THE USE OF NON-MONETARY INCENTIVES AS A MOTIVATIONAL
TOOL: A SURVEY STUDY IN A PUBLIC ORGANIZATION
A THESIS SUBMITTED TO
THE GRADUATE SCHOOL OF SOCIAL SCIENCES
MIDDLE EAST TECHNICAL UNIVERSITY
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE
MASTER OF SCIENCE
POLITICAL SCIENCE & PUBLIC ADMINISTRATION
Approval of the Graduate School of Social Sciences
Prof. Dr. Sencer Ayata
I certify that this thesis satisfies all the requirements as a thesis for the degree of
Master of Science.
Prof. Dr. Feride Acar
Head of Department
This is to certify that we have read this thesis and that in our opinion it is fully
adequate, in scope and quality for the degree of Master of Science.
Assoc. Prof. Dr. Yılmaz Üstüner
Examining Committee Members
Prof. Dr. inasi Aksoy (METU, ADM)
Assoc. Prof. Dr. Yılmaz Üstüner (METU, ADM)
Assist. Prof. Dr. Ahmet A. Dikmen (Ankara Univ., SBF)
I hereby declare that all information in this document has been obtained and
presented in accordance with academic rules and ethical conduct. I also
declare that, as required by these rules and conduct, I have fully cited and
referenced all material and results that are not original to this work.
Name, Last name: Nilay YAVUZ
THE USE OF NON-MONETARY INCENTIVES AS A MOTIVATIONAL
TOOL: A SURVEY STUDY IN A PUBLIC ORGANIZATION
MS, Department of Political Science and Public Administration
Supervisor: Assoc. Prof. Dr. Yılmaz Üstüner
July 2004, 182 pages
The purpose of this study is to demonstrate to what extent non-monetary
incentives are utilized in the public sector of Turkey and whether non-monetary
incentives have the potential to increase the motivation of public employees as
much as the monetary incentives. Incentive is any means that makes an employee
desire to do better, try harder and expend more energy. Non-monetary incentives
such as participation in decision making, verbal or written recognition of good
work etc. are the kinds of incentives that do not involve direct payment of cash.
To realize the objectives of the thesis, a survey study was administered at
the General Directorate of Investment and Enterprises, under the Ministry of
Culture and Tourism. According to the results of the study, most of the employees
think that the level of utilization of the non-monetary incentives in their
organization is inadequate. Also, the findings suggest that they value non-
monetary incentives as much as monetary incentives. Thus, within the limitations
of the survey study, it may be concluded that non-monetary incentives have the
potential to increase the motivation of personnel in this public organization.
Keywords: Non-monetary Incentives, Motivation, Personnel Administration,
MOTVASYON ARACI OLARAK PARASAL OLMAYAN TEVKLERN
KULLANIMI: TÜRKYE’DEK BR KAMU ÖRGÜTÜNDE BR ANKET
Yüksek Lisans, Siyaset Bilimi ve Kamu Yönetimi Bölümü
Tez Yöneticisi : Doçent. Dr. Yılmaz Üstüner
Temmuz 2004, 182 sayfa
Bu çalımanın amacı parasal olmayan teviklerin Türkiye’de kamu
sektöründe ne derece uygulandıına ıık tutmak ve bunların parasal tevikler kadar
çalıanların motivasyonunu arttırma potansiyelleri olup olmadıını göstermektir.
Tevik, çalıanları ilerinde daha iyiyi yapmayı istemeye, daha çok çalımaya ve
daha çok enerji harcamaya yönelten her türlü araca denir. Kararlara katılım, iyi
iin sözel veya yazılı olarak takdir edilmesi gibi parasal olmayan tevikler nakit
para ödemesi içermeyen teviklerdir.
Tezin amaçlarını gerçekletirmek üzere Kültür ve Turizm Bakanlıı’nın
Yatırım ve letmeler Genel Müdürlüü’nde bir anket çalıması yapılmıtır.
Sonuçlara göre, çou kamu çalıanları kurumdaki parasal olmayan teviklerin
kullanımını yetersiz bulmutur. Ayrıca bulgular, kamu çalıanlarının parasal
olmayan teviklere parasal tevikler kadar deer verdiini göstermitir. Sonuç
olarak, bu anket çalımasının sınırları içinde söylenebilir ki parasal olmayan
tevikler bu kamu örgütündeki çalıanların motivasyonunu arttırma potansiyeline
Anahtar Kelimeler: Parasal Olmayan Tevikler, Motivasyon, Personel Yönetimi,
To My Husband M. Metin Yavuz
The development of this thesis depended on the effort, support and
guidance of a number of people whom I should thank.
I am grateful to my supervisor Assoc. Prof. Dr. Yılmaz Üstüner for his
guidance and constructive criticisms. I would like to thank the examining
committee members Prof. Dr. inasi Aksoy and Assist. Prof. Dr. Ahmet A.
Dikmen for their comments and suggestions during the thesis defense.
I should thank my parents Ferhan-Nejat Toprak for their continuous
support and more importantly for the inspiration they gave to me in formulating
this thesis subject. Their experiences in the public service for years helped me a lot
in organizing my thoughts. I also appreciate my brother Selim for making jokes to
cheer me up whenever I was worried or upset.
I must thank my grandmother and grandfather Nimet-Bayram Güngör who
are very proud of my accomplishments all the time. It is always a source of
motivation for me.
Thanks to my friends Berna Tezcan and Seçil Tagın for their help and
support through out the development of this thesis. I also would like to thank Aslı
Kandemir for helping me reach the Turkish sources necessary for the thesis while I
was in the United States.
And finally, I owe a great debt of gratitude to my husband Metin, for his
continuous support, encouragement of my academic work, patience and unending
help in every aspect of my life. I could not have completed this thesis without him,
like many other things. His belief in me has given me the power to stand the
difficult times. Thank you so much for everything. I love you.
TABLE OF CONTENTS
TABLE OF CONTENTS.......................................................................................viii
1.1. Statement Of The Problem.....................................................................1
1.2. Purpose of the Study..................................................................................2
1.3. Assumptions and Limitations.................................................................5
1.4. Significance of the Study..........................................................................6
1.5. Organization of the Study.........................................................................7
2. THEORETICAL FRAMEWORK………………………………………….....9
2.1. Basic Concepts……………………………………………………….....9
2.1.1. Incentives, Rewards and Recognition.......................................9
2.1.3. Intrinsic and Extrinsic Motivation..........................................15
2.2. Review of Theories of Motivation Related with Non-monetary
2.2.1. Hierarchy of Needs Theory....................................................19
2.2.2. Erg Theory................................................................................22
2.2.3. Mcclelland’s Learned Needs Theory......................................23
2.2.4. Motivation-Hygiene Theory......................................................25
2.2.5. Job Characteristics Model.......................................................28
2.2.6. Valence, Instrumentality and Expectancy (VIE) Theory........30
2.2.7. Equity Theory..........................................................................33
2.2.8. Goal-Setting Theory................................................................36
2.2.9. Reinforcement Theory........................................................... ....39
3. A GENERAL DISCUSSION ON THE USE OF NON-MONETARY
INCENTIVES AS A MOTIVATIONAL TOOL…………………………..43
3.1. Types of Non-Monetary Incentives.....................................................43
3.2. Discussion on the Use of Non-Monetary Incentives in Employee
3.2.1. Tangible Non-Monetary Incentives............................................51
3.2.2. Social Non-Monetary Incentives.............................................56
3.2.3. Job-Related Non-Monetary Incentives.......................................61
4. THE ISSUE OF MOTIVATION IN PUBLIC SECTOR…………………....70
4.1. A Discussion Regarding the Use of Incentives as a Motivational Tool
in Public Sector of Turkey...................................................................71
4.2. The Use of Non-Monetary Incentives in the Public Sector of
4.3. Debates Regarding the Motivating Potential of Non-Monetary
Incentives among Public Employees………………………………......78
5.1. Data Collection.....................................................................................86
5.2. Survey Design......................................................................................86
5.3. Study Population..................................................................................87
5.5. Research Hypotheses..............................................................................87
5.6. Data Analysis.......................................................................................89
6. SURVEY RESULTS AND PRESENTATION OF FINDINGS………….…..90
6.1. Description of Respondents.................................................................90
6.2. Findings and Analysis Regarding the Perceived Utilization of Non-
Monetary Incentives in the Organization and Employees’ Incentive
6.3. Tests of Hypotheses…………………………………………….......126
6.3.1. Hypothesis One.....................................................................126
6.3.2. Hypothesis Two....................................................................130
6.3.3. Hypothesis Three..................................................................131
6.3.4. Hypothesis Four....................................................................132
7. SUMMARY AND CONCLUSION………………………………………135
7.2. Discussion of the Hypotheses Analysis.............................................143
7.3. Conclusion and Recommendations for Future Research……..……..144
A. SURVEY QUESTIONNAIRE....................................................................149
B. DESCRIPTIVE TABULATION OF SURVEY RESULTS..........................157
1.1.STATEMENT OF THE PROBLEM
It is widely accepted by the organizational theorists that manpower is one
of the most important assets of an organization because things are getting done
through employees. In other words, the success of an organization in realizing its
objectives heavily depends on the performance of its employees. Therefore, it is
important to focus on the factors affecting the performance of the employees.
Performance is considered to be related with the concepts of ability,
opportunity and motivation (Ivancevich & Matteson, 1988). Ability is a function
of skills, education, experience and training. Opportunity refers to the
infrastructure needed to perform a job. Finally, motivation is the desire to achieve
a goal and willingness to exert effort for it. Motivation is something that can lead
to better performance when other conditions are met. But, it has an advantage over
others in the sense that while the opportunity and ability tend to be stable and
difficult to change for the personnel, motivation has a flexibility, that is, it can be
changed by some means. Moreover, it is apparent that in the absence of
willingness to perform; capacity and opportunity will not generate the desired
results. If the situation is to be explained by a proverb; you can take the horse to
the water but you cannot make it drink.
All organizations, whether public or private, need motivated employees to
be effective and efficient in their functioning, in addition to the other factors.
Employees who are motivated to work energetically and creatively toward the
accomplishment of organizational goals are one of the most important inputs to
organizational success. Consequently, the challenge for organizations is to ensure
that their employees are highly motivated.
When the issue is motivation, one of the first things that comes to ones
mind is the concept of incentive, which refers to any means that makes an
employee desire to do better, try harder and expend more energy. With regard to
monetary incentives, it can be argued that private organizations have more
financial sources to motivate their employees than the public organizations. It is
known that public employees’ payment levels in Turkey are generally low
compared to private sector employees. Moreover, while many private
organizations have monetary incentives such as bonuses, commissions, cash
rewards etc, it is quite challenging for the public sector to provide such incentives
in adequate levels in a weak national economy. As a result, it is important to look
for any possible alternative means that can be used to motivate employees in the
In line with this purpose, this study focuses on the use of non-monetary
incentives as a motivational tool and their effectiveness in the motivation of public
sector employees. Non-monetary or non-cash incentives do not involve direct
payment of cash and they can be tangible or intangible. Some examples of this
kind of incentives are; encouraging the employees by providing them with
autonomy in their job and participation in decision making, assigning challenging
duties, improving working conditions, recognizing good work through small gifts,
letters of appreciation, plagues, tickets to restaurant etc., providing some services
for the employees, organizing social activities in the work place, etc.
Starting with Elton Mayo and Human Relations School, it is emphasized
that the need for recognition, self respect, growth, meaningful work, social
activities are as important as monetary incentives in increasing the employees’
morale and motivation. There are many contemporary research studies supporting
the effectiveness of non-monetary incentives as a motivating tool in the private
sector organizations. However, there is hardly any study regarding its use in public
sector organizations. This study will try to shed light on this issue and explore the
motivating potential of non-monetary incentives in the public sector of Turkey.
1.2. PURPOSE OF THE STUDY
The present study aims to demonstrate to what extent non-monetary
incentives are utilized in the public sector of Turkey and whether they have the
potential to motivate public employees as much as monetary incentives. Through a
survey study administered at the General Directorate of Investment and
Enterprises in Ankara, the following research questions were tried to be addressed:
1) What is the degree of utilization of the non-monetary incentives in this
public organization, based on the perceptions of public employees?
2) To what extent do non-monetary incentives have a motivating potential
for the public employees in this organization?
