Introduction
Employees’ work quality is the basis for the success of any enterprise, and therefore managers pay considerable attention to motivation issues. Work is based on compensation for the performance of tasks, and additional material payments can serve as effective incentives. However, non-material rewards also occupy an important place in the discussion of employee motivation and are part of the psychological contract at the workplace. Although many studies prove the effectiveness of non-monetary incentives, they can take much time and effort from human resource (HR) managers and may not be as effective in low-wage environments as in material ones.
The Motivation of Employees
Employers-employees relationships, including informal mutual expectations, beliefs, and obligations, arise In the work environment. These elements constitute a psychological contract and often imply that employees will make efforts to improve their performance and be committed to the employer (Cheng, 2021). In return, the company will provide material and psychological support and opportunities for the development of the employee. One party’s breach of contract leads to distrust, stress, and deterioration of work (Cheng, 2021). Psychological contracts imply several challenges and advantages in their development.
A favorable psychological contract improves the work of employees and relations with managers. It promotes loyalty to work in the company implies efforts to improve communication and mutual understanding. For instance, according to a study by Carucci (2021), companies that experienced little personnel turnover during Great Resignation due to the pandemic emphasized the development of a solidarity culture, employees’ involvement, and respect for them. At the same time, a contract provides flexibility in relations between employees and employers, allowing for a review of mutual expectations. However, the challenges of the psychological contract are that they are informal and not written, which interferes with execution. They are also individual for each employee and can contribute to injustice. The disadvantages of the contract are significant, and therefore the question arises of the appropriateness of investing in its development when material incentives can be used.
The connection between the level of compensation and the quality of work is strong. Bonuses affect the efforts that workers make to fulfill their tasks (Lazear, 2018). Considering a low-pay environment, it is worth considering the findings of Cheng (2021), following which material encouragement is critical in mobilizing employees. Without providing material needs, the use of other methods of motivation will not be so effective (Cheng, 2021). However, bonus expectations are also part of the psychological contract and can be negotiated in the communication process (Cheng, 2021). Moreover, transparency in the bonus payment policy and a clear understanding of how employees can get them facilitate psychological contracts and the payments.
Conclusion
Thus, it should be noted that the motivation of employees is an essential managerial issue, the solution of which determines the enterprise’s success. Material and non-material rewards can serve as incentives, and their effectiveness may differ depending on the context. A favorable psychological contract includes significant elements of intangible reward. However, monetary compensation is still at the heart of labor relations, and if correctly applied, material security can best contribute to employee enthusiasm. It is also worth noting that monetary expectations can be agreed upon within the framework of a psychological contract, and therefore bonuses and contact are interconnected. In conditions of low wages, emphasis should be placed on monetary incentives but also on promoting a contract in which the bonus system will be transparent.
References
Carucci, R. (2021). To retain employees, give them a sense of purpose and community. Harvard Business Review. Web.
Cheng, Y. (2021). The effect of psychological contract combined with stress and health on employees’ management behavior. Frontiers in Psychology, 12, 667302. Web.
Lazear, E. P. (2018). Compensation and incentives in the workplace. Journal of Economic Perspectives, 32(3), 195-214. Web.