Incentive is an act or promise for greater action. It is also
called as a stimulus to greater action. Incentives are something which
are given in addition to wagers. It means additional remuneration or
benefit to an employee in recognition of achievement or better work.
Incentives provide a spur or zeal in the employees for better
performance. It is a natural thing that nobody acts without a purpose
behind. Therefore, a hope for a reward is a powerful incentive to
motivate employees. Besides monetary incentive, there are some other
stimuli which can drive a person to better. This will include job
satisfaction, job security, job promotion, and pride for accomplishment.
Therefore, incentives really can sometimes work to accomplish the goals
of a concern. The need of incentives can be many:-
- To increase productivity,
- To drive or arouse a stimulus work,
- To enhance commitment in work performance,
- To psychologically satisfy a person which leads to job satisfaction,
- To shape the behavior or outlook of subordinate towards work,
- To inculcate zeal and enthusiasm towards work,
- To get the maximum of their capabilities so that they are exploited and utilized maximally.
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Therefore, management has to offer the following two categories of incentives to motivate employees:
- Monetary incentives- Those incentives which satisfy the
subordinates by providing them rewards in terms of rupees. Money has
been recognized as a chief source of satisfying the needs of people.
Money is also helpful to satisfy the social needs by possessing various
material items. Therefore, money not only satisfies psychological needs
but also the security and social needs. Therefore, in many factories,
various wage plans and bonus schemes are introduced to motivate and
stimulate the people to work.
- Non-monetary incentives- Besides the monetary
incentives, there are certain non-financial incentives which can satisfy
the ego and self- actualization needs of employees. The incentives
which cannot be measured in terms of money are under the category of
“Non- monetary incentives”. Whenever a manager has to satisfy the
psychological needs of the subordinates, he makes use of non-financial
incentives. Non- financial incentives can be of the following types:-
- Security of service- Job security is an incentive which
provides great motivation to employees. If his job is secured, he will
put maximum efforts to achieve the objectives of the enterprise. This
also helps since he is very far off from mental tension and he can give
his best to the enterprise.
- Praise or recognition- The praise or recognition is
another non- financial incentive which satisfies the ego needs of the
employees. Sometimes praise becomes more effective than any other
incentive. The employees will respond more to praise and try to give the
best of their abilities to a concern.
- Suggestion scheme- The organization should look forward
to taking suggestions and inviting suggestion schemes from the
subordinates. This inculcates a spirit of participation in the
employees. This can be done by publishing various articles written by
employees to improve the work environment which can be published in
various magazines of the company. This also is helpful to motivate the
employees to feel important and they can also be in search for
innovative methods which can be applied for better work methods. This
ultimately helps in growing a concern and adapting new methods of
operations.
- Job enrichment- Job enrichment is another non- monetary
incentive in which the job of a worker can be enriched. This can be done
by increasing his responsibilities, giving him an important
designation, increasing the content and nature of the work. This way
efficient worker can get challenging jobs in which they can prove their
worth. This also helps in the greatest motivation of the efficient
employees.
- Promotion opportunities- Promotion is an effective tool
to increase the spirit to work in a concern. If the employees are
provided opportunities for the advancement and growth, they feel
satisfied and contented and they become more committed to the
organization.
The above non-financial tools can be framed effectively by giving due
concentration to the role of employees. A combination of financial and
non- financial incentives help together in bringing motivation and zeal
to work in a concern.
Positive Incentives
Positive incentives are those incentives which provide a positive
assurance for fulfilling the needs and wants. Positive incentives
generally have an optimistic attitude behind and they are generally
given to satisfy the psychological requirements of employees. For
example-promotion, praise, recognition, perks and allowances, etc. It is
positive by nature.
Negative Incentives
Negative incentives are those whose purpose is to correct the
mistakes or defaults of employees. The purpose is to rectify mistakes in
order to get effective results. Negative incentive is generally
resorted to when positive incentive does not works and a psychological
set back has to be given to employees. It is negative by nature. For
example- demotion, transfer, fines, penalties.
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