3) What does the concept of “non-monetary incentive” mean to the public
4) What are the most important job factors that contribute to the
employees’ willingness to exert more effort in their jobs?
5) Is there a significant difference between the average rankings of these
job factors based on position in the organization and job tenure?
6) What is the type of incentive that the public employees in this
organization value most?
7) Which type of non-monetary incentive do the public employees value
8) How do public employees perceive the effectiveness of non-monetary
incentives in the absence of monetary incentives?
9) Is there a statistically significant difference between the subordinates
and superiors with regard to their incentive preferences in the public
10) Is there a statistically significant difference between employees’
incentive preferences based on job tenure?
The following hypotheses are formulated to address some of the research
Hypothesis H01 (null):
There is no statistically significant difference between the superiors’ and
subordinates’ average ranking of any of the job factors contributing to their
willingness to exert more effort in their jobs.
Hypothesis HA1 (alternate):
There is a statistically significant difference between the superiors’ and
subordinates’ average ranking of any of the job factors contributing to their
willingness to exert more effort in their jobs.
Hypothesis H02 (null):
There is no statistically significant difference between the employees’
average ranking of any of the job factors contributing to their willingness to exert
more effort in their jobs, based on job tenure.
Hypothesis HA2 (alternate):
There is a statistically significant difference between the employees’
average ranking of any of the job factors contributing to their willingness to exert
more effort in their jobs, based on job tenure.
Hypothesis H03 (null):
The superiors’ and subordinates’ responses to Q-28 (which of the
following incentives would increase your interest in the job the most?) do not
differ significantly when evaluated in terms of two general incentive categories
being non-monetary and monetary.
Hypothesis HA3 (Alternate):
The superiors’ and subordinates’ responses to Q-28 (which of the
following incentives would increase your interest in the job the most?) differ
significantly when evaluated in terms of two general incentive categories being
non-monetary and monetary.
Hypothesis H04 (Null):
The employees’ incentive preferences among two basic incentive
categories (monetary and non-monetary) do not differ significantly based on job
Hypothesis HA4 (Alternate)
The employees’ incentive preferences among two basic incentive
categories (monetary and non-monetary) differ significantly based on job tenure.
1.3. ASSUMPTIONS AND LIMITATIONS OF THE STUDY
The following conditions were assumed to be true:
The population was of adequate size to provide valid and comprehensive
questionnaire responses. The employees surveyed in the study completed the
questionnaire accurately and honestly. The 5-point Likert scale questions in the
survey measure the degree of utilization of social non-monetary and job-related
non-monetary incentives in the organization.
A limitation inherent in this type of research may be that it is not possible
to determine mathematically whether the conclusions of the research can be
generalized to other public organizations. It would be problematic to make
generalizations based on the limitations of the survey. However, the study may be
expected to be relevant for illustrating the current condition of public organizations
in Turkey in terms of the utilization and effectiveness of non-monetary incentives.
The General Directorate of Investment and Enterprises is one of the nine main
service units in the Ministry of Culture and Tourism. It consists of seven different
departments with employees of several different job titles. From this aspect, it may
be expected to provide variation especially in terms of perceptions of employees
regarding the utilization of social and job-related non-monetary incentives in the
workplace and their incentive preferences. Moreover, like most of the public
employees in Turkey, most of the employees in this study population can be
assumed to have job security and lower levels of satisfaction with their wages
which are expected to affect their incentive preferences in a similar way. Thus, it
may be argued that the study helps to understand the situation of public
organizations in Turkey with regard to non-monetary incentives.
1.4. SIGNIFICANCE OF THE STUDY
Starting with the Classical Theory, many previous studies have considered
the relationship between monetary incentives and employee motivation. Still, the
consideration of money as the basic motivating force and its superiority over any
non-monetary incentive secures its place on the organizational scholars’ agenda.
On the other hand, there is a growing interest and attention on the use of non-
monetary incentives. Especially in private sector organizations, it starts to be
pronounced louder and there is a wide literature on their incredible influence in
obtaining highly motivated employees. Despite the overwhelming research on the
effects of non-monetary incentives in private organizations, few researchers have
investigated the case for public organizations. Particularly in Turkey, the literature
on the motivation of public employees as well as the effects of incentives is quite
inadequate. There is hardly any research on these topics. Thus, the significance of
this study is that it sheds light on what kinds of incentives the public employees in
Turkey value most and it tries to explore the attitudes of employees towards non-
This study is also significant because it focuses on how to motivate public
employees in a weak national economy and where there is no incentive to drive
them to do more than what is expected. In terms of pay, there is almost nothing to
drive public employees to be more motivated, not only because in public sector
there are relatively lower pays, but also pay is not a function of performance. That
is, there is no performance related pay in public sector such as cash bonus,
commission, monetary reward etc. except for some extreme cases. So, this study
will contribute to exploration of alternative ways in answering the question of how
to motivate public employees where there is a weak national economy and there is
no performance related pay.
Non-monetary incentives offer many advantages to public organizations.
They have the potential to satisfy employee needs and motivate them without
necessitating significant amounts of the use of public financial sources. They are
much easier to administer than monetary incentives. Although to some extent,
establishing performance standards is also necessary for awarding some of the
non-monetary incentives, this is much easier to determine than the case for
monetary incentives. It is so because one of the objectives of offering non-
monetary incentives is to encourage any single behavior that is beyond
expectations, regardless of whether the behavior is extraordinary or not. The use of
non-monetary incentives creates a valuable opportunity to provide immediate
recognition to the employees who perform above expectations or to reinforce any
single behavior that contributes to the organizational objectives. In addition to
these, the variety of non-monetary incentives addresses many different needs of
employees such as social interaction, belongingness, recognition, respect,
attention, a feeling of achievement, autonomy, a meaningful job, a feeling of self-
worth, developing one’s full potential, feedback about performance etc.
All these factors suggest that non-monetary incentives may be a valuable
source of motivation for the public organizations to utilize. However, in
determining their degree of effectiveness, public employees’ reward preferences
are also a concern. Any incentive system is more likely to be successful if it
matches what the employees value. This study is also important as it is relevant for
understanding the public employees’ incentive preferences. To conclude, the
results of the study may be helpful for exploring the utilization and motivational
potential of the non-monetary incentives in the public sector of Turkey.
1.5. ORGANIZATION OF THE STUDY
This study is presented in seven chapters. Chapter I, Introduction, consists
of the statement of the problem, purpose of the study including research questions
and research hypotheses, assumptions, limitations and the significance of the
study. Chapter II, Theoretical Framework, presents basic concepts and motivation
theories. Chapter III, A General Discussion on the Use of Non-monetary
Incentives as a Motivational Tool, describes types of non-monetary incentives and
their importance in the motivation of employees. Chapter IV, The Issue of
Motivation in Public Sector, presents the use of incentives as motivational tool in
the public sector of Turkey and discussions on the use of non-monetary incentives
in the public sector. Chapter V, Methodology describes data collection, survey
design, study population, reliability, research hypotheses and data analysis.
Chapter VI, Survey Results and Presentation of Findings, presents the statistical
analysis of the data. Chapter VII, Summary and Conclusions, includes a summary
of the thesis, interpretation of the findings, conclusions, and recommendations for
future research. Relevant references and appendices are also presented at the end
of the thesis.
2.1. BASIC CONCEPTS
2.1.1. INCENTIVES, REWARDS AND RECOGNITION
The concepts of “incentive”, “reward” and “recognition” are quite
interrelated and complementary in the context of employee motivation. It is
difficult to draw a line among them. The broadest category is the “incentive”
which refers to any means that makes an employee desire to do better, try harder
and expend more energy. It may be divided into two categories: monetary
incentives and non-monetary incentives. Monetary incentives involve granting of
reward in terms of money such as commissions, bonuses etc. Non-monetary or
non-cash incentives do not involve direct payment of cash and they can be tangible
or intangible. Some examples of this kind of incentives are; encouraging the
employees by providing them with autonomy in their job and participation in
decision making, assigning challenging duties, improving working conditions,
recognizing good work through small gifts, letters of appreciation, plagues, tickets
to restaurant etc., providing some services for the employees, organizing social
activities in the work place, etc.
The difference between an incentive and reward may be noted as while
incentive aims to motivate future and encourage certain behavior, reward is the
appreciation for the accomplished behavior and it is a potential reinforcer.
Recognition covers monetary and non-monetary rewards and it refers to crediting,
encouraging and appreciating individuals and teams who contribute, through their
behavior and their efforts, to the success of the organization. It provides after-the-
fact reinforcement for specific types of performance or accomplishments and
emphasizes what the organization values. Moreover, it helps to create a sense of
being a valued member of a successful organization. Examples of recognition are
giving public praise, granting monetary and non-monetary rewards, celebrating
and communicating successes etc.
As in the final analysis both rewards and recognition are the means to
induce action, they can be analyzed under the broad category of “incentives”.
Consequently, through out this study, the word “incentive” is used to refer to
anything that motivates employees, covering reward and recognition concepts.
A major discussing point for this topic would be “Do public organizations
really need incentives, besides providing compensation and entitlements to the
public employees?” Compensation is the monetary benefits provided to employees
in return for the work they do as part of their job definition. Entitlements are the
fringe benefits like paid vacation, health insurance, retirement benefits etc. When
we look at the case of public employees in Turkey, their compensation levels are
lower comparable to private sector in most of the occupations. On the other hand,
public employees enjoy job security and fringe benefits. In public sector, there is
no correlation between the performance level of employees and the amount of
monetary compensation or fringe benefits they get. In other words, in return for
monetary compensation and fringe benefits, what is expected from public
employees is just realizing the requirements of their job definition daily, nothing
more. In fact, as public employees are guaranteed with wage / salary and fringe
benefits regardless of their performance, it may even lead them to be less
motivated to do their best. Conversely, in the private sector, if an employee fails to
exert much effort in his/her job; he/she may lose the job. Given their job security,
what can drive public employees to do more than what is expected from them?
The topic of incentives will come up at this point. They help to encourage specific
behaviors or goals that are not supported by the existing compensation. These
behaviors or goals can be reducing the operating costs, solving a particular
operational problem, making useful suggestions, improving citizens’ satisfaction,
preventing a major damage, helping the peers, complying with the rules and
regulations of conduct in the work environment etc. Thus, it is important
particularly for the public sector that, some kind of incentive mechanism exists to
promote employees to contribute more, to do more than what is expected from
them. As it will be discussed in the following chapters, this study proposes that
non-monetary incentives can be an appropriate tool to motivate employees in the
public sector and they may be as effective as monetary incentives.
The term “motivation” is derived from the word “motive” which means a
reason for action. A vast array of literature exists examining the concept of
motivation within organizations. The term has been used to mean “…the
contemporary (immediate) influences on the direction, vigor and persistence of
action” (Atkinson, 1964), “…how behavior gets started, is energized, is sustained,
is directed, is stopped, and what kind of subjective reaction is present in the
organism while all this is going on.” (Jones, 1955), “…a process governing
choices made by persons or lower organisms among alternative forms of voluntary
activity.” (Vroom, 1964), “…psychological processes that cause the arousal,
direction, and persistence of voluntary actions that are goal directed.” (Mitchell,
1982), “…a set of processes concerned with the force that energizes behavior and
directs it toward attaining some goal.” (Baron, 1983), “…an internal drive to
satisfy an unsatisfied need” (Higgins, 1994). All these different definitions offer
some implications about human behavior. First, there are some drives (needs) that
make individuals behave in certain ways, and second, individual behavior is goal
oriented. Motivation is a continuous process which starts with needs, continues
with goal-oriented behavior and ends with the satisfaction of needs.
While a general definition for motivation can be given as “the degree to
which an individual wants and chooses to engage in certain specified behaviors”;
motivation in the work place refers to “the degree to which an individual wants
and tries hard to do well at a particular task or job” (Mitchell, 1982). Motivation of
employees is a focus of attention because it may be a means to reduce and
manipulate the gap between employees’ actual and desired state of commitment to
the organization and to inspire people to work both individually and in groups. The
challenge for the organization is to find out what its employees’ values and goals
are and where they overlap with the organization’s.
Factors affecting motivation in an organizational setting can be classified
into three levels as shown in Table 2.1 (Steers and Porter, 1987).
Table 2.1 Variables Affecting the Motivational Process
in Organizational Settings
III- Work Environment
2- Attitudes e.g.
Types of intrinsic
1- Immediate work
• Toward self
• Toward job
• Toward aspects of
the work situation
3- Needs e.g.
