Effective non-financial incentives for employees, which need to be known and applied in civil service organisations

Kristina Jakubaityte-Revutiene, EU4PFM Expert on HR/PAR, for Derzhsluzhbovetc

All employees, regardless of the sector or place of employment in the world, first of all, want to receive a fair wage that corresponds to their competencies required at work. In addition, potential employees seek professional development and growth, the possibility to make a significant change.

Every employee wants to feel like an essential part of the organisation.

Kristina Jakubaityte-Revutiene,
EU4PFM Expert on HR/PAR

However, the non-financial system must meet the needs of employees working in a particular region, country, or sector. The demographic situation, needs, cultural norms, and legal environment may vary from country to country or sector.

The importance of employee motivation

Employee motivation is one of the essential prerequisites for the success of an organisation. The people are the principal capital of the organisation, so every organisation must constantly look for new and, most importantly, practical solutions for employee engagement and motivation.

Non-financial incentive systems can encourage or discourage employee and team behaviour. Non-financial incentives refer to both the reason for employees to join an organisation and how an organisation rewards and retains employees. On the other hand, if their efforts are unnoticed and not incentivised, they can look for a new job. Calculating the costs of high staff turnover in the civil service costs an organisation and taxpayers a lot.

Civil service organisations also operate in a competitive and changing labour market. They are forced to compete for highly skilled employees by offering a range of incentives that have become a common standard in business organisations. When wages are not competitive for attracting and retaining good professionals, civil service organisations must learn to apply non-financial incentives.

Employees’ needs are constantly changing

Various studies show that increasing employees’ motivation increases their work efficiency, creativity, and innovation, engagement, and loyalty.

Identifying key factors of employee motivation, employees’ needs, and expectations is one of the most critical tasks of HR professionals. The manager also has a vital role to play. In a modern organisation, the manager empowers their employees, helping them grow and feel valued, shares a shared vision and goals that help achieve not only the personal goals but also the organisation’s goals.

The workplace environment and non-financial incentives are essential for the majority of the so-called Generation Y. Young competent specialists are much less worried about financial security, more intensively looking for opportunities to realise their self-expression. Generation Y expects flexible working conditions from employers much more often, is interested in opportunities to be involved in decision-making, cross-functional projects, and professional development opportunities.

Different stages of life determine the needs of employees. For example, for a young employee who has just entered the labour market, it is essential to growing professionally and test new areas to find the right fit. Financial stability, work-life balance is crucial for those who have families. For other employees – purpose and meaning are significant challenges. The needs change at different stages of the employee’s life. The employer must strive to balance the needs and provide an opportunity for employees’ job satisfaction.

The model of non-financial incentives is a reflection of the values and culture of the organisation

The model of non-financial incentives of employees is a reflection of the culture and values of the organisation. Every organisation with clear fundamental values fully integrates them into the day-to-day life and HRM processes. For example, an organisation promoting cooperation will not apply a system that enables competition between employees. An organisation that strives to help employees maintain a proper work-life balance, protect their employees from stress and maintain healthcare will create a possibility to combine the work and the care of a small child or elderly parents, to work reduced working hours, as well as the opportunity to work from home, etc.

Leadership style in the organisation is also a part of the culture and affects employee motivation. The manager’s constant communication and informal feedback with employees based on trust and respect increases employee engagement. Therefore, in the practice of organisations,  coaching and shared leadership are used as an instrument of non-financial incentives, when each person can be the leader of a separate task or project.

What can managers from civil service organisations do to motivate and engage civil servants to work effectively?

The practice of non-financial incentives in civil service differs. The framework of non-financial incentives should be designed in a case‐by‐case manner after carefully assessing the initial situation. And should often be implemented on an incremental basis with short‐term solutions toward a long-term perspective, differentiated and targeted on an individual, group, and organisational level.

Non-financial incentives may come in many forms, such as special assignments, gifts, rewards, travel, etc. Some are more tangible than others since they are visible and can be compared to financial benefits. Less tangible incentives relate to work flexibility, independence of working, recognition of one’s work, and the possibility of advancement[1].

The first tip – to develop the conceptual framework of non-financial incentives

The EU4PFM Project has developed practical guidelines for the empowerment of non-financial incentives for civil servants for four PFM institutions of Ukraine. The figure below indicates the conceptual framework of the non-financial incentive system proposed by the experts of the EU4PFM Project.

