The Advantages of Financial Rewards to an Employee

Everyone loves a cash bonus or a raise. It's an opportunity to go out to dinner or just pay some extra bills. Cash bonuses and raises can be win-win experiences for employers and employees if they are dispensed effectively. They should be tied to specific performance results and given graciously, with a genuine sentiment that the employee has demonstrated his worth to the company and deserves to prosper as well.

Practical Financial Advantages

Financial rewards are advantageous to employees first and foremost because extra income is always useful. According to MSN Money, 43 percent of Americans spend more than they earn each year. This figure is only one example of the widespread phenomenon of personal income being insufficient to cover daily necessities, if not discretionary spending. Nearly everyone can find some use for the extra money included in a raise or a cash bonus, so providing extra income for an employee provides practical, tangible benefits.

Advantages of Showing Esteem

Providing an employee with a financial reward is a way of demonstrating to him that you value his work and his contribution to the company. Although praise and gratitude can be motivating factors as well, a raise or a cash bonus is a concrete expression of esteem, one that uses the same currency that fuels every company's day-to-day operations. Employees who feel valued tend to work harder, in part because the hope for additional financial reward in the future, and also because they feel that their contributions are recognized and important.

Employee Retention Advantages

Financial rewards are also advantageous to employees because they increase the likelihood of personnel staying with the company, allowing employers to retain experience and knowledge base, and providing workers with a measure of familiarity and stability. An employee who earns enough to cover his basic needs--and some extra--will be less likely to give notice and look for another job, saving himself the stress of a job search and saving his employer the hassle of having to replace a valuable worker.

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About the Author

Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.