Degree of autonomy
Amount of direct
Degree of variety
2- Organizational actions
• Reward practices
• System wide
Source: Steers and Porter 1987, p.28.
As it is seen in the table, first, there are variables related with the
uniqueness of individual (e.g. attitudes, interests, needs etc). Second, there are
variables originating from the nature of the job (e.g. autonomy, level of
responsibility in the job etc). Third, there are some impacts from the work
environment (e.g. peer group relations, supervisory practices, salary and reward
systems, openness of communication etc).
If motivation is to be affected, one or more of these variables must be
changed. As one of the objectives of this thesis study is to analyze whether non-
monetary incentives can be an effective tool in motivating the public employees,
first it is necessary to have a look at each of these variables affecting motivational
It is important to consider the role of individual characteristics because
different individual needs and interests have to be compromised with the
organizations’. People are motivated by unmet needs and these varies from person
to person according to their particular circumstances, values and beliefs, family,
education, personality, and work experience etc. While some individuals may
value a job with more creativity over a high-salaried job, others may seek to work
more to earn more money. These demonstrate that differences in individuals can
affect their work behaviors.
Variables originating from the nature of the job affect motivation in the
sense that job related characteristics such as increased autonomy, the significance
of the tasks, variety of activities and teamwork may result in improved motivation
for some individuals. But here, it is important to consider the influence of
individual characteristics at the same time, since everyone does not want -to the
same degree- to have an enriched job, nor perform better when assigned to such a
As a third level of influence, work environment is important for motivation
regarding the quality of peer-group interactions, leadership styles and salary and
reward systems. As shown in Hawthorne studies (Roethlisberger & Dickson,
1939) peer-group influence can affect an employee’s effort. In addition to this,
supervisors can have a considerable influence in the motivational process. They
have role in the structuring of work activities and the ability and freedom of
employees to pursue their own personal goals on the job. Supervisors can provide
feedback about the employees’ performance, as well as letting them to participate
in the decision making process by asking their ideas. The nature of relationship
between the superior and subordinates, effectiveness of communication among
them also affects the motivational process. Finally, as part of the work
environment, the existence and the degree of utilization of recognition systems can
also affect how employees behave at work.
To sum up, there are many variables affecting the motivational process
which are integrated and complementary to each other. Any incentive program
referring to the question of how to increase employee motivation focuses on one or
more of these variables.
Non-monetary incentives have the benefit of addressing most of these
variables affecting motivation. In other words, as the types of non-monetary
incentives (explained in Chapter 3, pages 43-67) that can be offered in a public
organization are numerous, they provide the opportunity to motivate employees in
a variety of ways in contrast to monetary incentives.
For example, first variable that was mentioned as affecting motivation is
related with individuals’ different interests and needs. Individuals also have
different preferences in terms of how to be recognized for the work they do. Non-
monetary incentives can take the form of improving working conditions,
recognizing good work through small gifts, letters of appreciation, plagues, tickets
to restaurant etc., providing some services for the employees, organizing social
activities in the work place, assigning challenging duties etc. Consequently, the
use of non-monetary incentives may provide this variety to meet different
individual needs and interests.
Second, some non-monetary incentives are related with the characteristics
of the job such as encouraging the employees by providing them with autonomy in
their job, assigning challenging duties, variety of tasks, giving more responsibility
etc. In this sense they also utilize job-related factors affecting motivation.
Third, non-monetary incentives contain elements from the work
environment such as consideration of group interactions and leadership styles etc.
Providing feedback, appreciating the good work, asking their ideas, greeting the
employees are some of the non-monetary incentives that fall under the title of
work environment characteristics affecting motivation. To conclude, non-monetary
incentives are expected to be effective in motivating the public employees, given
their variety in addressing factors affecting motivation.
2.1.3. INTRINSIC AND EXTRINSIC MOTIVATION
Motivation in work is often described as being “intrinsic” or “extrinsic” in
nature (Sansone & Harackiewicz, 2000). Thus, it is possible to argue that the
variables affecting motivation have intrinsic and extrinsic motivational effects. As
the question of how to increase employee motivation focuses on one or more of
those variables mentioned above affecting motivation, we can also conclude that
any incentive tool, whether it is monetary or non-monetary, is designed to provide
extrinsic or intrinsic motivation or both.
In the psychology literature, intrinsically motivated behavior is stated to
arise from innate psychological needs, such as needs for competence and
autonomy (Deci & Ryan, 1985; Kasser & Ryan, 1996). Intrinsic motivation means
a self-generated urge that comes from inside a person and influences him/her to
behave in a particular way or to move in a particular direction. They are connected
to job related and social incentives such as opportunity to use one's ability,
interesting work, recognition of a good performance, development opportunities, a
sense of challenge and achievement, participation in decision making, and being
treated in a caring and thoughtful manner etc. For example an employee may be
willing to put forth a sustained effort by working extra hours because of the feeling
that the project he/she is working on is challenging and worth to complete it at
once to see the output. In this situation, the individual takes action because the
likely outcome of that action appeals directly to what he/she values. The intrinsic
motivators are likely to have a deeper and long-term effect because they are
inherent in individuals. These kinds of incentives are largely a result of the
worker's satisfaction with his or her job. To sum up, intrinsic motivation
originating from within the person or from the activity itself, affects behavior,
performance, and well-being positively (Ryan & Deci, 2000).
On the other hand, extrinsic motivation is said to exist when behavior is
performed to attain externally administered incentives. Extrinsic motivation is
related to “tangible” incentives such as wages and salaries, fringe benefits, cash
bonuses, security, promotion, wall plaques, free dinner or movie tickets etc. For
example, an employee may be motivated to come to work on time everyday with
the desire to gain the monetary reward awarded for perfect on-time attendance for
The problem with extrinsic motivation is that it rarely has any useful long-
term effect. The use of extrinsic motivators to energize the employees may lead to
a situation where those reinforcers -particularly monetary ones- must get bigger
and better all of the time just to repeat the same results (McCann, 2000).
Luthans and Kreitner (1975) uses the term “contrived rewards” to refer to
incentives that may generate extrinsic motivation, and “natural rewards” to refer to
intrinsic motivators. According to them, although contrived rewards can be
positive reinforcers, they have some drawbacks. First, they generally involve costs
for the organization. Second, they tend to lead to satiation rather quickly. An
employee can be motivated by an extrinsic incentive only so long before he/she
becomes satiated, that is, people may get tired of most contrived rewards such as
receiving a wall plague each time.
On the other hand, Luthans and Kreitner (1975) note that incentives that
exist in the natural occurrence of events (natural or intrinsic incentives) such as
challenging task assignments, autonomy, time off, recognition, friendly greetings
etc. are of much more value than the contrived rewards. In contrast to extrinsic
rewards, they do not generally lead to satiation. It is not common that people get
tired of appreciation and attention. Another advantage of intrinsic rewards is that
while it is difficult for supervisors to give out extrinsic rewards frequently, they
can easily provide intrinsic motivation for employees by recognizing their efforts
and addressing their social needs in the work place.
To conclude, although their effectiveness may depend on the situation,
intrinsic and extrinsic incentives are two important tools in ensuring motivation in
the work place.
After these explanations, it is possible to argue that non-monetary
incentives as a motivational tool address both intrinsic and extrinsic motivation
concepts. While monetary incentives may only be classified as a factor leading to
extrinsic motivation, non-monetary incentives with its diversity can motivate
employees both intrinsically and extrinsically. For example, tangible non-
monetary incentives such as small gifts, free food or drink, internet access, tickets
to movie/theatre/sports facilities etc. or social non-monetary incentives such as
company picnics, after-work parties, friendly greetings by the supervisor,
recognition of a good job, feedback about performance etc. may have extrinsic
motivational powers. On the other hand, job-related non-monetary incentives such
as meaningful work, variety of tasks, more responsibility, teamwork opportunities,
training programs, participation in decision making, flexible working hours etc.
may motivate employees intrinsically. In other words, they help to produce self-
generated motivation. Thus, non-monetary incentives provide multi-dimensional
employee motivation in the work place, in contrast to the single dimension of
2.2. REVIEW OF THEORIES OF MOTIVATION RELATED WITH NON-
Each person is motivated by different things and it is important to know
how they are motivated in order to direct motivation towards the realization of
organizational goals. Reviewing the theories of motivation helps us to understand
what drives people to initiate action and to engage in certain practices in the
workplace. After elaborating on each of these processes, it would be possible to
comment on the effectiveness of non-monetary incentives as a motivational tool.
There are several theories of motivation which focus on different variables
in an attempt to explain motivation in the organizational setting. Each of these
theories offers perspectives that are not necessarily contradictory but
complementary. They are generally studied under three categories: content
theories, process theories and reinforcement theory (Samson and Daft, 2002).
Content theories focus on the analysis of underlying human needs. They
provide insight into the needs that motivate people in organizations. People have
different needs such as money, interesting work, social life, family life,
achievement or recognition for a good job etc. These needs convert into an internal
drive that motivates specific behavior in an effort to fulfill the needs. It is
important to know what employees need in order to evaluate the potential
effectiveness of an incentive system. For example, if an employee in a work place
needs the supervisor’s appreciation for his/her contribution, or a challenging job
with variety of tasks more than a salary increase, he/she won’t probably be
motivated enough with a monetary incentive.
Or one can imagine the situation of a public employee in Turkey who
would like to spend that evening celebrating his daughter’s birthday at home,
however, was asked to work three extra hours in the evening at work. In return, he
would be paid 650.000TL per each extra hour he would work, according to 2004
Budget Law (Hurriyet, 2003). In such a case, it is questionable whether the
employee would really be motivated to work overtime in return for a monetary
compensation. On the other hand, a tangible non-monetary incentive such as two
tickets to an amusement park might work better for a father in that situation.
To conclude, the needs of employees will shape the effectiveness of
incentives in the motivation of employees. This thesis study tries to shed light on
whether the needs of public employees match with non-monetary incentives. If
they are likely to match, then, it may be expected that they can reinforce
employees for directing energies and priorities towards attainment of
organizational goals. As it is discussed in later sections, non-monetary incentives
have the potential to meet diversity of needs, particularly the needs that monetary
incentives cannot satisfy.
Process theories deal with the thought processes that influence individuals’
behavior. Individuals assess their interactions with their work environment and
process theories of motivation consider what people are thinking about when they
decide whether or not to exert effort into a particular activity. They also concern
how employees seek rewards in work circumstances, how they select behaviors
with which to meet their needs and determine whether their choices were
Reinforcement theory, on the other hand, concern the process employees
learn the desired work behavior. The reinforcement approach to employee
motivation ignores the issues of employee needs and thinking processes described
in the content and process theories. Reinforcement theory merely looks at the
relationship between behavior and its consequences. It concentrates on how to
change or modify the employees’ behavior in the work environment through the
use of instant rewards and punishments.
In line with the purposes of this thesis study, the following theories of
motivation concerning non-monetary incentives are analyzed in the above
sections: hierarchy of needs theory, ERG theory, motivation-hygiene theory,
McClelland’s theory of needs as the content theories of motivation; job
characteristics theory, expectancy / valence theory, equity theory and goal-setting
theory as the process theories of motivation. Following these, reinforcement theory
of motivation is analyzed. Each section provides a brief discussion on how non-
monetary incentives might be incorporated into these theories of motivation.
2.2.1. HIERARCHY OF NEEDS THEORY
One of the first theories that describe behavior as being directed toward the
satisfaction of human needs is the hierarchy of needs theory by Abraham Maslow.
His theory is a theoretical foundation for many of need based approaches to
According to Maslow (1943), people are motivated to satisfy their needs
and those needs can be classified into the following five categories that are in an
ascending hierarchy: Physiological needs, security needs, social needs, esteem and
self-actualization needs. The first three are characterized as lower level needs
while the last two are higher order needs.
Physiological needs are the basic biological needs like air, water, food and
shelter. In the organizational setting, these are reflected in the needs for adequate
heat, air and a base salary to guarantee survival.
Safety needs are the needs for security and protection from danger. In an
organizational workplace, safety needs refers to the needs for safe jobs, fringe
benefits and job security.
Social needs are the needs for interaction with other people, belongingness,
love etc. These needs reflect the desire to be accepted by one’s peers, have
friendships, be part of a group and be loved. In the work environment, these needs
affect the desire for good relationships with co-workers, participation in a work
group and a positive relationship with supervisors.
