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ENC1102

June 19th, 2023

How Benefits and Outside Influences Affect Employee Productivity

All throughout the world businesses and individuals in managerial positions are

constantly looking for ways to improve their employees productivity levels. They do this through

the comprehension of employee incentives and other possible elements that affect productivity.

Although there are outside influences that can have an impact on employee productivity rates,

monetary and non-monetary benefits are the main factors that determine the output of employee

productivity. This is due to monetary benefits giving employees the extra incentive they need to

put forth more effort and inturn being more productive; this is the same case with non-monetary

benefits due to them causing an increase in employee morale and loyalty. This leads to the

research question: do monetary or non-monetary benefits have more of an impact on employee

productivity, and how do outside factors have an influence? Throughout this research paper

readers will view data from numerous sources ranging from studies, Ted Talks, and a primary

source to prove which incentive type has the biggest impact and about outside influences.

Moreover, the initial hypothesis at the start of this research project was that monetary benefits

reflect the highest positive influence on employee productivity rates. Although the data supports

the hypothesis on a general basis there is a more in depth answer to the research question that lies

ahead. This being said throughout the following paper the types of benefits and the possible

outside factors will be elaborated on in detail and be supported via the gathered data.

The first type of benefit that will be elaborated on is monetary incentives which focuses

on financial rewards to promote increased levels of employee productivity. With this being said

monetary benefits tend to come in a variety of different types of financial rewards, and it has

always been commonplace to compensate employees for work. To further elaborate on the
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different types of monetary awards is a quote by Dr. Okwudili Emerole’s study, “Financial

rewards means pay-for-performance such as bonus, job promotion, commission, tips, gratuities

and gifts etc.” (Effect of Non-Monetary Rewards on Productivity of Employees Among Selected

Government Parastatals In ABIA State, Nigeria). Now that readers have been given insight into

what types of incentives are most common with monetary benefits, it allows further exploration

of how they impact employee productivity levels. Through the analysis of various academic level

studies each concluded that monetary benefits are shown to impact employee productivity in

some way. This claim can be backed via a quote from Wei Liu and Yaoping Liu’s study on

incentives impact on job performance, “All the values in the correlation matrix showed that there

was a link between monetary incentives and job performance and that leadership did play a

moderating role between incentives and job performance.” (The Impact of Incentives on Job

Performance, Business Cycle, and Population Health in Emerging Economies). To expand on

their conclusion the researchers found a statistically significant number of correlation between

financial rewards and employee productivity. Moreover, even though they found monetary

benefits to have a correlation with employee productivity, it doesn’t conclude that it is always

impacted positively. Furthermore, this is supported and partially refuted during the interview

with Rhett Lewis, who is a business owner and holder of managerial positions for 33 years. This

was shown when he was asked about the correlation of monetary incentives and productivity in

employees; where he stated that productivity depends on the type and/or level of pay paired with

how much the worker values their time. Essentially Rhett is saying that if an employee believes

they are being paid fairly they would work harder compared to an individual who feels

underpaid. Likewise to what Rhett stated is another quote from Dr. Okwudili’s study, “Also,

Ojokuku and Sajuyigbe (2009) found out that financial incentives (pay satisfactions dimensions)
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have significant effect on employee’s performance. But Perry et al, (2006) discovered that

financial reward is not the most motivating factor and financial incentives have a de-motivating

effect among employees (Srivastava, 2001).” (Effect of Non-Monetary Rewards on Productivity

of ...). Through this quote it shines a light on how in certain cases employees may view the

financial incentives as too little for their assigned tasks and result in a negative response in

correlation with their productivity levels. Overall, various sources come to the similar conclusion

that there is a significant correlation between monetary incentives and employee productivity

rates, and that it can either have a negative or positive influence based on the pay and worker

point of view. Lastly, continuing off the notion of employees interpretation of types of incentives

having an impact is non-monetary benefits and how they boost or negate productivity levels.

The next type of benefit that will be elaborated in detail is non-monetary benefits which

are financially free rewards that can be given to employees to impact productivity levels. This

type of incentive for employees is used in small businesses to multi-billion dollar corporations,

due to it having no influence on yearly expenses. To further expand on what non-monetary

benefits are, here's a quote from Dr. Okwudili’s study, “Non financial rewards are non

monetary/non cash and it is a social recognition, praise and genuine appreciation etc.” (Effect of

Non-Monetary Rewards on Productivity of..). Through this method of incentivising employees,

businesses can help boost the overall morale and loyalty from their workers and inturn increase

productivity rates. Moreover, the implementation of this type of benefit would be free or come at

a low cost, by having individuals in managerial positions be trained on how to boost morale

through employee appreciation videos or articles. Now that non-monetary benefits have been

expanded on, readers can see Dr. Okwudili’s findings of his study, “The correlation between

non-monetary rewards received and employee productivity as shown in Table 3 is 0.759

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(P<0.05)....Hence, non-monetary reward has much contribution on the productivity of employees

of government parastatals and vice-versa.” (Effect of Non-Monetary Rewards on Productivity

of..). Through the doctor's results it is shown that non-monetary benefits do have a direct

correlation with employee productivity in a positive manner. However, when non-monetary

benefits are enacted improperly it could lead to a negative productivity outcome as well.