The framework includes:
JOB-RELATED INCENTIVES mean job rotation, job enrichment, growth opportunities, flexible working hours, empowerment.
SOCIAL INCENTIVES are associated with social activities and relationships with the manager and colleagues, including formal or informal recognition. Social incentives show an employee is valued, appreciated, and praised by his manager, team, or organisation.
TANGIBLE INCENTIVES are the actual symbols for achievement such as gifts, vouchers, family allowances, and others that enhance the employee’s commitment to his job and assurance of continued employment and are associated with rewards.
All three directions of non-financial incentives are differentiated for the different target groups and lead to organisational commitment – the key outcome of non-financial motivation.

The second tip – to select the right non-financial incentives

In practice, there is one common feature linking all models of non-financial incentives – the needs of the employees should be emphasised. Each employee’s needs differ, and managers need to know and understand the individual needs of their employees. When choosing incentives, it is essential to think carefully and investigate what motivates employees on the organisational, group, and individual levels.
A survey of civil servants in the EU Member States showed that not wages, but the content of the work, is one of the most important incentives for civil servants’ motivation. The public administration institutions try to motivate the civil servants by increasingly applying job enrichment measures, i.e., they delegate civil servants more responsibility, give more autonomy, flexibility to control their activities, participate in decision-making processes, etc.
Combining the different empirical studies and international best practices of civil service organisations, the most common and effective non-financial incentives are:
• FLEXIBLE WORK MODELS. Flexible working schedule, four-day working week or reduced working time, remote work, and similar practice. In other words – flexibility in the organisation of the work process. Giving an employee the flexibility to choose the start and end time of work, or the opportunity to select the part of the working time to work from home, will not only show the confidence of them as a specialist but also will motivate them to achieve the final result with an extra mile.
• HORIZONTAL CAREER OPPORTUNITIES. How to motivate employees with career development ambitions, but there is no possibility of the vertical move? Cross-functional activities, project assignments can be a good alternative, allowing employees to acquire new skills, share experiences, get to know the whole organisation, and keep motivated.
• PROFESSIONAL DEVELOPMENT OPPORTUNITIES. Professional development opportunities in the organisation engage and motivate employees. Acquired new knowledge increases employees’ self-confidence and loyalty to the organisation.
• EFFECTIVE INTERNAL COMMUNICATION also increases employee engagement, helps to shape the desired culture of the organisation, maintains a suitable microclimate. Open communication and feedback are essential for all employees, help to improve and achieve better results at work. It is an effective tool for improving the quality of work and competency development.
• JOINT ACTIVITIES. Common traditions (social responsibility initiatives, employee events, events for children, etc.), activities that help get to know colleagues better, find common interests lead to an excellent working atmosphere in the organisation, and promote cooperation and better work results.
• A CLEAR VISION AND VALUES. Clarity of common goals and clear values demonstrated by the personal example of top managers creates an identity of the organisation and increases employee engagement.

The third tip – create an engaging environment

Supportive organisational environment and the role of a manager in motivating civil servants should be emphasised. In many cases, the manager and management style directly impacts the team atmosphere, employee motivation, work well-being, and work attitude.
Managers need to create an atmosphere that is both motivating and encouraging in itself. The following key factors are used for creating an engaging environment:
• APPRECIATION | Every employee must feel valued for the work they do. Suppose an employee who has performed a task well receives positive feedback from the manager. In that case, he feels appreciated, so he will likely make more significant efforts when performing other tasks in the future.
• A SENSE OF CERTAINTY | It is essential for employees to feel confident in their work. Uncertainty distracts employees from direct tasks and forces them to devote time to activities that do not create value. Each employee should be acquainted with their personal and team-wide goals and expected results.
The continuous sharing of information also contributes to strengthening employee certainty. When the department’s long-term goals are planned together with the whole team, this dramatically increases the motivation of employees to achieve their own goals.
• POSSIBILITY TO MAKE DECISIONS | One of the most common reasons competent professionals leave civil service organisations and move to business organisations is the possibility of making their own decisions. What matters here is not even what level of decision-making managers should delegate to their employees. The main thing is to show confidence and state that the employee can make confident decisions at their discretion. The possibility of decision-making is one of the most effective ways of motivating employees and keeping them accountable for the final result.
• SOCIAL RELATIONS | What is familiar to most people – high needs for social activities. Keeping this in mind, managers need to develop traditions based on the principles of cooperation and teamwork and create an environment in which every employee can feel like an equal member of the team. Close team relationships and an atmosphere of trust in each other lead to more efficient information sharing and create an engaging environment.
A simple, practical approach can cover all factors mentioned above:
• Motivating with challenges and experimentation through creating meaningful challenges;
• Motivating with cooperation and sharing of power, developing a sense of unity of employees and giving greater freedom of action and the opportunity to make mistakes;
• Motivating with expressed concern for the well-being of employees, highlighting the benefits of the tasks performed to society;
• Motivating with a proper assessment of success, both in encouraging and helping to achieve success;
• Motivating with a sense of authenticity, respecting the uniqueness of everyone, helping to combine teamwork and individuality, trying to get to know and understand employees as much as possible.