Esteem is the desire for respect, which is affected by the person’s standing
reputation, his need for attention, recognition, achievement and appreciation etc.
Maslow illustrated two versions of esteem needs, a lower one and a higher one.
The lower one is the need for the respect of others, the need for status, recognition,
attention, reputation, appreciation, dignity etc. The higher form involves the need
for self-respect, including such feelings as confidence, competence, achievement,
mastery, independence, and freedom. Within organizations, esteem needs reflect a
motivation for recognition, an increase in responsibility, high status and
appreciation for contributions to the organization.
Self-actualization refers to the desire for self-fulfillment; it is a drive for
individuals for self-development, creativity and job satisfaction. They are related
to developing one’s full potential, increasing one’s competence and becoming a
better person. Providing people with opportunities to grow, to be creative, and to
offer training for advancement are the means that self-actualization needs can be
met with in the organization.
Maslow argued that as each lower level need is substantially satisfied,
individuals are motivated by the next higher level need. That is, the needs are
satisfied in sequence. According to Maslow’s argument, a person desiring job
security would dedicate his or her efforts to ensure it and would not be concerned
with seeking recognition. Maslow also claimed that higher levels of satisfaction
for a particular need decrease its potential as a motivator.
There are some criticisms to Maslow’s hierarchy of needs theory. One
main criticism is that there is little empirical evidence to support Maslow’s
assumptions (Drenth, Thierry & Willems, 1984). Second, his methodology was
problematic (Boeree, 1998). Maslow’s methodology was that he picked a small
number of people that he himself declared self-actualizing such as Abraham
Lincoln, Thomas Jefferson, Albert Einstein, then he looked at their biographies,
writings, the acts and words of those he knew personally, and so on. From these
sources, he developed a list of qualities that seemed characteristic of these people
and reached conclusions about what self-actualization is. Third, Maslow assumes
that human beings will move up the hierarchy, satisfying one need before moving
on. But, there are many examples that refute this thought. Many of the best artists
and authors, which can be thought of as self-actualized, suffered from poverty, bad
upbringing, neuroses, and depression (Boeree, 1998). That is, they were far from
having their lower needs taken care of. For example Van Gogh and Galileo
suffered from mental illness, and yet were able to produce works that made a
To conclude, in spite of the criticisms, Maslow’s work is important in
terms of recognizing the needs being pursued by employees and shedding some
light on the social and psychological needs of individuals in addition to material
With the higher order needs of esteem and self-actualization, Maslow
emphasizes the importance of non-monetary incentives in motivating the people.
Non-monetary incentives address these higher order needs, rather than any basic
needs such as food and shelter. If it is awarded as an appreciation of a contribution,
a tangible non-monetary incentive will remind the employees of their performance
and recognition for it, filling the needs for self-esteem and it will create esteem in
the eyes of co-workers, family, and friends. It will satisfy employees’ recognition
and respect needs. On the other hand, as it is mentioned in the section discussing
benefits of non-monetary incentives over cash, it is not easy to brag about the cash
incentives, which leads to a potential decrease in its power to serve esteem needs.
Also, social non-monetary incentives such as a verbal recognition by
supervisors or letter of appreciation to the employees contribute their self-esteem,
while social activities such as after-work parties, company picnics, sports activities
etc. satisfy the belongingness and friendship needs of employees.
Job-related non-monetary incentives work on the self-actualization needs
of employees. Providing employees with opportunities to grow like training
programs, letting them to be creative in their jobs, giving them more responsibility
and autonomy helps employees’ self-fulfillment.
The implication of Maslow’s theory is that non-monetary incentives can be
most effective on employees who are meeting their basic needs and satisfaction of
basic needs is not alone enough to motivate employees. In light of this, non-
monetary incentives have an important place in satisfying other needs of
employees which cannot be met by compensation. Within the limitations of the
scope of the survey study, the present study will also help to understand whether
public employees in Turkey have moved beyond the basic physiological and
security needs as primary motivators.
2.2.2. ERG THEORY
Clayton P. Alderfer (1972) reformulated Maslow’s theory and he proposed
that there are three basic needs: Existence (nutritional and material requirements
like pay and conditions.), Relatedness (need for meaningful social relations,
relationships with family and friends and at work with colleagues) and Growth
(need for developing one’s potential, the desire for personal growth and increased
The ERG model and Maslow’s theory are similar. His theory is a
simplified form of Maslow’s hierarch of needs theory but he added that all these
basic needs can motivate behavior at the same time and might not be activated in
any hierarchical order. That is, any one need may take precedence over others
regardless of whether the others are fulfilled or not. This implies that some
individuals may prefer to have non-monetary incentives in an organization such as
training programs, social activities, public praise etc. rather than having monetary
incentives in the first place. Moreover, contrary to Maslow who argued that when
satisfied a need becomes less important to an individual, according to Alderfer,
that relatedness or growth needs become more important when satisfied. This
means that team - working arrangements can continue to motivate employees and
are not necessarily superseded by growth needs.
Alderfer proposed that the hierarchy among these needs is more complex
due to the frustration-regression principle (Samson and Daft, 2002). It means that
failure to meet a high-order need may activate a regression to an already fulfilled
lower-order need. For example, an employee who is not appreciated for doing a
good job at work may not be realizing his self-esteem need. Then, this need may
revert to a lower-order need and he may redirect his or her efforts towards making
a lot of money.
Like Maslow’s hierarchy of needs theory, Alderfer’s theory points out the
need for organizations to find ways to satisfy belongingness needs of employees
through social activities in organization, to recognize employees, encourage their
participation in decision making, offer opportunities of development and
autonomy in job.
To conclude, ERG theory also supports the idea that non-monetary
incentives are necessary in the motivation of employees.
2.2.3. MCCLELLAND’S ACQUIRED NEEDS THEORY
McClelland (1975) suggests that some needs that individual’s have are
acquired during the individual’s lifetime. That is, people may learn them through
life experiences rather than being born with these needs. Thus, they differ from
individual and individual. He identifies three needs important in the work place
leading motivation, regardless of culture or gender: need for achievement, need
for affiliation, and need for power.
McClelland noted that early life practices determine whether people gain
these needs. If children are promoted to do things for themselves and receive
support, they will acquire a need to achieve, if they are reinforced for having
strong human relationships, they will develop a need for affiliation. If they get
happiness from controlling others, they will acquire a need for power.
According to his theory, achievement motivated people strive to attain
challenging goals. They prefer tasks that enable them to use their skills and
initiation in problem solving and enjoy doing something not done before. They
like to get immediate feedback on how they have done so that they can enjoy the
experience of making progress toward objectives. People with a high need for
achievement tend to be entrepreneurs.
People with a high need for affiliation like joining groups, participating in
pleasant social activities and they obtain great satisfaction from being accepted by
others. These individuals prefer to work in an environment that provides
significant personal interaction and it is likely that they appreciate social
incentives. They are able to establish good working relationships with other
The need for power may be classified as "personalized power" or
"socialized power" (McClelland, 1975). Power motivated individuals like to
influence and direct others. They want loyalty to their leadership rather than to the
organization. When the leader leaves the organization there is likely disorder and
decrease of team morale and direction. Socialized power need is usually referred
as effective leadership. These leaders use their power in a way that benefits others
and the organization rather than only contributing to the leader's status and gain.
They seek power to make sure that tasks are accomplished and to empower others
who further the leader's vision for the organization. A high need for power often is
correlated with successful attainment of top levels in the organizational hierarchy
(Samson and Daft, 2002). This is due to the fact that while achievement needs can
be met through the task itself, power needs can be met only by ascending to a level
at which a person has power over others.
Acquired needs theory implies that the same set of circumstances in a work
environment may cause employees to react in different ways as they have different
needs. Thus, employees can be motivated differently in the workplace. For
example power motivated individuals can be granted the opportunity to manage
others, growth opportunities or greater autonomy in their jobs, which are job-
related non-monetary incentives. People with high need for achievement may be
motivated by other job-related non-monetary incentives such as assigning
challenging tasks with reachable goals or giving frequent feedback. People with
affiliation needs may be more willing to work in a team environment, or may be
satisfied with social activities in the organization which can be provided by social
non-monetary incentives. To conclude, non-monetary incentives may also be
effective in meeting power, achievement and affiliation needs of individuals
proposed by McClelland.
2.2.4. MOTIVATION-HYGIENE THEORY
Frederick Herzberg studied the factors in the work environment that caused
satisfaction and dissatisfaction among the workers. He interviewed hundreds of
workers about times when they were highly motivated to work and other times
when they were dissatisfied and unmotivated at work. He found that the factors
causing job satisfaction were different from those causing job dissatisfaction and
they can not be treated as opposites of one another (Herzberg, 1966).
Herzberg argued that two entirely separate dimensions contribute to an
employee’s behavior at work: hygiene factors and motivators. Hygiene factors
refer to the presence or absence of job dissatisfiers. When hygiene factors are
reduced, work is dissatisfying. They are considered maintenance factors that are
necessary to avoid dissatisfaction but they do not themselves contribute to the job
satisfaction and motivation of personnel. That is, they only maintain employees in
the job. In line with Herzberg’s view, unsafe working conditions or a noisy work
environment will cause employees to be dissatisfied with their job but their
removal will not lead to a high level of motivation and satisfaction. Some other
examples of hygiene factors are salary, status, security, supervision, company
On the other hand, motivators, leading to job satisfaction, are associated
with the nature of the work itself. They are those job-related practices such as
assignment of challenging jobs, achievement, work itself, recognition,
responsibility, advancement and opportunities for growth in the job etc. Herzberg
argued that when motivators are absent, workers are neutral towards work, but
when motivators are present, workers are highly motivated to excel at their work.
In contrast, hygiene factors can only work to prevent job dissatisfaction. Thus,
hygiene factors and motivators represent two distinct factors (Samson and Daft,
Based on the arguments of the theory, adequate hygiene factors should be
provided to meet the basic needs of employees and to prevent dissatisfaction with
the job. In addition to this, motivators that are intrinsic to the work itself should be
integrated to the process to meet higher-level needs and drive employees towards
greater achievement and satisfaction.
Herzberg (1971, pp. 3) stated that "...the factors which make people happy
all are related to what people did: the job content... what made people unhappy
was related to the situation in which they did their job: job environment, job
context..." According to him, employees are satisfied with a work that is
interesting and challenging and they will be motivated to do work that they
identify to be important. Thus, it is possible to motivate employees with the work
itself. In fact, Herzberg emphasizes that true motivation comes from within a
person, that is, intrinsically, not extrinsically. In line with this view he suggested
that jobs can be redesigned and enriched to integrate “motivators” to the job, so
that employees will be willing to exert effort in their work. He argued that jobs
should have adequate challenge to fully utilize employees’ abilities and employees
who prove to have increasing levels of ability should be given increasing levels of
Accordingly, Herzberg contributed to the idea of “job enrichment”. Job
enrichment is adding more tasks to a job to provide greater involvement and
interaction with the task. Adding tasks can make the jobs more challenging to the
employees and it may enable the employees to use their talents, demonstrate their
Herzberg’s theory is commonly criticized because of his methodology and
the reliability of the results leading to limitations on the study (Ratzburg, 2004).
The original sample population consisted of 200 middle management
professionals. There is the criticism that the sample size is small and the theory
applies to only middle management professionals. However, numerous replication
studies have been conducted to check the validity of the original results. In most of
the cases, the results were similar to the results obtained by Herzberg and they
indicated that motivators are the primary cause of job satisfaction (Ratzburg,
2004).Another criticism is that the result of the study was two-factor because
when things are going well, people tend to take credit for satisfaction but when
they don’t go well they blame failure on their environment (Imperial, 2004). Also,
the assumption that practically every employee will respond positively to a job
with high motivating factors may not be universally true. Herzberg’s theory is
considered to be valid for employees whose lower order needs are satisfied
Motivation-hygiene theory has important implications for this thesis study.
It constitutes a good framework for the validity of the argument that non-monetary
incentives can be as effective as monetary incentives in the motivation of
personnel. Herzberg points out that what really motivate employees are the
assignment of challenging jobs, achievement, work itself, recognition,
responsibility, opportunities for growth in the job. They have the power to
motivate employees intrinsically. As an external factor, monetary incentives may
prevent job dissatisfaction but do not necessarily motivate employees. Likewise,
job-related non-monetary incentives such as job with variety of tasks and
responsibilities, meaningful work, autonomy, participation in decision making,
growth opportunities etc. and social non-monetary incentives such as appreciation
for a good work address what Herzberg referred in his theory as “motivators”.
