Cash-strapped businesses should look to incentivise staff by giving them a degree of autonomy.

How do you incentivise your staff without paying them more money?

It is a question that is keeping a growing number of owners of small and medium sized enterprises (SMEs) awake at night as they grapple with poor growth prospects and the impact of a double-dip recession.

According to the Chartered Institute of Personnel and Development, less than a third of SME employers are expecting to give pay rises to their employees in 2012.

For companies that have traditionally used the carrot approach of dangling the prospect of pay rises, promotions and bonuses in front of employees to spur them on, the realisation that the cupboard is bare is especially daunting.

One possible solution to the problem is to give a delayed monetary incentive in the form of share options, but that will only work if you give them to all employees, otherwise resentments will fester.

Realistically it will also only be an option for certain types of business. And if the current growth prospects for the business really are negligible, then it is debatable just how much of an incentive a tiny sliver of a future theoretical pot of gold will really be.

The good news for cash-strapped SME owners is there are many non-monetary ways to incentivise and motivate staff. The even better news is that these may well turn out to be even more effective than a pay rise would have been.

Indeed, using money as a way of motivating employees is actually not nearly as effective as people generally think.

Non-monetary factors, such as being given some autonomy over how tasks are carried out, the freedom to make decisions about issues that affect them and having achievements praised and acknowledged, have been repeatedly shown to be far more effective in motivating people. Flexible working arrangements and being given time off are equally valued.

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Think tank: freedom, not pay, is best motivation