What really motivates your employees? Spoiler: it's probably not what you think. In a recent blog, we revealed that "extrinsic" rewards, like money, only create superficial, short-term motivation. So, how can you promote intrinsic motivation - when people want to work because it's fun or interesting - using non-financial rewards?

You're likely to have seen how motivated people show better problem-solving skills, innovation and creativity, as well as encourage higher customer satisfaction and retention rates.

Therefore, if extrinsic rewards like money, discounts and holidays don't create a truly motivated team, let's find out what does.

Why non-financial rewards matter

Creating a positive culture in your organisation where people enjoy being at work should naturally be the right thing to do.

This isn’t always obvious and often we look too closely at the bottom line in terms of profitability, pay and bonuses when we need to zoom out and consider the bigger picture.

It is important for leaders and employees to see the benefits and impact of non-financial rewards to understand why they’re so important.

According to the Management Study Guide, non-financial rewards are linked to:

Higher self-confidence
Stronger job security
Increased self-esteem
Heightened personal fulfilment
Better employee engagement

In fact, there’s undeniable evidence out there highlighting why engagement in the workplace matters and we know by now that higher engagement equals more productivity, more profitability, fewer people problems, fewer accidents and greater retention.

So, it’s crucial to look at the long game. If you create an environment where people enjoy being at work by having great leaders and engaged employees, your business will become more sustainable and more profitable, which will lead to greater financial rewards.

So, do non-financial rewards work?

In a word, yes.

We often come back to Albert Einstein’s famous quote when it comes to non-financial rewards: “not everything that matters can be measured and not everything that’s measured matters”.

Your employees may say – and even believe – they're motivated purely by money – and of course, financial stability is essential. But once our financial needs are met and we can afford a few of life’s luxuries, money becomes far less of a motivating factor.

Essentially, we all want to feel respected and valued at work and money only goes so far in achieving this.

Even well-paid employees may leave their job if they don't feel confident or validated there. In fact, a 2004 study revealed money came in at a humble sixth place on employees' list of the most important factors in creating job satisfaction.

Plus, using money as motivation has been known to stimulate unnecessary rivalry among employees rather than contributing to a culture of collaboration and support.

How to use non-financial rewards in the workplace

Here are seven proven ways to promote intrinsic, genuine motivation in your employees, using non-financial rewards.

Say thank you

A meaningful thank you goes a long way.

In a busy working environment, it's easy for us to feel gratitude is a given, but you should never take it for granted that your employees know how much you appreciate them. If in doubt, make it clear you recognise and value their work with a simple thank you.

Research has shown saying thank you improves motivation, reinforces positive behaviour and helps people feel validated.

Plus, gratitude is also linked to better health and less stress.

Make time to check-in

As a manager, checking in with your team is one of the most important things you can do to inspire motivation and engagement.

By looking into the whites of their eyes during regular catch-ups, you form stronger personal connections, recognise and resolve issues before they spiral and maintain clarity around shared values, visions and goals.

When your employees know they have that one-to-one time scheduled in, they feel seen, secure, understood and comfortable communicating openly.

Create personal development plans

One of the key non-financial ways to motivate your employees is to work with them to create and maintain a personal development plan.

Often, low levels of engagement are linked to disillusionment with the job, which can easily creep in if employees don't know where they stand, what they're working towards and don’t feel they are being developed as a person – learning new skills and knowledge.

With a personal development plan in place, your team members have defined goals and a clear view of their strengths and weaknesses, giving them clarity on how they fit into your organisation and its vision for the future.

Employees who recognise your commitment to their professional growth, self-improvement and progression will always feel much more motivated than those given superficial financial incentives.

Offer flexible working

A recent survey revealed that six in 10 "knowledge workers" value flexible working over financial rewards.

The same survey showed 73% of the 5,000 global employees surveyed believed that in the future, having a physical office will be an extra perk and social amenity rather than a compulsory way to work.

Giving your team more autonomy over where, when and how they work has become common - faster than we imagined - over the past two years, leaving us with a workforce demanding to work on their terms.

To build or maintain engagement among your teams, therefore, flexible working is set to remain a vital asset valued much more highly than financial rewards.

Allow extra time to volunteer or do a passion project

Did you take up a new hobby or project during the pandemic? A poll showed a third of adults tried new pursuits to preserve or improve their mental health and many of us turned to volunteer or other projects to bring more meaning into our lives.

Now your employees have returned to work, they may wish to develop a new kind of balance in their life and this gives you an opportunity to offer them a valuable non-financial reward.

Allowing your teams extra time or leave to pursue volunteer work or passion projects on work time doesn't just benefit their mental health.

It will also increase their motivation, self-esteem and capacity to bring a more well-rounded, energised mentality into the workplace, not to mention their view of you as an empathetic, supportive employer who values their holistic development.

This has the potential to positively impact your business in a powerful way.

Shake up your feedback system

What kind of feedback system do you have in place in your organisation? Is there room for improvement?

If all feedback comes from the top, now could be a good time to shake things up to boost motivation and morale.

How about inviting employees to give feedback on their peers to gain insight from inside each of your teams on how you could improve?

What about asking your teams for feedback on how their managers are performing?

Knowing you’re truly listening and acting on feedback from everyone is likely to have a significant impact on the engagement and satisfaction levels among your teams.

Ask them what they'd like

Of course, you could second-guess all the non-financial rewards to motivate your teams most effectively or you could actually ask them.

Put it to your employees: what can we do for you to raise motivation levels and create an environment you want to work in?

The response may well enlighten you.

How to get support motivating your team

Communication is the backbone of a happy and successful workplace. If you need support improving your communication skills to motivate your employees, Communication Bootcamp is for you.

The fresh, informative way to gain practical skills, strengthen engagement and pump-up productivity, Communication Bootcamp is a programme for leaders at all levels, from first line manager to the boardroom, customised around your needs and conducted at your workplace or off-site. Find out more here.

How (and Why) to Motivate and Engage Your Team with Non-Financial Rewards