According to a McKinsey Quarterly survey, there are three nonmonetary motivators that can work as well as financial incentives. The first is direct praise, where you focus on, for example, a staffer's quality of work or specific achievements. Second is leadership attention, where you engage in private conversations with staffers, asking for their opinions on work-related matters. Last is leadership opportunity, where you give staffers a chance to spearhead projects that can provide interesting challenges and increased status.

I would also add to these the findings of Dan Ariely, a professor of behavioral economics and psychology. His research concluded that showing employees the concrete results of their work – e.g., customers helped, revenues increased, widgets sold – can exercise an elevating effect on motivation, because when workers know they're contributing to a group effort, they feel a sense of purpose. Used together or separately, these methods engender recognition and respect, which, when it comes to compensation, can be as good as gold. E