Attracting and retaining competent civil servants is a common challenge of civil service organisations in other countries

Attracting and retaining competent civil servants, especially in managerial positions, is one of the biggest challenges facing civil service organisations in the UK, Switzerland, Iceland, Lithuania, etc. The growing awareness and demand of labour market participants have a substantial impact on civil service organisations. The employer-employee ratio changes, both sides become equal partners who take care of each other for the common good.
Current trends prevailing in the international labour market are focused on flexible working conditions, employee work-life balance, empowering and increasing employee engagement, using gamification at work, promoting employee creativity and personal initiatives at work, developing various health care programs, creating and maintaining a cosy and respectful atmosphere.
Most business organisations offer employees various additional benefits because they want them to be happy, focus on work, and perform their tasks efficiently. After all, the overall result of an organisation is determined by the efforts and contributions of each employee. This is business logic, not an obligation regulated by law. The practice of business organisations also forces to improve civil service organisations, which seek to attract and retain the best employees and often find themselves in an unequal competitive position with business organisations.
Following an example of Lithuanian civil service, most Lithuanian civil service organisations understand that exciting work content, the opportunity to make and implement creative and innovative solutions, a good working environment, flexibility of working time, the ability to balance work and private life, professional development opportunities, strong leadership are equally crucial as salary wages. Therefore, since 2017, the Lithuanian Civil Service has been expanding non-financial incentives for civil servants. Since 2017 in the Lithuanian Civil Service was implemented the practice of Flexible working hours. Working hours were individualised: working time arrangements can be determined at the employee’s request, civil servant, diplomat, or official, and the institution’s possibilities to ensure work efficiency.
There is no longer anything surprising about specially equipped rest and childcare rooms, the possibility of working part-time from home, or flexible work schedules in the public sector organisation.

The organisation must continually seek ways to keep its employees motivated

A non-financial incentive is an integral part of the whole employee value proposition – the value an organisation offers to employees in return for the value they bring to the organisation. The fundamental elements are provided to employees in return for their commitment and skills, and capabilities. A well-designed non-financial incentive as a part of employee value proposition helps build the internal and external perception of the employer brand and attract and retain talent for the organisation. It is also a way to differentiate from other civil service organisations to appeal to organisations’ values and beliefs.
Within the framework of the EU4PFM project, the organizational culture and the potential impact of non-financial incentives in our partner organizations in Ukraine were assessed. Based on the data obtained, it can be said that considering how to improve the model of non-financial incentives in Ukrainian civil service organisations, it is essential to take into account the following factors: inspiration by a shared vision, strong leadership, benefits to society, a delegation of responsibility, opportunities for learning and professional development, options for flexible working conditions.
In conclusion, in a constantly changing external environment, the opportunity to perform effectively will have those organisations that best understands the importance of employee motivation.

In conclusion, in a constantly changing external environment, the opportunity to perform effectively will have those organisations that best understand the importance of employee motivation.

[1] Taken from the report The guidelines for practical empowerment of non-financial incentives for employees in PIs

Kristina Jakubaityte-Revutiene,

EU4PFM Expert on HR/PAR

Kristina Jakubaityte-Revutiene is HRM and Organization Development practitioner and consulting professional with a Master’s Degree in Human Resource Management and coaching. She is an experienced mentor of the Association for HR professionals (PVPA), the professional organisation gathering professionals in the HR field in Lithuania. Kristina has a demonstrated history of over 20 years of experience working on people and organisation management, organisation transformation, organisation’s capability development, leadership development at various positions in a multicultural environment within businesses and public sector organisations operating in Lithuania, Latvia, Estonia, Poland, Moldova, Armenia, and Ukraine.
Kristina also has sound experience in capacity building on topics relevant to Human resource management, leadership, people, and culture management by delivering training for civil servants and business sector employees and teaching students at Vilnius University of Applied science and Mykolas Romeris University.