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Monetary and Non-Monetary Rewards on Employees’ Job Performance: Exploratory Insights into the Role of Work Experience in East Malaysia’s Automotive Dealerships

  • Abdul Aziz Jusoh
  • Dr. Rudzi Binti Munap
  • Yvonne Katherina Robert
  • Lalitha A/p Santhersegran
  • Mohammad Ridhwan Khan
  • 3744-3754
  • Sep 8, 2025
  • Management

Monetary and Non-Monetary Rewards on Employees’ Job Performance: Exploratory Insights into the Role of Work Experience in East Malaysia’s Automotive Dealerships

1Abdul Aziz Jusoh., 1Dr. Rudzi Binti Munap., 2Yvonne Katherina Robert., 3Lalitha A/p Santhersegran., 4Mohammad Ridhwan Khan

1Faculty of Business, UNITAR International University

2Kah Motor Co., Malaysia

3MCIS Insurance Berhad, Malaysia

4Co-opbank Pertama, Malaysia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.908000303

Received: 29 July 2025; Review: 08 August 2025; Accepted: 11 August 2025; Published: 08 September 2025

ABSTRACT

This study examines how monetary and non-monetary rewards influence employees’ job performance within East Malaysia’s automotive dealership industry, with exploratory insights into the moderating role of work experience. Monetary rewards include salary, bonuses, and allowances, while non-monetary rewards encompass recognition, work environment, and career development opportunities. Using a quantitative approach, data were collected from 158 employees and analysed via Partial Least Squares Structural Equation Modelling (PLS-SEM). The results indicate that both monetary and non-monetary rewards have significant positive effects on job performance, with non-monetary rewards emerging as the stronger predictor. In contrast, the moderating effect of work experience on these relationships was found to be statistically insignificant, suggesting only a limited role in shaping reward performance dynamics. These findings highlight the importance of prioritising non-monetary incentives in enhancing job performance, while also encouraging further research to explore contextual or qualitative factors that may better capture the influence of work experience.

Keywords: Monetary Rewards, Non-Monetary Rewards, Employees Job Performance, Industrial Automotive, East Malaysia

INTRODUCTION

Employees’ job performance is fundamental to organizational success, defined as the extent to which employees fulfill their job responsibilities (López‐Cabarcos et al., 2022). This performance is significantly influenced by both monetary and non-monetary rewards. Monetary rewards, encompassing salary, bonuses, and commissions, serve to meet employees’ financial needs and motivate them financially (Cusson, 2023). On the other hand, non-monetary rewards such as flexible work hours, recognition programs, and professional development opportunities provide intrinsic satisfaction and psychological benefits. Both types of rewards are essential for motivating employees, with monetary rewards addressing financial objectives and non-monetary rewards fostering a sense of value and appreciation (Manjenje & Muhanga, 2021).

In the context of the Malaysian automotive dealership industry, challenges like skilled labour shortages, escalating costs, and competition from online retailers are prevalent (Malaysia & Malaysia, 2023). To stay competitive in the market, dealerships must comprehend employee preferences concerning monetary versus non-monetary rewards. Some employees may prioritize non-monetary incentives, such as career development opportunities, over financial bonuses. Despite the automotive sector’s significance in Malaysia, there remains a gap in the literature regarding the nuanced effects of both monetary and non-monetary rewards on Employees’ Job Performance, particularly within automotive dealerships, especially in East Malaysia. This research aims to fill this gap in the automotive industry by exploring essential aspects of dealership management to develop effective strategies that enhance employee engagement, and satisfaction, and ultimately, improve job performance.

Employees’ job performance is fundamental to organizational success, defined as the extent to which employees fulfill their job responsibilities (López‐Cabarcos et al., 2022). This performance is significantly influenced by both monetary and non-monetary rewards. Monetary rewards, encompassing salary, bonuses, and commissions, serve to meet employees’ financial needs and motivate them financially (Cusson, 2023). On the other hand, non-monetary rewards such as flexible work hours, recognition programs, and professional development opportunities provide intrinsic satisfaction and psychological benefits. Both types of rewards are essential for motivating employees, with monetary rewards addressing financial objectives and non-monetary rewards fostering a sense of value and appreciation (Manjenje & Muhanga, 2021).

