To understand the value of incentives for the employees, we first have to consider the value of what human beings want in the corporate world. Maslow, categorizes human needs and wants in five major portions namely, physiological needs, safety, love and belonging, esteem and self-actualization. All have their own value in the present society. Directly or indirectly, these needs are co-related with each other. Amongst them most important needs are physiological and emotional ones. Unless these needs are fulfilled, attainment of others is a far cry. In one way or the other, fulfillment of physiological and emotional needs mostly depends on the place a worker does a job. So, all corporations must keep in mind through workable incentives these needs should be fulfilled.
- Financial incentives for the employees keep them motivated.
- Performance bonuses and commissions elevate an employee’s standard of living.
- Incentives ensure social and financial security.
- Money makes the mare go; hence, effectiveness of employees increases.
- Incentives for the employees improve their loyalty with the employer.
What the incentives are!
Google defines the incentive as a factor that is used to motivate someone for doing something. Incentives for the employees fall under two major categories: monetary and non- monetary. These are further categorized into financial compensations, performance bonuses, prizes and appreciations. In compensation incentives, an employee is assisted by giving annual bonuses, profit sharing and stock options. In appreciation incentives, an employee is given thanks for his work by awarding him a letter of appreciation coupled with a gift usually.
How the incentives work!
B.F. Skinner and his associates proposed a theory that belongs to motivation and incentives. Individual behavior is a result of its consequences. Based on the Law of Effect, an individual’s behaviour tends to repeat good results only. Applying this law to the present day corporations, an efficient act of some employee, if followed by the reward, will more likely repeat itself. Incentives behave as a catalyst in the corporate culture. The companies that have a good scheme of incentives are gaining maximum profits. A research conducted by the Academy of Management declares that the companies that have a sound incentive based work performance program raise their business by a bit more than 40 percent annually.
Selecting a workable incentive scheme!
Psychological innovation in corporate culture has enhanced the value of incentive based performance. But there lies an important question about which type of incentives can bring maximum results. They should be of monetary or non-monetary form. The researches show that monetary forms of incentives such as increasing salaries and awarding performance bonuses is not enough to heat up the employees for better performance. There should be service based incentives too: free health services, security insurances, free tours, subsidized education for the children of employees. Wellness Programs can add to the overall motivation of the employees to work harder and stay longer for the employer.