Furthermore, now that non-monetary benefits are shown to have a positive correlation with

employee productivity, readers will delve into the thoughts of previously mentioned Rhett Lewis

and Dan Pink, an economist author, and the opposing conclusion made by Bash Ajose.

Throughout Dan Pink’s Ted Talk “The Puzzle of Motivation” he discusses motivation in

individuals, a study conducted of 51 companies by London School of Economics (LSE), and a

three part method to enact non-monetary benefits which derived from the study. Dan goes into

detail on how the study viewed that intrinsic motivation was key in inducing higher levels of

productivity, which leads to the 3 part method autonomy, mastery, and purpose. Through these

elements an individual is given the freedom to explore new things that could benefit the

company at certain times, and thus the employee’s loyalty and morale will increase significantly.

In addition, Dan mentions that the companies like Google and Atlassian have had great

additions/advancements with this method such as gmail, google news, and an array of software

fixes, simply by giving employees freedom and praise. However, according to Bash Ajose

financial rewards are still the biggest contributor to productivity, this shown through an excerpt

of his conclusion, “The study brought out a clear fact that financial benefits are the main

motivation behind employee productivity. Since employees were ready to leave their current jobs

for better pay elsewhere..” (Employee Benefit and Its Effect on Employee Productivity).

Through this quote it shows how non-monetary benefits are not the main source of determination
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and a good wage is required to keep their loyalty and keep productivity levels up. This is

partially supported by my interview with Rhett Lewis when asked how he managed subordinates

for 33 plus years, he stated that it took a combination of developing a positive connection with

each employee and providing a fair compensation. However, Rhett highlighted that there are also

possible outside influences that could impact the productivity of his workers.

Continuing with this idea that there are possible factors outside of monetary and non-

monetary incentives that could influence employee productivity, readers will now be given an

expanded perspective. With this being said readers can probably reflect on times that factors

outside of work have impacted their abilities or stunted productivity in its track, such as in the

workplace with broken computers, paper jams, etc.. Moreover, the outside factors that could also

have an impact are shown through this quote from Sandra Black and Lisa Lynch’s study,

“..technology still matters, as the proportions of non-mangagers using a computer is still

positively related to labor productivity and statistically significant.” (What’s Driving the New

Economy: The Benefits Of Workplace Innovation). Through this quote it shows that there is

significant data that reflects that technology in the workplace could have a direct positive

influence on employee productivity. Moreover, this means that a company could bolster their

productivity rates if equipped with the best technology and in turn also allows for employees to

receive higher compensation increasing their productivity even more. The next possible factor

that could impact employee productivity is their health, which is highlighted through this quote

from a study done by Jerome Adams a surgeon general, “Research shows that employees who

are in good physical, mental, and emotional health are more likely to deliver optimal

performance in the workplace than employees who are not.” (The Value of Worker Well-Being).

With this in mind employees productivity could be heavily impacted if they were to become sick,
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stressed, sad, etc.. This goes to show that it is in the employers best interest to give their

employees incentives such as health plans and less stressful work environments to achieve

optimal performance rates throughout the company. Moreover, this goes to show how financial

rewards are limited at times due to them not covering certain outside factors that could influence

their workforce. In addition to health and technology there are other factors like education and

training that can also have an impact on employee productivity in positive or negative outcomes.

This is backed by Johannes Biesebroeck, a professor at Faculty of Economics and Business,

through a quote from his study, “When different discrete levels of education attainment are used,

the results are ambiguous. Sometimes the wage premium exceeds the productivity contribution,

for example, for primary education the difference is almost fourfold.” (Wages Equal Productivity

Fact Or Fiction?). Through this quote it expresses how education can impact two things:

compensation and productivity levels, which shows how much this outside factor may impact an

employee's performance. That being said, compensation is also proven to have a direct

correlation with employee productivity, which means that if due to prior education they receive

less or more money they may work harder or less as a result. Furthermore, there are unlimited

factors that could have an influence on employee productivity outside of company benefits, due

to each individual having different perspectives and life experiences. Overall, the factors of

technology, health, and education seem to have the greatest outside influence on employee

productivity, but there are many more that could have an unseen impact.

