Employee Perceptions and the Motivation of Nonmonetary Incentives

Nonmonetary incentive programs have been gaining notice recently because of the current economic downturn and the lack of financial resources necessary to support traditional monetary incentive programs. Nonmonetary incentive programs not only benefit employers through lower costs but also benefit employees by increasing their intrinsic motivation toward the job. However, how such programs are received by employees may vary greatly depending on employee perceptions related to internal and external pay equity, organizational justice, perceived managerial discretion and perceived organizational hardship. Compensation managers need to address these perceptions head-on to increase the success of nonmonetary incentives.