allowed to set their goals, they will be motivated to attain them. Goal-setting is a non-financial motivator that motivates and guides human behaviour.

(vi) Challenging jobs:


Allowing workers (with higher-order needs) to take challenging and innovative projects motivates them to perform their jobs faster and better.

(vii) Development of individuals:

Managers should allow subordinates to use imagination and creativity in their area of expertise and convert their weaknesses into strengths. Subordinates who exploit opportunities for personal growth contribute towards organisational growth also.

(viii) Effective feedback system:

An effective and quick system of feedback enables employees to compare their performance with the targeted performance. This motivates them to correct deviations and avoid their recurrence in future.

(ix) Promotions:


It is human psychology to improve his status and be different from others. People aspire for higher positions. Opportunities for promotion to higher posts offer strong motivation to people. Though promotions depend on prosperity and policies of the company, normally, promotions honour the internal people who are able and experienced.

When a person is promoted as branch manager, he gets power, position and enjoys higher income that makes him work harder to step further to the higher posts. Promotions should be based on merit and experience instead of favouritism.

(x) Improved communication:

The communication system where organisational policies and procedures are communicated from top to bottom and doubts and clarifications flow from bottom to top improves understanding of each others’ viewpoint, boosts their morale and simplifies implementation of decisions.

(xi) Integration of individual goals with organisational goals:

Managers who integrate individual goals with organisational goals look at organisational goals as a means of satisfying individual goals and individual goals as a means of satisfying organisational goals. This integration increases the morale of individuals.

(xii) Sound organisation structure:

A sound organisation structure with well-defined tasks, authority-responsibility relationships, span of control and leadership styles increases people’s morale to improve their performance.

(xiii) Employee-oriented approach:

Managers should emphasise upon employee relations more than task relationships. People should be allowed to develop to their maximum potential. Employee satisfaction leads to task accomplishment.

(xiv) Job design:

The jobs should be so designed that people exploit their potential to the fullest and derive job satisfaction and need satisfaction out of their jobs. Challenging and innovative jobs build the morale of people with high ‘growth-needs’.

(xv) Development facilities:

Recreational, medical, educational, counselling, sports and other welfare facilities develop the employees and build their morale to positively contribute to organisational output.

(xvi) Magazines and bulletins:

Magazines and bulletins are published by the companies to keep their employees motivated. Employees take it as a matter of pride that the company is spending on magazines and bulletins meant specially for them.

These magazines provide new techniques of working new products and latest policies of the concern and give valuable information regarding promotion of people and their work; that is, outstanding people are praised. Employees also contribute their ideas in the articles. Some of the experienced employees may narrate their experiences that promote future thinking by new employees.

(xvii) Positive effect:

The positive effect is an important technique for motivating the employees. It involves praise, positive feedback, human warmth and understanding the capabilities of employees. Developing small group and peer-relations also affects motivation through positive effect. Friendship, support and comradeship frequently create positive feelings towards the company and the employees.

(xviii) Leadership style:

Leadership style plays important role in motivating the employees. Managers should use inspirational leadership style, that is, influence through referent power. Identification or recognition of employees is an important tool in the motivational strategy. It develops the expectation for extreme efforts, sacrifice and achievement in the employees.

It is practiced through professional speakers, special audio tapes and video tapes designed to arouse and stimulate the interest of employees. It also tries to create and perpetuate certain corporate myths and success stories, which indirectly motivate employees to perform at their best.

(xix) Freedom to work:

In order to perform the duties and responsibilities, employees must have the freedom and discretion to perform the jobs. Lack of discretion has negative impact on job satisfaction. Freedom satisfies psychological needs of the employees and is like power pay (a reward), which makes the job of the employees important in the organisation.

(xx) Rewards and recognition:

Rewards and recognition of accomplishments also serve as motivators. Some of the ways to recognise and honour the employees are to confer “employee of the month/year” award. Congratulation messages from members of top management, trophies, membership of social clubs, mention in company’s newsletter, certificate etc. also recognise and honour employees’ need for self-esteem and self- respect. These are like status pay, that is, public acknowledgement of the value that management places upon an individual.