In the context of the Malaysian automotive dealership industry, challenges like skilled labour shortages, escalating costs, and competition from online retailers are prevalent (Malaysia & Malaysia, 2023). To stay competitive in the market, dealerships must comprehend employee preferences concerning monetary versus non-monetary rewards. Some employees may prioritize non-monetary incentives, such as career development opportunities, over financial bonuses. Despite the automotive sector’s significance in Malaysia, there remains a gap in the literature regarding the nuanced effects of both monetary and non-monetary rewards on Employees’ Job Performance, particularly within automotive dealerships, especially in East Malaysia. This research aims to fill this gap in the automotive industry by exploring essential aspects of dealership management to develop effective strategies that enhance employee engagement, and satisfaction, and ultimately, improve job performance.

While monetary and non-monetary rewards are expected to influence job performance directly, the role of work experience in shaping these relationships is less certain. Previous research offers mixed evidence on whether tenure or accumulated skills amplify or weaken the effectiveness of different types of rewards. Given this uncertainty, the present study treats the moderating role of work experience as exploratory, aiming to identify potential patterns rather than to confirm a strong predicted effect.

LITERATURE REVIEW

Two Factor Theory

For an organisation to succeed, it is essential to comprehend employee motivation. Frederick Herzberg’s 1959 introduction of Herzberg’s Two-Factor Theory is still widely used in this field. According to Jaworski et al. (2018), the theory makes a distinction between two types of factors that affect job satisfaction and discontent: motivational factors and hygiene factors. While motivational elements like growth chances and recognition directly contribute to job happiness, hygiene variables like pay and working conditions try to prevent job dissatisfaction (Galanakis & Peramatzis, 2022).

Figure 1. Theoretical Framework of Herzberg’s Two-Factor Theory

Figure 1. Theoretical Framework of Herzberg’s Two-Factor Theory

Herzberg (1959) posited that motivator factors are intrinsic elements of the job that contribute to increased satisfaction, while hygiene factors are extrinsic conditions that primarily serve to prevent dissatisfaction. He emphasized that fostering motivator factors is essential for enhancing job satisfaction, whereas improving hygiene factors helps to reduce job dissatisfaction. In the absence of motivator factors, employees may become indifferent—neither satisfied nor dissatisfied—which can ultimately result in lower productivity and diminished engagement (Herzberg et al., 1959).

According to Herzberg, key motivator factors include achievement, recognition, and responsibility, all of which are vital for sustaining long-term job satisfaction (Li, 2018). In contrast, hygiene factors such as organizational policies and supervisory practices may contribute to short-term dissatisfaction if poorly managed, yet their presence alone does not ensure lasting satisfaction.

Herzberg’s two-factor theory has been widely applied across various sectors. For example, research has identified differing perceptions of hygiene factors between lecturers in public and private universities (Amoaka et al., 2020). In the hospitality sector, Ann and Blum (2020) found that dissatisfaction among employees was primarily influenced by hygiene-related issues. Similarly, in the healthcare industry, Yasin et al. (2019) demonstrated that both motivator and hygiene factors significantly affect nurses’ job satisfaction, thereby reinforcing the relevance of Herzberg’s theoretical framework.

Monetary Rewards

Monetary rewards, often referred to as cash rewards, direct payments, or extrinsic rewards, include three primary components: compensation, bonuses, and allowances (Malek et al., 2020). Compensation typically refers to the base wage paid to employees on a weekly, monthly, or annual basis, such as a basic salary, but excludes bonuses (Lin et al., 2022). Bonuses and allowances, on the other hand, are financial incentives tied to performance, designed to motivate employees to achieve work objectives (Venketsamy & Lew, 2022). These monetary rewards honor workers for providing specific goods or services and form a crucial part of the compensation management system (Lin et al., 2022). Employees engage in work activities to earn various extrinsic rewards of differing values, such as wages, promotions, and business status, which are provided by the organization.