These non-monetary incentives are expected to motivate employees intrinsically.
Thus, Herzberg’s theory offers insights to support the view that job-related non-
monetary incentives may have the power to drive public employees to exert much
effort in their job, as much as monetary incentives. According to two-factor theory,
it is expected that public employees would be motivated by job-related and social
non-monetary incentives and would need monetary incentives and other
environmental factors to avoid dissatisfaction with the job.
2.2.5. JOB CHARACTERISTICS MODEL
Job characteristics model by Hackman and Oldham (1980) tries to explain
what the characteristics of motivating jobs are. They argue that jobs can be
redesigned through enrichment to contribute positively to the motivating potential
of a job. According to their research, there are five core job characteristics that
create three psychological states and can be used to describe the motivating
potential of a job:
Skill variety: It describes the degree to which a job necessitates the practice
of a number of different skills, abilities, or talents. Activities in a job will be
distinct enough to require the use of different skills.
Task identity: It defines the extent to which job allows completion of a
whole and identifiable piece of work from beginning to end.
Task significance: It refers to the importance of the job; the degree to
which the job has an effect on the lives of other people, the immediate
organization or outside the organization.
Autonomy: It is the degree to which individuals are allowed discretion,
independence and control over their work, are free to schedule them and determine
the procedures to be used.
Feedback: It is the degree to which the individuals are provided direct and
clear information about the effectiveness of their performance. Besides
supervisory feedback, it includes the opportunity to observe the results of their
According to Hackman and Oldham, all these factors can be used to enrich
the jobs. Jobs can be more enriching when employees utilize multiple skills and
talents instead of repeating one skill over and over again. Similarly, as part of task
identity, if employees can have a whole picture of the job through to its final stage
rather than only dealing with a small part of the whole process, task can be more
enriching. Also significance of the tasks in terms of its effects on other people’s
lives can enrich the jobs. The importance of autonomy is that when employees
have the chance to control their work schedule and the process, job enrichment can
be promoted. And finally, feedback is an essential step for job enrichment because
it gives employees the opportunity to improve their work, make necessary
adjustments in a timely manner and know where they are going.
The combination of these five scales produces a “Motivating Potential
Score” (MPS). It is defined as (Hackman and Oldham, 1980):
MPS = [(Task Variety + Task Identity + Task Significance)] ×Autonomy × Feedback
These job characteristics create three psychological states (Hackman and
1. Experienced meaningfulness of the work (through skill variety, task
identity and task significance): Individuals evaluate the job as generally
meaningful, valuable, and worthwhile.
2. Experienced responsibility for work outcomes (through autonomy):
Individuals feel personally accountable and responsible for the outcome of their
3. Knowledge of results (through feedback): Individuals are informed
about how effectively they are performing their job.
According to Hackman and Oldham’s research, jobs with high score in
terms of a combination of five job characteristics (task variety, task identity, task
significance, autonomy and feedback) lead to higher job satisfaction and
motivation than jobs with low scores. In other words, work that is characterized as
enriched is generally highly motivating. However, Hackman and Oldham also
point out that certain people do not like job enrichment and consequently,
enriching the tasks may not increase their level of motivation. In response to this
issue, Hackman and Oldham proposed that “growth need strength” (GNS) restrains
the link between enrichment and motivation. GNS is a personal attribute that
defines a person's desire or tendency for personal challenge (Adler, Milne &
Stablein, 2001). What determines the degree of GNS may be explained by need
theories of motivation. People who have satisfied lower order needs of existence
and relatedness may seek satisfaction from higher order needs of esteem and
growth. Accordingly these people may exhibit high GNS. In contrast people whose
needs of existence and relatedness are not fulfilled may be interested in satisfying
these needs and display low GNS (Spector, 1985).
Individuals with high GNS enjoy tasks that challenge or develop them; on
the other hand, individuals with low GNS prefer to stay away from situations that
are difficult or challenging. Accordingly, Hackman and Oldham found that
employees with high growth needs responded positively to high motivating
potential jobs, but those with low growth needs did not. Thus the model suggests
that different employees react differently to jobs and enriched jobs may motivate
people with high growth needs.
Job characteristics model imply that it is possible to motivate employees
through job design. Job design is a set of activities to change the content and/or
process of a specific job in order to increase motivation, job satisfaction and
performance. Job-related non-monetary incentives try to achieve this by offering
employees more meaningful tasks, control over work scheduling and methods,
increasing responsibility, the opportunity to use variety of skills in their job etc.
That is, these non-monetary incentives target motivating the employees through
enjoying the job itself. It may be seen as an attempt to reach a compromise
between individual’s abilities and needs and the requirements of the job. It is also
important to keep in mind that, as this model suggests, job enrichment as a non-
monetary incentive can be successful in motivating the public employees with high
growth need strength. Job-related non-monetary incentives may intrinsically
motivate public employees that have high growth needs. It may be expected that
public employees in Turkey who are satisfied with the levels of wages, job
security and fringe benefits will respond positively to job-related non-monetary
incentives in terms of motivation.
2.2.6. VALENCE, INSTRUMENTALITY AND EXPECTANCY (VIE) THEORY
This theory had resulted from Vroom’s (1964) work into motivation.
According to VIE theory, motivation depends on individuals’ expectations about
their ability to perform tasks and receive desired rewards. In other words, people
are motivated to work when they have the expectancy that effort leads to
performance and that performance results in reward. It also assumes that
individuals have different levels of satisfaction they expect to receive from
rewards and each person is a rational decision maker who will expend effort on the
activities that lead to their desired rewards (Muchinsky, 2000).
Table 2.2 shows schematization of the VIE theory.
Motivation = Expectancy x Instrumentality x Valence
Expectancy => "If I try, can I perform at the level necessary to get the promised
Instrumentality => "If I perform at the necessary level, will I in fact get the
Valence => "How much do I value the promised reward?"
Source: Malos 2003, p.1.
Expectancy is the probability that putting effort into a task will lead to high
performance. It is also called E – P expectancy. In order for this expectancy to be
high, the individual must possess the ability, previous experience and necessary
machinery, tools and opportunity to perform (Samson and Daft, 2002). If an
employee believes that with hard work he/she can finish a task before the assigned
time frame, his/her expectancy will be high, so will be the motivation. On the other
hand, if the employee believes that he/she lacks the ability or opportunity to
achieve high performance, the expectancy and in turn motivation will be low.
Instrumentality (P – O expectancy) refers to whether the performance will
result in the desired outcome. It concerns the relation between performance and the
award. If an employee is motivated to receive public recognition for a performance
above expectations but he does not expect that high performance will generate this
desired outcome, his motivation will be lower.
Valence is the value or attraction of outcomes for the individual. If the
outcomes that can be reached as a result of high effort and performance are not
appreciated by employees, motivation will be low. Similarly, if an employee
values a reward that is offered for a special effort, he/she will be more motivated
to exert effort. For example, if an employee is interested in sport activities and he
expects that high performance in the organization is recognized with free tickets to
sport games, then he will probably be more motivated to work hard.
To conclude, these three factors have affects on motivation but for an
employee to be highly motivated, all these three factors must be high. For example
if an individual believes in his/her ability to show the required performance but do
not expect that there is a reward for the outcome or do not want that particular
reward, then he/she will be less likely to exert much effort. VIE theory suggests
that motivation can be increased in three ways. First, employees’ belief about their
chances of obtaining the required performance level can be strengthened. To do
that it is necessary to establish a match between employees’ skills and abilities and
the job requirements. Job-related non-monetary incentives serve this end. It should
also be ensured that individuals have the time and equipment to attain the
performance goals. Second, a positive relation between required performance and
reward can be reinforced. Performance objectives should be defined clearly and
there should be a link between rewards employees value and the required
performance to get it. This can be possible if the goals are set clearly. Third,
rewards and outcomes that are of value to the employees can be chosen. Non-
monetary incentives provide variety of choices to the employees.
It is clear that VIE theory emphasizes the importance of rewards in
employee motivation. If E-P and P-O expectancies are high, individuals will be
motivated to exert effort with a reward that they value. Reward acts as a means to
reach targeted performance levels or specific organizational goals. The value of a
reward depends on the preferences of individuals. For example, one employee may
want to be promoted to a position of increased responsibility; the other may pursue
a work atmosphere of good relationships with peers and others may like to receive
tangible recognition items like gift certificates etc. Consequently, all individuals
will be motivated with different incentives. It is important for organizations to
determine what rewards employees value in the workplace, and then link those
rewards to the accomplishment of the objectives of organization. To this end, the
present study explores what kinds of incentives public employees value the most.
If the incentives are set according to the preferences of the employees, it may
contribute positively to the motivation since valence will be high.
Non-monetary incentives offer diversity in responding to various interests
and needs of individuals in the workplace. Tangible non-monetary incentives,
social non-monetary incentives and job-related non-monetary incentives are
expected to motivate employees by offering them something that they may value
as much as monetary incentives. To sum up, the implication of expectancy theory
for the present study is that, given the existence of high E-P and P-O expectancies
in a work place, if employees are offered non-monetary incentives that they value,
they will be highly motivated to achieve the targeted outcomes.
2.2.7. EQUITY THEORY
Equity theory suggests that employees’ perceptions of a working situation
in terms of how fairly they are treated compared with others influence their levels
of motivation; motivation is a consequence of perceived inequity (Adams, 1965).
According to equity theory, employees make comparisons. Employees determine
their own work outcomes versus the effort or inputs required to achieve the
outcomes, and compare these with outcomes and efforts of other employees. If
they recognize that their compensation is equal to what others receive for similar
inputs, they will believe that their treatment is fair and equitable.
Education, experience, effort, ability etc. are the inputs to the job by the
employees. Outcomes that employees receive from a job are pay, benefits,
promotions and rewards etc. A state of equity refers to the ratio of one person’s
outcomes to inputs being equal to the ratio of another’s outcomes to inputs.
Inequity takes place when the situation is reverse. For example, when an employee
with a high level of education or experience receives the same salary as a new, less
educated employee, he/she may perceive it as inequality. Or perceived inequity
may occur when an employee thinks that he/she is paid more than other people
who contribute the same inputs to the organization.
According to a major criticism, equity theory does not precisely
characterize mental processes because it assumes that humans make mental lists of
outcomes and their likelihood and sum them up systematically.
Adams (1965) pointed out that perceived inequity creates a tension that can
motivate individuals to bring equity into balance, in four common ways:
1) Altering effort: Individuals may change their level of input to the
organization. For example, underpaid individuals may decrease their level of effort
or increase their absenteeism. Overpaid individuals may correct the inequity by
working harder or getting more education.
2) Altering outcomes: An underpaid person may request a salary increase,
other forms of recognition or a bigger office. A union may try to improve wages
and working conditions in order to be consistent with a comparable union whose
members are paid higher (Samson and Daft, 2002).
3) Changing how people think about inputs or outcomes: According to
research, people may alter perceptions of equity if they are unable to change
efforts or outcomes (Samson and Daft, 2002). Thus, individuals may unnaturally
increase the status attached to their jobs or distort others’ perceived rewards to
4) Leaving: Individuals who feel they lack equity in the work place may
choose to quit their jobs rather than bearing the inequity of being underpaid or
overpaid. They may seek balance of equity applying for new jobs.
The implication of equity theory for organizations is that, to motivate
employees it is necessary to ensure a state of equity in the work place by
establishing mechanisms to deal with perceived inequity situations. Otherwise
organizations may face low motivation, low performance, high absenteeism and
As it is mentioned before, a typical example of perceived inequity in a
work organization is the situation of an employee who believes that his/her peers
do not exert as much effort as him in the work place, although they are all getting
the same amount of wage. Or an employee may think that he/she is performing
well above the expectations but being treated the same as other employees who are
just satisfying the expectations. This may lead employees to lose their motivation
to do their best, to do more than what is expected from them, to be creative and to
be problem solvers. In that kind of perceived inequity situations, employee may
decide that his/her efforts do not make any difference to the organization, thus may
stop working hard to make things fair in his/her mind.
This example can particularly be observed in public sector employment
where employees of the same status and tenure get the same amount of wage, no
matter how hard they work or how successful they are in making contributions.
