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Non monetary employee incentives
Non monetary employee incentives
Reasons for adopting flexible working arrangements
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Introduction
Today, competition between the businesses is extremely high thus companies need to find ways to be competitive. Organizations prepare the best market strategy to increase the company performance and the ways to keep their employee motivation on the highest level to perform well within the competition. At that time, several incentive pay programs play an important role for every organization to perform well within the competition.
Creating and implementing of incentive pay system supports to solve organizational problems to align the preferences of business and employees. In addition, the system serves as an organizing tool to identify and attract the most capable employees since companies need to deliver the product or service within targeted timeframe.
Since organization success depends on both customers’ satisfaction (outsource) and increase employees’ productivity and commitment (internal source), today companies attempt to attract improving employees’ performance by using various flexible incentive pay programs. Careful design of incentive pays program and rules of administration are crucial to the effective management of an organization.
Incentive Pay and Purpose of Incentive Pay System
Incentive pay is a form of direct compensation where employers pay for performance beyond the normal expectations to motivate employees to perform at higher levels. (www.uslegal.com, 2001-2014).
Employers are practicing the incentive pay systems to promote employees particular behavior and performance to get more involved in the organizational development and which is essential for the organization’s success. So employers use incentive pay program as an effective tool for employees to achieve their goals and improve emp...
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...anresources.about.com/od/employeerecognition/g/what-are-incentives-at-work.htm
Heathfield, S. M. (n.d.). Performance Management. Retrieved March 15, 2014, from About.com Human Resources: http://humanresources.about.com/od/glossaryp/g/perform_mgmt.htm
Radek Knesl, Sal DiFonzo, Philip E. Warner. (2013). Incentive Compensation Effectiveness Study. US: FMI Corporation.
Rao, S. R. (2008, June 01). Merits of companywide incentive plan. Retrieved March 30, 2014, from www.citeman.com: http://www.citeman.com/3350-merits-of-companywide-incentive-plan.html
rms. (2013, January 29). Explain the various Group Incentive Wage Plans . Retrieved March 30, 2014, from Education Observer.com: http://www.educationobserver.com/forum/showthread.php?tid=13111
Sani, A. D. (2012). Strategic Human Resource Management and Organizational Performance. Business Intelligence Journal, 10.
Gabris and Giles (1983) research also supports the importance of performance incentives and its role in relieving conflict, so much more that it trumps human relations methodologies. Furthermore, it indicates that lack of performance incentives shows weak organizational objectives, behaviors, structural arrangement (Gabris & Giles, 1983). The importance of performance incentives have a dramatic influence on an organization yet it so simple that it may be dismissed.
WorldatWork. (2007). The WorldatWork handbook of compensation, benefits, & total rewards. Hoboken, NJ: John Wiley & Sons.
An incentive or reward system refers to a program designed by an organisation to reward high performance and motivate workers on an individual and group basis (Corby et al. 2009, p. 2). Rewards are useful to a company operating in a competitive market. Although used interchangeably, rewards and recognition where the former can be monetary or non-monetary but has a cost to the company, while the latter is meant to offer psychological reward, for instance, oral public recognition or end of the year award. While the company does not provide financial incentive, it provides non-financial in the form of cars for its Sales Division consultants. This improves the working condition of the employees, but it does not improve their financial stance. Wright (2004) notes that some employees are more concerned with status, for instance, an executive desk, attractive office or business card (p. 76). Such incentive make the jobs and company attractive.
The purpose of this paper is to explore the use of Merit Pay and Incentives
Cooke, EF 1999 'Control and Motivation in Sales Management through the Compensation Plan', Journal of Marketing Theory and Practice, vol. 7, no. 1, pp. 80-83.
The culture of appreciating employees for their hard work and achievements by incentives shows how the organization values their employees. Lincoln believed “Status is of great importance in all human relationships. The greatest incentive that money has, usually, is that is it a symbol of success... The resulting status is the real incentive... Money alone can be an incentive to the miser only. There must be complete honesty and understanding between the hourly worker and management if high efficiency is to be obtained”. This shows how harmoniously the labor and management have to work together to produce
A number of motivational theories explain how rewards affect the behavior of individuals and teams. Performance related pay can have a motivational effect. Employees are motivated to increase prod...
Reward strategy can be defined as a financial or non-financial reward an organization gives as a token of Favor for their labor accommodation offered to the organization. The components of a financial reward consist of simple pay, performance pay and employee benefits thus comprising of total compensation. Non-financial rewards include, holiday trips, large office, promotion, support, achievement responsibility and personal progression etc.
Incentive reward engagement offers a win-win situation for the employees and the company. Kelleher believes that incentive is a form of recognition and builds engagement through company’s and employee’s obligations towards a common goal (2014). The company has a “Growth Incentive Scheme” for the production workers. Special monetary incentives are provided should the workers achieve the monthly output target. Through the rewards, employees feel motivated towards their work and thus, contribute towards the company’s
Johnson, Sam T. "Plan your organization’s reward strategy through pay for performance dynamics: Compensation & Benefits Review 30, Number 3: (May/June 1998): 67-72
Employee compensation and reward systems have undergone a couple of paradigm shifts since inception. Reward systems were traditionally compensation based and focused on the individual or the position (Beam 1995). After a recession in the early 1980's, employers turned to performance based models in an attempt to save money while still rewarding top performers (Applebaum & Shapiro, 1992). Today, the most successful organizations are using a total reward model, a hybrid of the performance based model combined with strategic human resource management planning to create reward systems that both benefit the employee and help organizations realize their operational goals (Chen & Hsieh, 2006).
In today's complex business environment; traditional approaches like monetary incentives are not the only prime motivators. In addition to expecting financial incentives for their performance, employee's expectations are much more. Appreciation, recognition and opportunities for personal growth; must be catered for to harness maximum productivity. Furthermore in an era where change is imperative for the organisation's survival, highly motivated employees, represent flexibility and show willing to change; a vital component for the success of any organisation.
Cichelli, D. (Jul/Aug 2006) Incentives that really motivate. Sales and marketing management, 158 (6), 25.
Formalized compensation goals serve as guidelines for managers to ensure that wage and benefit policies achieve their intended pur¬pose. The more common goals of compensation policy include to reward employees’ past performance, to remain competitive in the labor market, to maintain salary equity among employees, to motivate employees’ future performance, to maintain the budget, to attract new employees, and to reduce unnecessary turnover. It is important for the organ...
Management spends a huge amount of time to design incentive systems and schemes to motivate their workers and to ensure they work in their best possible manner. Motivating workers by giving them decent pay helps in winning employees heart to make the work done efficiently, significantly and effectively. The most effective way to motivate people to work productively is through individual incentive compensation (Pfeffer, 1998). An attraction of getting more is a powerful incentive to people for high performance. While most people agree that money plays a major role in motivating people, in organizations there is a widespread belief that money may also have some undesirable effects on morale.