Financial incentives are best staff motivator, study finds

Nick Elvin

Financial incentives are key to engaging employees and boosting productivity, but many organisations are failing to offer any to staff, according to a new study by Xactly.

The incentive solutions firm’s survey found that despite 27% of UK employees stating a financial bonus is their main motivator, a large portion of employers do not run any kind of monetary incentivisation programme. 45% of respondents said they are paid hourly or on a fixed-pay rate with no potential for a bonus, and 25% stated their personal performance is in no way connected to financial incentives or affects their pay package. Over two thirds (69%) of respondents who had previously received a bonus said it motivates them to push towards their next professional goal within nine months.

“The UK is currently experiencing a huge productivity challenge – UK productivity currently falls behind the likes of the US, Italy, Germany and France,” said Tom Castley, ‎vice president EMEA at Xactly. “The Government is taking steps to address this with the Productivity Plan announced this year, but UK plc must play its part too.

“These findings highlight the gap between what motivates employees and what businesses are doing to engage them. The best way to boost productivity is to boost employee engagement – financial incentives are key. Of course, this isn’t about throwing money at the problem – but smart, performance-based financial reward must be utilised to help the UK pull itself out of the productivity pit.”

In addition to highlighting the role of financial motivation, the study revealed money is not the only factor in engaging employees. Despite 33% of those questioned admitting they wouldn’t work if they didn’t have to, 28% stated they still would. When asked to indicate what would motivate them to go the extra mile, most respondents said increased pay (34%) and better commission and bonuses (27%), while internal recognition also ranked highly (27%). Almost a quarter (23%) of respondents also said the opportunity for personal career growth would entice them to stay in a role for less money, while 25% said that flexible working hours was the most appreciated non-financial incentive.

“This research shows the answer to boosting the UK workforce’s productivity lies with incentive and compensation schemes. While money is unsurprisingly a big driver in encouraging staff to go above and beyond the call of duty, it is not the sole motivator,” added Castley. “It is vital for organisations to ditch the ‘one size fits all’ approach and tailor their compensation schemes to positively encourage their satisfied and motivated workforce.”