Likewise, an increase in salary or a promotion will have no motivational effect if it
is perceived as inequitable relative to that of other employees, as it is not linked to
performance. Public sector lacks an effective incentive system to motivate
employees to exert extra effort and to differentiate between who is doing a good
job and who is not.
In line with equity theory, a public employee in Turkey, like other public
employees who have job security and a fixed level of wage regardless of
performance, may not be motivated to exceed expectations unless he/she is treated
different from other employees when he/she makes a contribution. In other words,
without an effective recognition mechanism, it may be expected that for most of
the public employees, any attempt to exceed expectations will create perceived
inequity in time, because their compensation will be equal to what others receive
for less contributions. As it is emphasized, employees may lose their motivation in
such cases and may decrease their level of effort in order to get rid of the tension
created by perceived inequity. Thus, it is very important that in public sector of
Turkey, an effective recognition system should exist besides compensation and
benefits, which will differentiate high level performing individuals from lower
performing ones. In light of these, use of incentives becomes inevitable for public
sector to motivate employees by acknowledging the contributions exceeding
This thesis study proposes that non-monetary incentives, whether tangible,
social or job-related, may be considered as the tool that is most appropriate for
public sector to accomplish this objective. Non-monetary incentives offer variety
of ways to recognize public employees besides compensation, such as letters of
appreciation, plaques, gift certificates, tickets to events, a thank-you note, pat on
the back, public recognition in a meeting, newsletter or bulletin board, opportunity
to attend training program of interest, tasks with more responsibility etc.
Moreover, as it is discussed in later sections, non-monetary incentives may be
superior to monetary incentives in many aspects like cost, trophy value,
separability from compensation, social reinforcement, justifiability etc. With the
existence of non-monetary incentives to recognize good performance, those public
employees may feel that their efforts make a difference to the organization and
they are treated equitably. In turn, they may be more motivated to continue such
contributions because they’ll be differentiated from others who do not contribute
as much but paid the same monetary compensation. To conclude, equity theory
supports the idea that non-monetary incentives may be effective in motivating
2.2.8. GOAL-SETTING THEORY
Based on the idea that behavior is purposeful or goal-oriented, goal-setting
theory suggests that specific and challenging goals can motivate behavior.
Difficult goals boost performance by directing interest and action, mobilizing
effort, rising determination, and motivating the search for effective performance
strategies (Imperial, 2004).
The idea behind goal-setting theory is that, through setting goals, an
employee knows what needs to be done and how much effort will need to be
exerted. It is assumed that individuals compare their current performance to the
required level of performance for the accomplishment of a goal. If they fall short
in terms of performance, they will be motivated to fill the gap to achieve the goal
by working harder.
Locke (1968) demonstrated that individuals who were assigned difficult
goals performed better than those who were assigned moderately easy goals.
Latham and Baldes (1975) applied Locke’s findings to the logging industry and
they found that goal-setting may provide the employees with a sense of
achievement, recognition and commitment by making clear what they are
supposed to do. Moreover, 87 studies on goal setting as a motivational technique
empirically supported the idea that challenging and specific goals motivate
employees more than goals that are not difficult and stated in general terms
(Tubbs, 1986). Thus, it is better to state a specific goal than to simply letting
workers to do their best.
According to Eden (1988) goal setting raises expectations and strengthens
people’s positive judgments of their capabilities. It encourages people to think that
they can make a difference. It enhances motivation because expectations are raised
and productive self-fulfilling is strengthened. Accordingly, Eden points out that
goal setting and expectancy theories are related to each other. As employees’
perception that their efforts will lead to required performance increases, they will
be more likely to exert more effort toward accomplishment of the goal.
Latham and Locke (1979) emphasizes that goal-setting may be the major
instrument by which extrinsic and intrinsic incentives affect motivation. They give
the example that, according to an experiment on job enrichment, unless employees
are assigned more difficult and specific goals, there is no difference between
enriched and unenriched jobs in terms of productivity. Moreover, they argue that,
in order for money to be an effective motivator, it should be made contingent on
accomplishing specific objectives.
It is also important to bear in mind that in order goal-setting to be effective,
goals have to be accepted by the employees, that is, people have to be committed
to the attainment of the goal. If goal setting is established in a participative
process, goals may be accepted easily. Goal can be set jointly by supervisor and
subordinate and it may also promote role clarity. Moreover, after setting the goal,
it is necessary that individuals are provided feedback to allow them to track their
progress and how well they have accomplished the goals. Through feedback,
employee can know his level of performance and adjust the level of effort
In addition to these, Latham and Locke (1979) suggest that goal-setting is
more likely to be successful if the following steps are followed. First, goals should
be specific rather than unclear, for example instead of a statement like “try to
decrease the costs”, “decrease the costs by 5 percent in the next 3 months” is more
specific. Second, goals should be challenging but not unreachable. If goals are
perceived as unreachable, employees will not accept them and they will not get the
feeling of success from pursuing goals that cannot be achieved. Thus, self-
confidence and abilities of employees should be considered in assigning the
challenging goals. Third, it is essential to set proper quality standards along with
challenging goals so that quantity is not achieved at the expense of quality. Fourth,
if immediate results are emphasized without regard to how they are achieved,
long-run benefits may be sacrificed to attain short-term improvement.
Goal-setting theory was supported by considerable empirical support and it
gains attention because of its simplicity. One criticism is that the theory has not
been tested in complex task settings (Imperial, 2004).
To sum up, goal-setting is important because it clarifies what is expected
from the employee, provides an opportunity for communication, enhances positive
feelings about one’s own capacity, encourages commitment and allows employees
to monitor their own performance. Moreover, it is essential for incentive programs
to be successful.
As it is explained so far, goal-setting has quite important implications for
the motivation of employees and it may be expected that goal-setting can be an
effective motivational tool in public organizations as well. Public employees may
be more motivated if they are assigned specific and challenging goals that are
appropriate to their abilities and provided with feedback to monitor their own
performance. Setting challenging and specific goals may be particularly
considered important in public sector because there is no performance related
compensation or reward system in public employment. In other words, there is
almost nothing to drive public employees to exert extra effort as they have job
security and fixed level of compensation regardless of performance. Goal-setting
theory emphasizes that difficult goals improve performance by directing interest
and action, mobilizing effort, rising determination, and motivating the search for
effective performance strategies. Consequently, goal-setting may be expected to
have a high motivating power for public employees in Turkey.
2.2.9. REINFORCEMENT THEORY
Reinforcement theory is a different approach than content and process
theories in the sense that it simply looks at the relationship between behavior and
its consequences. It analyses the effects of rewards and punishments on changing
or modifying the employees’ on-the-job behavior. The basic assumption
underlying behavior modification is the law of effect, which states that behavior
that is positively reinforced tends to be repeated, and behavior that is not
reinforced tends not to be repeated.
Reinforcement refers to anything that causes a certain behavior to be
repeated or inhibited. The four reinforcement tools are positive reinforcement,
avoidance learning, punishment and extinction (Samson and Daft, 2002). In each
of these cases, reinforcement is caused by applying or avoiding a pleasant or
unpleasant event following a person’s behavior.
Positive reinforcement is rewarding the individual with a pleasant
consequence following desired behavior. A good example of positive
reinforcement is immediate recognition of an employee for arriving on time or
doing extra work. Offering the employee a pleasant output for his/her behavior
will increase the likelihood of that behavior occurring again. This pleasant output
may be a monetary incentive as well as a non-monetary incentive. In fact, positive
reinforcement by non-monetary rewards, such as positive feedback, is often as
effective as financial rewards (Stajkovic, A. D., & Luthans, F., 1997).
Avoidance learning, sometimes called negative reinforcement, is the
elimination of an unpleasant outcome following desired behavior. Employees learn
to behave in the desired manner as they avoid unpleasant situations. For example,
a supervisor stops criticizing or warning an employee seeing that he/she does not
show the incorrect behavior anymore.
Punishment is the opposite of avoidance learning. It typically occurs
following the undesirable behavior. For example, a supervisor may give an
employee a lower grade during performance appraisal, for performing a task
incorrectly. The supervisor may expect that the negative outcome will serve as a
punishment and reduce the likelihood of the behavior recurring. Punishment is
often criticized being an improper way to indicate the correct behavior.
Extinction is the taking out of a positive reward. Extinction leads to a
decline in the reinforcement of the undesired behavior; therefore it is less likely to
occur in the future. If an employee does not receive praise or pay raises, he or she
may begin to grasp that the behavior is not producing desired outcomes or is
undesirable. The behavior will gradually disappear if it is not continually
The frequency of reinforcement is important in reducing the time needed
for the employee to learn the desired behavior. There are five main types of
reinforcement schedules: continuous reinforcement and four types of partial
reinforcement (Samson and Daft, 2002).
Continuous reinforcement refers to the reinforcement of every occurrence
of the desired behavior such as praising an employee for a job well-done or for
helping his/her peer. This schedule can be very helpful in the early stages of
learning new types of behavior, because every desired behavior attempt by the
employee has a pleasurable consequence for him/her. However, in daily operation
of organizations, it may be difficult to reinforce every correct behavior. With a
partial reinforcement schedule, the reinforcement is administered only after some
occurrences of the correct behavior. Partial reinforcement schedules are more
effective for maintaining behavior over extended time periods. It is done through
fixed-interval schedule, fixed-ratio schedule, variable-interval schedule and
The fixed-interval schedule rewards employees at specified time intervals.
For example, if an employee demonstrates the correct behavior each day,
reinforcement may occur every week such as a monthly gift certificate for a full
month of on time attendance.
With a fixed-ratio schedule, reinforcement occurs after a specified number
of desired behaviors. For example, a sales representative may be awarded with a
ticket to a sports or social event for every 20 pieces of products he/she sold.
In a variable-interval schedule, reinforcement is managed at random times
that cannot be predicted by the employee. An example would be a random
inspection by the manufacturing supervisor of the production floor, at which time
he or she praises employees on their hard working.
The variable-ratio schedule is grounded on a random number of instances
of the desired behavior, rather than on variable time periods. Reinforcement may
occur after variable amounts of output.
To conclude, reinforcement theory has important implications for the
motivation of employees. It demonstrates that behaviors’ of employees that are
positively reinforced are likely to be repeated and negatively reinforced are not
likely to be repeated. Then, it is possible to motivate employees by reinforcing
them each time they perform a desired behavior. Non-monetary incentives in the
form of rewards have a significant role in positively reinforcing the desired
behaviors. Social non-monetary incentives such as verbal recognition for a job
well-done, feedback on performance, letter of appreciation, public praise,
celebration of a work-related success or tangible non-monetary incentives such as
a gift certificate, plague or job-related non-monetary incentives such as training
opportunity, time-off, job enrichment etc. can easily be rewarded in order to
reinforce a desired behavior. The desired behavior may be coming to work on
time, exerting extra effort and time on a task, helping peers, solving a problem,
making a good suggestion, innovation, completing a project very well,
contributing to the satisfaction of a customer, preventing a potential danger etc.
The advantage of non-monetary incentives in that kind of situations is that, it helps
to reinforce the desired behavior in a timely manner, following the behavior.
Positive reinforcement is much more effective when it comes shortly after the
desired behavior is displayed (Nelson, 2001). While a positive feedback, a pat on
the back or a simple “thank-you” can accomplish this immediately; a monetary
incentive such as a bonus would take much longer time to award, thus, to reinforce
the desired behavior. Therefore, non-monetary incentives are necessary to
reinforce the desired behaviors’ of employees in public sector in a timely manner
and motivate them to repeat those actions.
As it is shown, the benefits of using non-monetary incentives in motivating
the employees are supported by many motivation theories. Whether non-monetary
incentives can be effective in motivating the employees in public sector will be
discussed further in the later sections, after the analysis of the survey study. The
next chapter examines each type of non-monetary incentives and their particular
A GENERAL DISCUSSION ON THE USE OF NON-MONETARY
INCENTIVES AS A MOTIVATIONAL TOOL
3.1. TYPES OF NON-MONETARY INCENTIVES
Non-monetary incentives are the tangible rewards, social practices or job
related factors that are used in an organization to motivate employees without
direct payment of cash. In classifying the non-monetary incentives, the breakdown
of on-the-job rewards proposed by Meacham and Wiesen (1969, p.46) provides a
framework, which is shown in Table 1 on page 44.
