Companies around the world are cutting back their financial-incentive programs, but few have used other ways of inspiring talent. The authors of the McKinsey Quarterly article, Motivating people: Getting Beyond Money, believe that now is the best time to implement and utilize non-cash motivators to engage employees and energize your business.

The imperative to reduce costs and to balance short- and long-term performance effectively gives business leaders a great opportunity to reassess the combination of financial and nonfinancial incentives that will serve their companies best through and beyond the downturn.

A recent McKinsey Quarterly survey underscores this opportunity. The respondents view three noncash motivators—praise from immediate managers, leadership attention (for example, one-on-one conversations), and a chance to lead projects or task forces—as no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options (exhibit).

The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth. These themes recur constantly in most studies on ways to motivate and engage employees.

The authors contend that business leaders would do well to consider the lessons of the crisis and think broadly about the best ways to engage and inspire employees. A talent strategy that emphasizes the frequent use of the right nonfinancial motivators would benefit most companies in bleak times and fair. By acting now, they could exit the downturn stronger than they entered it.

Read the full article in the McKinsey Quarterly by clicking here.