Monetary rewards, as defined by Zhao et al. (2023), include tangible rewards like cash compensation, bonuses, raises, and both short- and long-term incentives, as well as perks like income protection and allowances. Despite not being the sole or always the best form of reward, their widespread use warrants special attention (Wang et al., 2021). People highly value money, making it a significant form of compensation. Monetary rewards also involve using financial incentives to influence behavior to achieve desired outcomes (Nguyen & Malik, 2020). According to Gulyani and Sharma (2018), monetary rewards are typically tied to performance, such as bonuses for meeting sales targets. These rewards are recommended for improving employee performance (Nguyen & Malik, 2020).

In practice, rewards significantly impact employee performance, influencing and determining effectiveness (Malek et al., 2020). Many businesses link compensation to performance, with base pay often reflecting individual performance (Kokubun, 2018). Managers must understand the importance of financial incentives in motivating and inspiring workers. Financial compensation is a powerful tool for managers to encourage effective behavior and achieve organizational goals (Mosquera et al., 2020). Conversely, a lack of financial incentives may limit employee effectiveness. Theoretical predictions suggest that higher monetary rewards should lead to increased performance (Mosquera et al., 2020).

However, empirical research presents mixed findings on the effectiveness of financial incentives in achieving positive employee outcomes. Some studies indicate that monetary rewards significantly improve performance across various contexts. For instance, Watkins & Fusch (2022) found a positive correlation between financial remuneration and overall job satisfaction, including extrinsic and intrinsic satisfaction. Conversely, other studies suggest that monetary rewards do not significantly impact positive employee outcomes. Gulyani and Sharma (2018) reported an insignificant effect of monetary rewards on employee work happiness.

While monetary rewards may not be the sole incentive, their impact is undeniable. Non-financial rewards, such as job stability, recognition, and decision-making opportunities, can influence employees’ internal motivation in ways that monetary rewards cannot. Thus, it is irrational to assume that financial incentives alone drive performance. Various interrelated monetary and non-monetary factors motivate employees. Some accomplishments are achieved for reasons beyond money, which, while attracting people, may not sustain or inspire them long-term. Gulyani and Sharma (2018) stated that salary and other hygienic factors can lead to dissatisfaction, while only motivators that go beyond the neutral psychological level directly affect motivation.

Employees’ Job Performance

Employees are the greatest asset of an organization and the key to its long-term existence. Or-ganisations utilise different strategies, such as incentives and reward programmes that increase em-ployee contributions, to identify and compensate for employee effort. These useful pol-icies have the objective of encouraging employees to work better.

Employees’ scalable activities, behaviours, and outcomes that correspond to organisational goals are referred to as job performance (Liu et al., 2023). The degree to which an individual achieves overall organisational performance goals through the use of achievement-related behaviour encompassing evaluative dimensions is another way of describing it (Indrayani et al., 2023). One of the most meaningful and studied variables in industrial management and organi-sational behaviour is job performance (Khtatbeh et al., 2020). Because employee job performance can improve organisational outcomes indirectly and directly, managers should prioritize it more (Khtatbeh et al., 2020; Vu et al., 2022).

In the contemporary work environment, job performance is understood through an integrative perspective that encompasses all the behaviors that help the firm achieve its objectives (Kim et al., 2019). In-role performance, adaptive performance, proactive performance, and citizenship behavior all come under this wider umbrella (Kim et al., 2019). Guo et al. (2023) created an integra-tive performance model that categorizes behaviors like proficiency, adaptability, and productivity and assesses their effects on individuals, teams, and organisations.

Eight categories are used to classify the performance measures: quantity, quality, knowledge, initiative, trustworthiness, creativity, collaboration, and personal traits (Sinaga et al., 2018). Six additional variables for the measurement of performance are work quality, labour quality, time efficiency, work effectiveness, supervision requirements, and self-influence (Guo et al., 2023). Task performance, contextual performance, flexible performance, and counterproductive work behaviour are four more variables that are used to measure performance (Guo et al., 2023). Task performance, contextual performance, and counterproductive work be-haviour are the three general categories that have received more emphasis over the recent past (Naqshbandi et al., 2023).

As per studies, job perceptions of employees play an important role in their level of performance. While low performance is associated with low productivity, profitability, and organisational effectiveness (Saks, 2019), peak individual performance increases organisational profitability and achievement (Sekhar & Patwardhan, 2021). The determination of the determinants of work performance is essential to the success of an organisation.