According to Table 1, there are two basic categories of rewards: contrived
on-the-job rewards and natural rewards. As discussed in Chapter-2 under the title
of “Extrinsic and Intrinsic Motivation”, contrived rewards are tangible incentives
that are external to the work, generally involving costs for the organization and
generating extrinsic motivation; on the other hand, natural rewards are job related
and social incentives that exist in the natural occurrence of events leading to
intrinsic motivation. The table includes monetary incentives as contrived rewards
For the purposes of this thesis study, non-monetary incentives are classified
as “Tangible Non-monetary Incentives”, “Social Non-monetary Incentives” and
“Job Related Non-monetary Incentives”. In line with this classification, on-the-job
rewards breakdown by Meacham and Wiesen (1969, p.46) is redesigned in this
thesis work, as shown in Table-2 on page 45.
Tangible non-monetary incentives refer to the tangible items such as desk
accessories, coffee mugs, wall plagues, watches, trophies, rings, tie pins, clothing,
gift certificates, key chain, discounted goods, free tickets to various facilities etc.
Table 3.1. Classifications of On-the-job Rewards
Source: Meacham & Wiesen 1969, p.46.
-Formal acknowledgement of
-Invitations to coffee/lunch
-Solicitations of suggestions
-Solicitations of advice
-Compliment on work progress
-Recognition in house organ
-Pat on the back
-Verbal or non-verbal
recognition or praise
-Job with more responsibility
-Early time off with pay
-Extended lunch period
-Personal time off with pay
-Work on personal project on company
-Use of company machinery or
facilities for personal projects
-Use of company recreation facilities
Contrived On-the-Job Rewards
Manipulatables Visual and
the family on
furniture for the
-Home shop tools
-Office with a
Table 3.2. Classifications of Non-Monetary Incentives
Incentives Social Non-Monetary
Incentives Job Related Non-
-Office with a window
-Tickets redeemable at
-Gift certificates as a new
-Use of company
machinery or facilities for
-Newspaper or magazine
-Pat on the back
-Verbal recognition or
like a “thank you” note
-Public recognition in a
bulletin board etc.
-Employee of the month
-Solicitations of advice
-Compliment on work
-Dinners for the family
on the company
-Job enrichment (work
with variety of tasks
-Autonomy over the
such as training
-International work trip
Or they can be some services provided by the organization such as free
food/beverage, childcare center, bus service, internet access, club privileges,
piped-in music etc. They can be awarded as recognition to a good performance or
any single contribution or may be offered in the workplace to create a positive
working atmosphere for the employees.
Social non-monetary incentives are related with superior-subordinate
relationships and the social activities within the organization. Superiors being
sincere and caring in communicating with the subordinates and valuing their
opinions, the degree of informal or formal recognition for a good job, various
social activities in which employees of the same organization get together in an
informal way for celebrating something or just to release the stress of the work etc.
all contribute to the creation of a working atmosphere that employees feel
themselves valuable as part of an entity. This in turn has the potential to motivate
employees without offering monetary incentives.
Job related non-monetary incentives have the potential to motivate
employees intrinsically. Jobs with variety of tasks, responsibilities, autonomy,
flexible working hours, participation in decision making, development
opportunities etc. are very important in satisfying employees’ certain needs and
they may lead to a feeling that the job itself is worth exerting more effort without
need to any external incentive.
In light of these explanations, all three categories of non-monetary
incentives have the potential to meet various needs of public employees without
involving significant costs for the organization. It is also important to bear in mind
that the basic monetary needs of subsistence must be adequately met with an
employee’s income before a non-monetary incentive can be effective.
3.2. DISCUSSION ON THE USE OF NON-MONETARY INCENTIVES IN
The importance of non-monetary incentives in motivating the employees is
supported by various studies and mentioned in writings of many authors. Janet
Wiscombe (2002) argued that what people really want is to be recognized for
making contribution to the job, thus, recognition and praise are among strong
motivators. In her opinion, non-cash incentives can not only be cost effective, but
also can contribute a lot to raising morale, increasing productivity, improving
quality, safety standards and customer service. Non-monetary incentive is the
answer that Wiscombe gives to the question of how to maintain and improve
worker morale while retaining the costs.
Bob Nelson (2001) also supports the view that there is a strong link
between non-cash incentives and improved job motivation. He thinks that non-
cash incentives lower stress, absenteeism, turnover and raise morale, productivity,
competitiveness, revenue and profit. According to his study, which was conducted
from 1999 to 2000, in 34 organizations of U.S. ranging from Universal Studios to
the U.S. Postal Service, 90.5% of the managers agreed on the idea that recognizing
employees helps them better motivate their employees and 84.4% of the managers
responded that providing non-monetary recognition to the employees when they
do good work helps to increase their motivation and performance. On the
employees’ side, the research revealed the fact that for the 77.6% of the
employees, it was very or extremely important to be recognized by their managers
when they do good work. These findings have further confirmed the importance
and effectiveness of non-monetary incentives in the motivation of personnel. In
addition to these, Nelson pointed out that cash incentives may have some definite
drawbacks. The money employees paid for the job is compensation. He argues that
in time, monetary incentives as well are begun to be regarded as rights rather than
incentives and the increasing demand for material rewards rapidly is destroying
their usefulness as incentives and managerial tools. Another drawback is
considered to be related with the decrease in teamwork as employees concentrated
primarily on individual cash gains.
According to a March 1998 survey by The Gallup Organization Inc. and
Carlson Marketing Group Inc., of the 2000 employees surveyed in United States,
overall 82% said recognition and praise motivate them to improve their
performance compared to the 17% that said they did not find them motivational
(PFI, 2002). The study also revealed that for almost 70% of the employees polled,
non-monetary incentives provide the best motivation to improve their job
performance, followed by 16% monetary recognition.
According to Sarah Gale (2002), non-monetary incentives evaluated as
more valuable incentives than monetary incentives. In her article, she emphasizes
that when you pay people for doing a good job, it becomes part of their salary
expectations; a non-monetary incentive, however -whether it's a trip or a coffee
mug- is a luxury separate from compensation that shows respect and commends
In comparing the cash incentives with non-monetary incentives, Dean R.
Spitzer (1998) notes that the correlation between the monetary value of rewards
and motivation is not very high and in most jobs the best performers are not
necessarily the highest-paid ones. He emphasizes that money as an incentive tends
to create “money motivation” rather than “good-work motivation” in the sense that
when people struggle for monetary incentives, they may sacrifice quality to take
the shortest and fastest way to maximize their monetary gain. Moreover, it is likely
that the employees will soon become “habituated” to monetary rewards and start to
see them as entitlements. Spitzer also draws attention to a study showing that a pay
rise, on average, has a motivational impact of less than two weeks.
A survey conducted by AEIS in year 2000 supported a similar argument.
17% of the American employees polled said they had received a year-end cash
bonus and 32% of these respondents stated that the cash incentive did not improve
their work performance (American Express Incentive Services, 2003).
Another study which revealed the importance of non-monetary incentives
for employees was published by Kenneth Kovach in 1999. In a survey of 1000
employees, he compared the associates’ rankings of what they wanted from their
jobs with what their bosses thought was important to the associates. According to
the findings, associates listed an interesting work at the top, followed by
appreciation of work, a feeling of being “in on things”, job security and good
wages. According to these rankings, Kovach’s survey provides support for the
effectiveness of non-monetary incentives in the motivation of employees.
David Saxiby (2002) draws attention to the impact of recognition programs
on motivation of employees and stresses the fact that recognition comes in many
forms, from a hand-written thank-you note, to the manager or president of the
company praising their work, to the plaque with their name on it that sits in the
Scott Jeffrey’s paper (2002) on the benefits of tangible non-monetary
incentives constitutes one of the significant studies regarding the use and
effectiveness of non-monetary incentives. He argues that the use of tangible non-
monetary incentives might accomplish the objective of motivating employees in a
lowest cost better than the market value of that incentive in cash. Tangible
monetary incentives refer to the non-monetary incentives with a substantial market
value, such as vacation travel, tickets to restaurants etc. Among the short-term
benefits of non-monetary tangible incentives is that first, a firm might be able to
obtain these incentives for a lower net cost than the employee could on his or her
own. Second, it is likely that a cash incentive will be mentally combined with the
rest of the employee’s salary, evaluating it in the same account as regular salary.
As a result it may lose its effectiveness as a motivating factor. A company could
solve this problem to some extent by issuing a separate check, or by having a
ceremony or plaque, but it is likely that employees will have a strong tendency to
consider this money as "more salary" rather than an incentive. For the incentive to
be more motivating than cash the incentive will need to be segregated in the
employee’s mind, it should be unique. Tangible non-monetary incentives better
serve to this objective. Third, tangible non-monetary incentives often carry utility
beyond the pure consumption value of the incentive, that is, it has social aspects as
well. An employee receiving a trip to a touristic place will be able to tell his fellow
employees and friends about it, and gain some utility from this social interaction.
Scott Jeffrey (2002) states the long-term benefits of tangible non-monetary
incentives as follows. First, tangible non-monetary incentives might be perceived
as gifts, which change the nature of the employment relationship. In other words,
instead of a pure exchange relationship where services are exchanged for money,
the giving of gifts may produce more sincere relationships and increase in the
commitment of the personnel. More committed employees are less likely to
withdraw from the firm, and engage in more positive behavior towards the firm
according to Jeffrey. Second, a tangible non-monetary incentive like a trip to a
touristic place will be remembered longer and more clearly than what is done with
a cash bonus. This type of incentive creates fond memories (e.g. photographs of
the trip) that will create a positive feeling in employees, which will induce more
positive attitude towards the firm.
Despite all these arguments supporting the use of non-monetary incentives
in employee motivation, there are some views regarding the possibility of failure
for the non-monetary incentives as well. First, possession of money is generally
seen as the symbol of power and prestige in society and some employees may
think that money is the only and sufficient way to realize all their dreams. Such a
consideration may underestimate the value of non-monetary incentives in the eyes
of employees. The use of non-monetary incentives may also be resisted because
employees may evaluate it as a threat to the amount of monetary compensation
that they wish to get instead. Good pay is usually necessary to employee
satisfaction and must be carefully taken into consideration in all personnel matters.
In addition to these, when the situation for public employees in Turkey is
considered in terms of salary and wages, it is quite normal to expect that public
employees value monetary incentives more than the non-monetary incentives
because the amount of monetary compensation is usually considered to be low to
satisfy the basic necessities. This may decrease the motivating potential of non-
monetary incentives. The effectiveness of non-monetary incentives may depend on
whether the salary or wage level is at satisfying levels for the employee. The
employee should not feel that he/she is underpaid. Despite the importance of non-
monetary incentives, pay continues to be seen as the best and most tangible way of
recognizing the employees’ worth to the company. There are some views that any
amount of human relations cannot compensate for the insufficiency of monetary
rewards whereas it may be possible to make use of the non-monetary incentives in
addition to monetary incentives to motivate the employees further (Accel-team,
2004). In addition to these discussions regarding the effectiveness of non-monetary
incentives, there has been much debate on whether or not external incentives
contribute to the motivation of employees or on the contrary they harm the
intrinsic motivation (see e.g. Beer, 2002; Deci, Koestner, & Ryan, 1999; Kohn,
1993; Prendergast, 1999).
In the light of these, it can be argued that non-monetary incentives with
their advantages have the potential to motivate public employees, however, there is
no guarantee that they can always lead to efficiency and effectiveness in the work
place. Also, the existence of highly motivated employees in the workplace does
not necessarily mean that they are the best performing ones. Performance level is
related to a much variety of organizational and workplace related circumstances.
Perception of equity concept developed by Porter and Lawler (1976) is another
variable that affect the performance and motivation of the employees. Perception
of the individuals regarding the rewards is an important determining factor. Based
on this concept, motivation results from “the level of performance followed by
intrinsic and extrinsic rewards as perceived by the employee as equitable” (Aksoy
1986, p.19). The survey study in this thesis sheds light on how the employees
perceive the non-monetary incentives and whether they have the potential to
motivate the employees in the General Directorate of Investment and Enterprises.
The following sections specify the features and importance of each type of
non-monetary incentive for the motivation of public employees.