Now that both monetary and non-monetary benefits have been expanded on and key

outside influences were brought to light, readers will promptly be shown which incentive is

superior in garnering results. Throughout the development of this research paper a variety of

sources were analyzed, and each concluded through their respective methods that either
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monetary and/or non-monetary benefits correlated in a positive manner to employee

productivity. Although they both have a direct impact on employee productivity, monetary

benefits have been shown to have more of an impact on productivity levels. This can be shown

through a quote from Edward Lazear's, who is an American economist, study , “At least on the

margin, it is necessary to compensate individuals to get them to put forth effort. The reason is

straightforward. If effort has value in the market or specifically to a particular employer, then the

employer will be willing to pay for that additional effort.” (Compensation and Incentives in the

Workplace). This quote from Edward Lazear shows that no matter how much intrinsic

motivation is put forth, there needs to be financial compensation for a worker to go above and

beyond. However, this doesn’t overshadow non-monetary benefits completely due to the

opposite also possibly being true. Moreover, an employer can provide an employee with

monetary incentives to do their exact job, but without added non-monetary incentives individuals

will not go the extra step to have optimal performance. This is shown through Dan Pink’s Ted

Talk, which was previously referred to, where he explains that money is the attention grabber for

possible employees, but that types of intrinsic motivation is still needed to have the individual's

initial productivity to grow and leads to new innovation, company revenue streams, etc..

Likewise, he refers to companies like Google and Atlassian who obviously pay very well due to

them being large tech companies, and yet they provide days where employees are motivated to

go beyond and be rewarded in praise, social recognition, etc.. Furthemore, Rhett Lewis agreed

throughout the interview conducted that he believes that monetary incentives is the main/first

stepping stone in producing high employee productivity, however, non-monetary benefits are

needed as well. Likewise, to the other sources he concludes that while monetary incentives are

overall superior, non-monetary incentives are a must to cultivate higher levels of productivity
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and solidify work teams cohesion. Overall, the data analysis of the reviewed sources all point to

two different answers to the research question; first that monetary benefits are superior to non-

monetary benefits and second that they must both be used to have the most optimal employee

productivity levels.

In conclusion to this research paper on how benefits and outside influences affect

employee productivity, monetary incentives appear to be superior to non-monetary incentives. In

addition, outside factors were highlighted to show their possible negative and positive influences

on employee productivity. Moreover, although the original hypothesis proved to be true, there is

a second answer which recommends business owners and individuals in managerial positions to

use a combination of both to get the highest employee productivity rates possible. This being

said, individuals who don’t have an interest in business are recommended to avoid this piece of

literature. This is due to it targeting individuals who own or manage a business and want a more

keen comprehension of how varied types of benefits could impact their employees productivity.

Furthermore, with the knowledge that is available throughout this research paper an individual

could reflect the findings apun their own study or company and in turn increase the overall

productivity rates. In addition, they could avoid or take into account the outside factors that have

an influence on their employees directly and attempt to put measures that will prevent the

deterioration of the workers health, connections, etc.. Lastly, employees themselves could take

this information and use it to leverage themselves in more favorable positions and earn more

financial and non-financial rewards as a result. (Word Count: 2,522)

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Works Cited

Ajose, Bash. “Employee Benefit and Its Effect on Employee Productivity.”

Academia.Edu, 6 June 2016,

www.academia.edu/25932687/employee_benefit_and_its_effect_on_employee_pr

oductivity . Accessed 30 May 2023.

Adams, Jerome M. “The Value of Worker Well-Being.” Sage Journals, 2019,

journals.sagepub.com/doi/full/10.1177/0033354919878434.

Biesebroeck, Johannes V. “Wages Equal Productivity Fact Or Fiction?” NBER, 2003,

www.nber.org/papers .

Black, Sandra E, and Lisa M Lynch. “What’s Driving the New Economy: The Benefits

Of Workplace Innovation.” NBER, 2000, www.nber.org/papers .

Emerole, Okwudili B. Effect of Non-Monetary Rewards on Productivity of Employees

Among Selected Government Parastatals In ABIA State, Nigeria. - IOSR

Journals, 2015,

iosrjournals.org/iosr-jbm/papers/Vol17-issue2/Version-4/B017240611.pdf.

Lazear, Edward P. Compensation and Incentives in the Workplace, 2018,

pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.3.195.

Lewis, Rhett, In person interview.

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Liu, Wei, and Yaoping Liu. “The Impact of Incentives on Job Performance, Business

Cycle, and Population Health in Emerging Economies.” Frontiers, 16 Dec. 2021,

www.frontiersin.org/articles/10.3389/fpubh.2021.778101/full . Accessed 30 May

2023.

Marzullo, Dan. “Employee Benefits Can Increase Productivity.” Workest, 31 Aug. 2019,

www.zenefits.com/workest/employee-benefits-can-increase-productivity/.

Pink, Dan, director. The Puzzle of Motivation. YouTube, YouTube, 25 Aug. 2009,

www.youtube.com/watch?v=rrkrvAUbU9Y . Accessed 30 May 2023.