Since job performance has been researched a lot, the literature on it is mature (Liu et al., 2021). A number of variables were researched in recent times as predictors of performance at work, including trust between peers and principals (Yu & Chen, 2023); complexity of tasks, competitiveness, personal worth, and continuous commitment (Indrayani et al., 2023); flexible and online work (Naqshbandi et al., 2023); change management, job satisfaction, organisational commitment, and leadership style (Latifah et al., 2023). How monetary rewards pay, bonuses, and commissions and non-monetary rewards professional development, appre-hciation, and non-cash rewards contribute towards organisational value are usually not comprehensively examined using these studies. This limitation of the research therefore accentuates the need to explore how elements influencing total rewards, whether they are money and non-money incentives, have been debateld under the following section.

Non-Monetary Rewards

Non-monetary rewards, though intangible, significantly impact employees’ motivation and performance. These rewards, such as recognition, problem-solving opportunities, supportive employer attitudes, and job rotation following goal achievement, stem from employees’ perceptions (Venketsamy & Lew, 2022). According to Gulyani and Sharma (2018), most employees often prefer non-monetary incentives due to their comparative advantages over monetary rewards. However, for these incentives to be meaningful, all components must be present and used in tandem.

Workers are stimulated when they receive non-monetary rewards since it truly satisfies their intrinsic motivators. Giving workers difficult assignments, allowing them to participate in decision-making, and elevating them to higher places in the hierarchy are a few examples. Salary increases are not always required for these rewards; a highly motivated employee can hold a higher management position without receiving a pay increase. According to De Spiegelaere et al. (2018), the best internal rewards for raising employee performance are praise and acknowledgement. According to Saethan (2020), non-monetary rewards are instruments that encourage employees to perform as required and offer psychological advantages that each employee experiences on a personal level.

Malik et al. (2019) note that non-monetary rewards can include better positions, increased responsibilities, acknowledgment, and positive feedback from management. Recognition, one of the most cherished benefits, serves as a powerful motivator for continued excellence. While monetary rewards address basic needs, non-monetary rewards drive efficiency, loyalty, and a sense of value. Malek et al. (2020) emphasize that intrinsic motivation and a sense of well-being significantly influence performance. Non-monetary benefits such as free tea, flexible scheduling, movie tickets, and holiday presents improve working conditions and offer significant advantages.

Aldabbas (2023) argues that non-monetary rewards, including self-determination achieved through intrinsic motivation, can be highly satisfying without financial compensation. These rewards build a fundamental motivation to accomplish more, encouraging employees to create strategies and action plans to reach their goals. Emotions play a crucial role in shaping attitudes, viewpoints, and the motivation to excel.

Achievement is another key aspect of non-monetary rewards that influence employee performance. Francis and Hoefel (2018) identify the need to complete tasks as a primary motivator. Achievement involves producing results that align with goals or objectives, and can be categorized into dedication, perseverance, confidence in success, and persistence. Employee success builds confidence and increases motivation. Tarigan et al. (2022) highlight that persistence is crucial for improving performance, as it drives employees to achieve both personal and organizational goals. Setting and pursuing performance goals intrinsically motivates employees more than external pressure. Gulyani and Sharma (2018) suggest that success is an innate human goal that can be enhanced, particularly for those already self-motivated, leading managers to focus on raising employee performance. Developing internal organizational tools to help employees set and track their performance objectives is essential.

Working Experience

In general, the performance of an employee depends on inborn talents, character traits, necessary knowledge, work experience, and motivation (Mokhniuk et al., 2018). Research on the moderating role of work experience in the job performance relationship has produced mixed empirical findings. For instance, Wijaya et al. (2023) found that work experience significantly strengthened the positive effects of work flexibility and work motivation on job performance among female Gojek drivers in Denpasar, Indonesia. Their results suggest that experienced workers are better able to translate motivational and structural advantages into higher performance outcomes. Similarly, Sinambela and Ernawati (2023) examined employees in a distribution company in Surabaya and found that work experience, along with ability and motivation, significantly contributed to job performance, indicating that accumulated skills and knowledge gained through experience can directly enhance workplace effectiveness.

