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How Much Should You Spend to Motivate Your Employees?

Recent research reports have revealed that motivating employees can help to significantly reduce the rate of employee turnover by at least 31%.

Employees who work in companies with active reward and motivation programs are less likely to voluntarily resign compared with companies who have no reward programs in place.

Motivating your employees is not only beneficial for them but for you as well because it improves job satisfaction and happiness and it makes them more willing to give in their best to the service of the organization.

How Much Should You Spend to Motivate Your Employees?

Your employee motivation budget would largely depend on the industry in which you operate but generally, a sum that amounts to about 1-2% of your payroll would be considered an ideal sum. So if for instance, an employee earns $50,000 as salary annually, you should mark out a sum of around $500-$1,000.

This of course should not include other regular employee benefits and entitlements as employee motivation programs are supposed to be for showing hardworking and performing employees that you appreciate their inputs and also to encourage them to do more. It should not be designed in such a way that the employee begins to see it as an entitlement.

Non-Monetary Methods of Motivating Employees

As an employer, you should not be completely fixated on monetary means of motivating your employees as there are a lot of other ways to motivate your employees and make them give in more to the service of the company without necessarily spending cash.

Here are ten non-monetary ways to motivate your employees:

1. Offer Them Job Flexibility

Your employees like a little bit of freedom sometimes. They want to be given the freedom to exercise their discretion and use their knowledge and skill to solve problems because it makes them feel valuable to the company.

Employees also want a work environment where they have the freedom to make contributions and air their opinions.

2. Offer Them Recognition

Every human being has the desire to be recognized. A lot of employees make some sacrifices behind the curtains for the progress of the company and they feel undervalued or sometimes frustrated when they don’t get that handshake or pat in the back for their contributions.

Again, this is not something that money can buy. Your business should have a way of recognizing employee’s efforts even if it is just an email blast, a pat on the back or an ‘employee of the month’ poster on the wall. All of these can do a lot to boost your employees’ morale and make them feel like all their visible and invisible efforts are seen and appreciated.

3. Employee Training and Improvement Programs

Another way to motivate your employees without having to offer them cash is by sending them on training and improvement programs. Sending your employees on such programs make them feel like there is a lot of room for growth and improvement for them.

It helps them look forward to handling bigger challenges and keeps them from feeling stuck. When planning training programs as a means of employee motivation, you have to ensure that the programs are in line with the personal wants and desires of each employee.

This means that you should conduct skill assessment and personal interviews before sending employees on training programs so that the programs would be suited to the career path that an employee has decided to take, otherwise it wouldn’t be able to motivate the employees.

4. Respect, Friendship and Belongingness

Employees need to feel like they are a part of a healthy community. When employees feel disrespected, isolated or unhappy, it promotes absenteeism and employee turnover. It is important to set up your team in such a way that each employee has mutual respect for one other, and office politics and conflicts are significantly reduced.

5. Make Sure they are Doing Meaningful Work

One of the most effective ways to create a motivating environment is to ensure that the work every employee is doing is meaningful and crucial to the overall success of the organization. If employees feel like the work they are doing doesn’t matter or makes no difference, it kills their motivation and makes them more likely to under-perform.

6. Get to Know Your Employees

Employees feel like you care deeply about them when you learn about some things that they consider really important such as their career goals and their families. Employees are more willing to go the extra mile for an employer who they have a personal relationship with than for one who barely knows their names.

7. Don’t Underpay Employees

Salaries and wages are still the strongest means of employee motivation. Employees want to be well-paid for the services they offer as this is the reason they jump out of bed to go to work every morning. Employees who feel like they are not paid enough for the services that they offer would be less likely to give their best to the services of the organization.

8. Promote Them

One of the best ways to encourage high performers is to promote them from their current position to a higher one. This not only encourages the high performers to do more, it also motivates the under-performers to sit up as no one likes to be left at the bottom of the chain.

9. Throw Small Events

You can organize small events to celebrate your employees in your own little way. This could be to celebrate their birthdays, their achievements or their personal contributions to the organization’s success. A little party in the conference room every now and then would go a very long way.

10. Offer Them Gift Cards

You don’t have to spend too much on a gift card, even a gift card worth $10 for a quick coffee or sandwich to celebrate little success and achievements can help to boost employee morale and make them feel appreciated.


You don’t have to break the bank or hurt your company’s profit margins to show your employees that you appreciate the efforts that they put into serving the company. All of the above mentioned strategies would tell your employees that you love and appreciate them without having to spend a dime.