KATHMANDU: In his motivation theory, Abraham Maslow outlined a hierarchy of human needs, a chart that attempts to identify the main needs a human has. Maslow said that the individuals need to start at the lowest level and once that level has been attained, they will move to the next stage.

The first of these levels concerns people’s needs to satisfy their basic needs, such as food, shelter, and rest. Money is the ticket to procuring these things and selling one’s talents and skills to an employer is the most common way of acquiring the mandatory finances. Financial incentives are vital in the trade of labour for wages. Labourers work in order to gain salaries which allow them to

purchase the products and services they need in order to survive.

Once the lowest level of the hierarchy has been satisfied, money can play a (sometimes huge) role in helping people reach higher levels as well, such as security and even esteem needs. Thus, it is expected and even natural that employers and organisations have seen and continue to see money as a major motivator for employees.

“There are many ways in which financial incentives are used to motivate and influence employee performance,” says Dipesh Man Shrestha, the human resource head of Siddhartha Bank Limited. “Some of the most frequently used ones

include allowances for holidays, overtime and lunch. Additionally, there are performance linked incentives, like salary increments and revisions, which are usually given at the end of the financial year based on performance appraisals.”

The assumption is that providing employees with bonuses and commissions increases their efficiency and urges them to work more diligently. Keyur Krishna Shrestha, the owner of Bipassana International, a company that special-ises in digital home

innovations says, “If an employee does an outstanding job on a project, they expect some sort of recognition.

Giving them a bonus for performing well not only makes them feel valued but also encourages them to work hard the next time as well.”

K Shrestha adds, “But it is normal for employees to take financial incentives for granted if they get allowances too often and without a solid reason.” If these motivational incentives are handed out too freely and employees are not told exactly what they are getting their bonus or salary raise for, it will end up having no effect over employees whatsoever. He explains, “When you reward a worker, you have to make sure that they know it is a reward. One should make it a point to say ‘This is why you’re getting this bonus’. They should know that they earned it through hard work, there’s no point in it otherwise.”

Likewise, K Shrestha believes that allowances which are applicable to all the staff are not as effective as performance linked incentives. He voices, “It would be wise for an organisation to study its workers and institution properly before designing and institutionalising any such incentives.” If an organisation neglects to study the dynamics of their environment and understand their workers’ expectations regarding their jobs and employers, they could very well end up paying staff extra bucks for average or below standard performance.

There are many studies, theories and writings which claim that financial motivation is overrated and often times less effective than non-financial motivation. Maslow’s hierarchy theory states that after a certain point, money stops holding power over people’s performance. Another study, Fredrick Herzberg’s Two Factor Theory, maintains that salary is actually not a motivator at all, and that things like achievement, responsibility and advancement in a job affect employee performance more than wages.

“Employee-employer relationships are important as well,” opines D Shrestha. “Money is always a part of what you expect from work but other than that, interacting with your employees and guiding them improves their morale as well. Also, I’ve noticed that a genuine interest in work leads to tremendous performance and comparatively more output.”

D Shrestha advises employers not to put too much emphasis on money while trying to influence employee

behaviour. “Creating a pleasant atmosphere at work so that employees are happier and providing non-cash incentives such as paid breaks,

and recommending their children for educational scholarships will play a big role in motivating employees.” He goes on to say that small gestures like thanking the employee’s family for the late night work the employee put in, or simply patting them on the back and

saying ‘Good job’ go a long way and work better than financial incentives in most cases.