METHODOLOGY

Data Analysis Procedures

The ability of Wold’s (1982) partial least squares structural equation modelling (PLS-SEM) in analysing models with relatively modest sample numbers led to its use in this study. Because it allows for the investigation of both direct and indirect correlations among variables. In addition to the main effects of monetary and non-monetary rewards on job performance, the model included work experience as a potential exploratory moderating variable. The moderating influence of employee experience, PLS-SEM is especially well-suited for exploratory research and theory formation (Haji-Othman et al., 2022). The PLS-SEM process typically involves two main stages: measurement model assessment and structural model evaluation. This approach has been widely applied in previous research studies (Hansaram et al., 2024; Moksin et al., 2023; Jusoh, 2023)

Convergent and discriminant validity are evaluated in order to evaluate the measurement model (Cook & Campbell, 1979; Campbell & Fiske, 1959). Item reliability, composite reliability of constructs, and the Average Variance Extracted (AVE) for each latent variable are all used to determine convergent validity (Heng Xu et al., 2009). Conversely, when constructs are demonstrated to be empirically different from one another, discriminant validity is validated (Campbell & Fiske, 1959).

The structural model is assessed to ascertain its explanatory power and the importance of proposed links after the measurement model’s psychometric qualities have been validated. The percentage of variance explained by the endogenous constructs is a measure of the explanatory strength of the structural model (Heng Xu et al., 2009).

The internal consistency of constructions made up of several items is evaluated using Composite Reliability (CR). It takes into account the standardised factor loadings and shows how well the indicators assess the latent construct as a whole. Stronger internal consistency and increased dependability in describing the construct are indicated by higher CR values (Hair et al., 2017).

According to Hair et al. (2022) and Pervan (2017), convergent validity is considered good when each construct’s AVE is greater than 0.5, indicating that the construct accounts for more than 50% of the variance in its indicators.

Fornell and Larcker’s criterion, which determines if the square root of each construct’s AVE surpasses its correlations with other constructs, is used to evaluate discriminant validity. In order to guarantee conceptual distinctiveness, connections between possibly overlapping ideas are also investigated (Aziz et al., 2023).

FINDINGS

The sample covered middle and low-level managers only. The data collected in this research is 158 employees. With those data, this study assessed the reliability and validity of three key constructs: employee job performance, monetary rewards, and non-monetary rewards. The constructs were evaluated using Cronbach’s Alpha, Composite Reliability (CR), and Average Extracted Variance (AVE).

Table 1. Composite Reliability & Convergent Validity

Constructs Cronbach Alpha Composite Reliability (CR)  Average Extracted Variance (AVE)
Employees Job Performance 0.933 0.939 0.714
 Monetary Rewards 0.941 0.949 0.710
Non-Monetary Rewards 0.929 0.934 0.674

Internal consistency, which measures how closely connected a group of items are to one another, was measured using Cronbach’s alpha. Employee work performance has a Cronbach’s Alpha of 0.933, indicating high internal consistency between the components. The teams in these constructions are also very stable and dependable, as evidenced by the Cronbach’s Alpha values of 0.941 and 0.929 for monetary and non-monetary prizes, respectively (See Table 1).

Another reliability metric that evaluates a latent construct’s overall dependability is Composite Reliability (CR). A value of 0.7 or higher is considered acceptable. The Employees Job Performance CR in this study is 0.939, which denotes a good degree of reliability. While non-monetary rewards have a CR of 0.934, monetary rewards have an even higher CR of 0.949. These findings support the constructs’ high degree of dependability (see Table 1).

The percentage of variance in observed variables that is captured by a construct as opposed to the variance due to measurement error is assessed using the Average Variance Extracted (AVE). A notion is considered to explain more than half of the variance in its indicators if its acceptable AVE score is greater than 0.5. A significant amount of the variance in job performance items is captured by this construct, as evidenced by the Employees’ Job Performance AVE of 0.714. Similarly, Monetary Rewards exhibits great explanatory power with a robust AVE of 0.710. Additionally, non-monetary rewards show a strong AVE of 0.674, highlighting the construct’s dependability (see Table 1).

Table 2. Discriminant Validity (Fornell-Larcker Criterion)

Variables Employees Job Performance Monetary Rewards Non-Monetary Rewards
Employees Job Performance 0.845
Monetary Rewards 0.775 0.843
Non-Monetary Rewards 0.869 0.757 0.821

Diagonals (in bold) represent the square root of the average variance extracted, while the other entries represent the squared correlations.