3.2.1. TANGIBLE NON-MONETARY INCENTIVES
The importance of tangible non-monetary incentives can be discussed by
comparing them to monetary incentives. When people are asked what type of
reward they want, cash may, on the surface, be preferred by everyone, but it may
not really energize people to do beyond their basic job requirements. As mentioned
in the previous section, monetary incentives can be more effective in some
instances in motivating employees, however, as Herzberg (1966) states in his
motivation-hygiene theory, a fair salary is a "hygiene" factor, it is something
people need as an incentive to do the jobs they are hired to do. Money can prevent
dissatisfaction with the job but does not necessarily motivate people. Tangible
non-monetary incentives are as important as monetary incentives in the motivation
of employees. This importance is attributable to various factors that can be stated
as follows (American Express Incentive Services, 2003).
Cash incentive is typically thought of as compensation, can be spent on
everyday necessities (such as groceries, bills etc.) and gone. But non-monetary
incentives such as free bus service, a ticket to a football game, discount on a store,
a gift certificate or subscription to a magazine can be used to satisfy the “wants”
and “interests” of employees. Most of the employees have interests outside the
workplace. Offering the employees things that they value can make them feel that
the organization cares about them as valuable human beings. They may contribute
to create a positive work environment for the employees make them feel more
motivated to work. Moreover, while employees may feel guilty for not spending a
cash incentive on basic needs, they can enjoy non-monetary incentives guilt-free
as they do not have other choice.
In line with this view, Hill and Pavetti (2000) stress that low income
working parents often have difficulty in devoting enough time and money to
pleasurable activities with their family. Providing tangible non-monetary
incentives such as a ticket to a movie or an amusement park, purchasing school
supplies or clothes, opportunity to join a local sports team or summer camp for
children etc. may have great value for the employees. On the other hand,
employees would probably hesitate to spend a cash incentive of the same value for
these kinds of activities rather than necessities.
Tangible non-monetary incentives provide employees a tangible symbol of
achievement and it becomes something physical to show off. Tangible non-
monetary incentives that are awarded as recognition of a good performance can
often be shown to co-workers and friends as a trophy and there is no reason not to
brag about them. On the other hand, it is unlikely that employees do the same thing
with a cash incentive; socially it is not an acceptable way to seek peer recognition.
Tangible non-monetary incentives provide lasting reminder of
achievements and the efforts put to achieving it. The more symbolic an item is of
the success, the more likely it is powerful in reminding the employee of why it was
given (Spitzer, 1998). Small gifts, plaques, a coffee mug, a pen set, rings/tie pins
etc. remain most of the time in the employees, in their offices or in their home;
they continue to have a memory value long after its initial receipt. The employee is
more likely remember how he/she felt when the reward was awarded, what the
achievement was etc. On the other hand, people when asked how they spent their
last cash reward often don’t remember it (American Express Incentive Services,
Tangible non-monetary incentives cost much less than cash incentives for
the organizations’ compensation budget. Non-monetary incentives have a higher
perceived value than their actual monetary value. According to a study by Alice
Kendrick in 1986, when focus groups were asked to assign a cash value to a
number of tangible non-cash incentives, most assigned a higher value to the items
than they actually had (Alonzo, 2004). On the other hand, no greater emotional
value is attached to cash incentives.
Another research shows that the way the brain processes information
affects tangible non-cash incentives having a greater impact on people than cash
rewards (Alonzo, 2004). Offers of tangible non-cash incentives are visualized or
imaged by the right hemisphere of the brain. Such images or mental pictures
activate emotional responses which can be quite powerful. Conversely, offers of
monetary incentives are processed by the left hemisphere, which lacks the ability
to create images. When a monetary incentive is received, the brain’s lefts
hemisphere evaluates the information and determines whether the offer is
sufficient, relative to the time or effort required to earn it. With cash, the response
is reduced to one issue: how much.
As all these demonstrate, non-monetary incentives can be as powerful as,
in some instances even more effective than monetary incentives in motivating the
employees. This may be a valid argument for the public employees as well. Unlike
private sector who usually offers monetary incentives to its employees, public
sector is financially constrained to do that. Other than wages and fringe benefits,
public sector employees rarely have monetary incentives in their jobs. Tangible
non-monetary incentives, with their mentioned benefits, may compensate this
deficiency and may contribute to the motivation of public employees without
involving significant financial costs for the public organization. Moreover, as the
Expectancy Theory of motivation demonstrates, if employees are offered non-
monetary incentives that they value, they will be highly motivated to achieve the
targeted outcomes, for the cases where E-P and P-O expectancies are high.
Another type of non-monetary incentive is the social activities within the
organization which can be put under either tangible or social non-monetary
incentive categories. Social activities such as celebrations, team lunches, picnics,
sports activities, social events or special dinners for achieving a goal, an
employee’s retirement etc. in which employees of the same organization get
together in an informal way helps employees to associate themselves with the
organization. Social activities encourage communication, as well as recognizing
achievements. In turn, employees may be more likely to exert more effort towards
accomplishment of organizational goals. These kinds of non-monetary incentives
are ideal for people with high need of affiliation in McClelland’s Acquired Needs
Theory and Maslow’s Hierarchy of Needs Theory. These individuals with social
needs are motivated to work in an environment that provides significant personal
interaction and participation in pleasant social activities. To conclude, the
existence of these non-monetary incentives in a workplace has considerable effect
on creating a positive atmosphere and motivating employees.
It is expected that public sector in Turkey would have some limitations on
the type of tangible non-monetary incentives it could offer to the employees due to
financial constraints. Possible tangible non-monetary incentives may be letters of
appreciation, e-cards for praising a good job, pen sets, plagues or other symbolic
gifts, improving working conditions and arranging social activities etc.
Nevertheless, as an original idea and practice, tangible non-monetary incentives,
when applied in public sector, has the potential to attract employees’ attention to
exert more effort in their jobs. Moreover, they may take the place of monetary
incentives in satisfying lower level needs of employees.
In using tangible non-monetary incentives as a motivational tool, it is also
necessary to consider the possible areas of conflict in the organization. It may not
be easy to administer these kinds of incentives in the public sector since there are
no clearly defined performance criteria and it may be difficult to put forward clear
targets for the employees. This may lead to situations in which an employee is
awarded and the other one is not, although they both work hard. As a result, the
application of tangible non-monetary incentives may create perceived inequalities
in the work place. An employee may be awarded a tangible non-monetary
incentive whereas the other may think that in fact he/she deserves the reward. As a
result, there may be loss of motivation in other employees. Thus, the
administration of these kinds of incentives necessitates attention.
The following are the three examples of the use of tangible non-monetary
incentives from the private sector. In the first case, Cochlear is an Australian-based
company that leads the world in the design and manufacture of implant systems.
Since many Cochlear employees spend a lot of time looking through microscopes
and assembling very small components, the ergonomics of the workplace is vitally
important. To deal with it, Cochlear has made significant investments in
ergonomic work benches and chairs, which are aimed specifically at reducing the
negative impacts on staff, and making the work environment fitted to workers’
needs. In addition, the company has two work breaks each day in which workers
stop work and participate in stretching and calisthenics. These exercises avoid the
injuries and cramping associated with the requirements of the job. Employees
leave their work benches and spend 10 minutes exercising along with music. As a
result, stress and work-related injuries have substantially decreased and there is a
healthier, happier and more motivated workforce for Cochlear (Samson and Daft,
2002). As a second example, employees at Blanchard Training and Development
in Escondido, California, get two movie tickets on their birthdays (Nelson, 2001).
As a third example, employees in Vantage One Communications Group, a
marketing firm, regularly take breaks by playing foosball in the company’s
recreation room. Such diversions relax the daily routine and create a feeling of
belongingness and community. Similar examples may also be practiced in public
sector organizations to create a positive working atmosphere and motivate
employees without offering money.
3.2.2. SOCIAL NON-MONETARY INCENTIVES
Social non-monetary incentives concern the superior-subordinate
relationships within the organization. They are as important as tangible non-
monetary incentives in the workplace because social non-monetary incentives have
an important role in satisfying certain needs of employees such as social
acceptance and affiliation, self-esteem and self-realization.
A friendly greeting, a smile, a handshake, a pat on the back, a thank-you
note by the superior mean a lot to most of the employees. They are all means of
showing that employees are valued, cared and appreciated by their superiors. Also,
employees whose ideas are taken into consideration, whose suggestions are
appreciated, who feel themselves in on things and who gets feedback about their
performance are more likely to try harder in their job. As McClelland’s Acquired
Needs Theory states, achievement motivated people like to get immediate
feedback on how they have done so that they can enjoy the experience of making
progress toward objectives. They may satisfy those needs with these kinds of
social non-monetary incentives.
One of the most important issues to be considered in discussing the social
non-monetary incentives is the appreciation of employee. Expressing
acknowledgement and appreciation creates a link in participants’ minds between
their actions and the positive emotional results without assigning a monetary value
to their achievement. It is a positive reinforcement, that is, it gets those positive
actions repeated. It is a powerful tool in identifying excellence and setting
standards on how to be successful in an organization. As Rosabeth Moss Kanter
suggests, "To the rest of the organization, recognition creates role models and
heroes-- and communicates the standards: These are the kinds of things that
constitute great performance around here" (Nelson, 2001). It can focus employees’
efforts on the direction of improvement and no-cost involved in one-minute
praising. Once employees are recognized for their hard work and realize that they
do make a difference to the organization and are valued, as reinforcement theory
suggests, it is likely that they will want to perform at higher levels.
According to Bob Urichuck (2003) recognition and praise reinforces the
employees’ beliefs about themselves and helps make them think they are better
than they thought they were. That is, it helps to build self-esteem. Employees with
enhanced self-esteem can develop feelings of self-confidence, strength, making
difference to the organization and being a valued member.
Craig N. Clive (2004) emphasizes the significance of recognition in his
article “Cashless Employee Motivation”. He points out that employees seek
recognition for their accomplishments both inside and outside the organization and
being respected for knowledge and skills is an important satisfier for them. While
highlighting the importance of the phrase "Thank You" as the least costly non-
financial incentive, he lists “articles in organization publications, postings on an
employee information bulletin board, recognition at unit meetings, and other
positive communications” as the other means to recognize employees. Moreover,
he notes that social incentives such as the opportunity to speak with managers and
executives provide employees a chance to address their concerns and comments
directly to the top. If the organization takes immediate actions to resolve the
issues, employee feels that the organization cares about them.
Some other suggestions for recognizing the employees socially can be
stated as follows (Bussin and Christopher, 2002): “Praise employees for a job well
done immediately, be specific regarding recognition, personalize by using the
person’s first name, greet employees, give credit where due, start a yearbook with
the names and photographs of outstanding employees, arrange “out-to-dinner”
incentive programs to give individuals a sense of appreciation, arrange “behind the
scenes” incentive programs for those whose actions are not usually in the
limelight, recognize employees in front of their colleagues and spouses, co-
ordinate a surprise celebration of the achievements of an employee or group of
employees, thank employees for initiative, acknowledge a long relationship
between a company and an individual, show personal interest in an employee’s
development and career after a special achievement, asking how you can help him
or her take the next step, send birthday cards to employees signed by the CEO,
when you hear a positive remark about an individual, repeat it to that person as
soon as possible, if you cannot meet, leave an e-mail or voice mail message,
introduce peers and management to individuals and groups who have been making
significant contributions as a way of acknowledging their work.”.
Seeking and using employees’ ideas is another type of social non-monetary
incentive for the employees. In organizations, there should be mechanisms such as
suggestion boxes or weekly meetings that encourage employees to express their
ideas and suggestions and focus on the problems of the organization. Also,
discussion meetings with the employees may be helpful. With these kinds of
incentives, employees know what is going on and how they fit into the overall
picture. It makes them feel important and they gain the opportunity to reach their
supervisors to voice their concerns or ideas. In turn, it helps them to associate their
interests with the organizational objectives.
Organizations can benefit from the ideas and solutions offered by the
employees. Employees can have progressive ideas for the efficiency of the work
they perform. According to one study conducted by the Brooks consulting firm, of
12 companies in six different fields of work in United States, 64% of the workers
believed they could contribute to reduce the costs of production if they were asked
(Nelson, 2001). Consequently, if organizations seek their ideas, employees could
come up with various useful ideas and in turn they would recognize their value to
the organization by seeing how his/her efforts contribute to the overall success.
Private sector companies usually have mechanisms to encourage
employees to make suggestions and involve them in problem solving and reward
them. Promoting employees to make suggestions and to express their ideas
regarding the work process is very significant and essential in the public sector as
well. Decreasing costs of operation is a concern for many public organizations. In
fact, it is the reason