Rakesh was promoted to sales manager. He got a higher salary, but he felt most satisfied by the higher status, greater authority and the challenge of his new job. How should this promotion be classified as an incentive?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Non-financial incentive, because its non-monetary aspects over-ride the monetary aspect
Option (1) Financial incentive, because its higher status and authority carry perquisites above the salary — Incorrect. Perquisites, such as car allowance and housing over and above the salary, are financial incentives. Rakesh valued status, authority and challenge.
Option (2) Non-financial incentive, because its non-monetary aspects over-ride the monetary aspect — Correct. A non-financial incentive aims at psychological and emotional satisfaction rather than money. Promotion brings extra pay, but the higher status, authority and challenge satisfy Rakesh more. So the non-monetary aspects over-ride the monetary aspect.
Option (3) Non-financial incentive, because its higher status and authority work as employee recognition — Incorrect. The class is right but not the reason. Recognition, such as praise for good work, is a separate incentive. Promotion counts as non-financial because its non-money gains weigh more than the pay rise.
Option (4) Non-financial incentive, because its status and challenge help build a better organisational climate — Incorrect. The class is right but not the reason. Organisational climate is the set of features of a whole organisation, such as its autonomy. One person's promotion does not build it.
NCERT (2026-27 Edition): “Non-Financial Incentives: All the needs of individuals are not satisfied by money alone. Psychological, social and emotional factors also play important role in providing motivation. Non-financial incentives mainly focus on these needs. Some times, monetary aspect may be involved in non-financial incentives as well. However, the emphasis is to provide psychological and emotional satisfaction rather than money driven satisfaction. For example, if an individual gets promotion in the organisation, it satisfies him psychologically more as he gets a feeling of elevation, increase in status, increase in authority, challenge in the job etc., Though promotion involves payment of extra money, non-monetary aspects over-ride monetary aspects. …” |