The correlations between measures of possibly overlapping constructs are based on discriminant validity (Ramayah et al., 2011). The average variance shared between each construct and its measures should be greater than the variance shared between that construct and other constructs, and items should show stronger relationships with their particular constructs in a viable model (Compeau et al., 1999).

The results (See Table 2) confirm that each construct (Employees Job Performance, Monetary Rewards, and Non-Monetary Rewards) exhibits discriminant validity. This analysis supports the reliability of distinguishing these constructs in the context of the study.

Table 3. Path Coefficient Analysis and Hypothesis

Hypothesis Relationship Coefficients P -Value Supported
H1 Monetary Rewards    Employees’ Job Performance 0.278 0.0001 YES
H2 Non-Monetary Rewards   Employees’ Job Performance 0.661 0.0001 YES
H3 Monetary Rewards  Working Experience  Employees’ Job Performance -0.090 0.079 NO
H4 Non-Monetary Rewards  Working Experience  Employees’ Job Performance 0.047 0.377 NO

Path analysis and hypothesis tests come next in this study when a valid model is established.  The results are shown in Table 3 and Figure 2.  The coefficient determination value for the model is 0.786, meaning that monetary and non-monetary rewards account for 78.6% of the variance.

The data show that workers’ job performance is statistically significantly and positively affected by monetary compensation.  With a coefficient value of 0.278, workers’ job performance increases by 0.278 units whenever monetary compensation increases by a unit.  The statistical significance of the same at the 5% level is testified by the p-value of 0.0001, which is way less than the 0.05 level.

Compared to monetary rewards, non-monetary rewards also exhibit an even greater positive and statistically significant effect on employees’ work performance.  According to the coefficient of 0.661, work performance rises by 0.661 units with every unit rise in non-monetary compensation.  This effect is also statistically significant at the 5% significance level with a p-value of 0.0001.

A p-value of 0.065 indicates that the interaction term of financial rewards and work experience is negative (-0.090) but not statistically significant at the 5% significance level.  This indicates that the relationship between financial rewards and job performance is not significantly moderated by work experience.

Likewise, the p-value of 0.377 indicates that the interaction term between work experience and non-monetary rewards is positive (0.047) but not statistically significant at the 5% level.  This indicates that the association between job performance and non-monetary rewards is not significantly moderated by work experience.

Figure 2. Path Analysis

Figure 2. Path Analysis

Implications

Based on the findings that non-monetary rewards significantly enhance job performance compared to monetary rewards, automotive dealers in East Malaysia should prioritize non-monetary incentives such as recognition programs, skill development opportunities, and flexible work arrangements that the scope of work in automotive to boost employee motivation and productivity. Unfortunately, employee experience does not significantly moderate the impact of rewards, dealers can focus on implementing personalized management approaches and performance-based incentive structures to align employee efforts with organizational goals. It is crucial for middle and low-level managers to foster a positive work environment through effective communication, regular feedback, and engagement initiatives that promote teamwork and professional development. These strategies can collectively improve job satisfaction and performance among employees in the automotive sector in East Malaysia.

CONCLUSION AND FUTURE RESEARCH

This study provides evidence that both monetary and non-monetary rewards positively influence job performance among automotive dealership employees in East Malaysia, with non-monetary rewards such as recognition and career development that emerging as the stronger driver of performance. While the moderating role of work experience was statistically insignificant, its inclusion offers exploratory insights into potential variations in reward effectiveness across different experience levels. These findings suggest that dealership managers should focus on non-monetary strategies to motivate employees, while also considering tailored approaches for staff at various career stages.

For future research, expanding the study beyond East Malaysia would enhance the generalisability of findings and provide broader applicability across different cultural and economic contexts. Incorporating qualitative methods such as interviews or focus groups that could yield richer insights, particularly regarding employee perceptions of non-monetary rewards. Employing techniques such as Harman’s single-factor test would help to assess and mitigate common method bias, thereby strengthening validity. Additionally, adopting a longitudinal research data to assess changes in motivation and performance over time.

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