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The use of incentives and rewards

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It is crucial for individuals and for the different units, which constitute an organization to be wholly committed to the execution of company strategy and the achievement of set performance objectives.  Managers essentially utilize various motivational strategies and reward systems to ensure commitment to the execution of strategic objectives.  Individuals in managerial positions are required to do more than communicate how important the set targets are to the organization’s survival.  Irrespective of how motivational and inspirational it is.  Verbal communication alone rarely suffices as a motivational tool.  In order to ensure employees are continuously energized, and committed, the management levels of an organization must design effective motivational incentives and implement them in a manner, which ensures maximum returns (Noe 2006).  These incentives can be monetary and nonmonetary benefits for the attainment of certain targets (Thompson et al 2010).  The more a manager comprehends the various motivational factors that influence employee performance, the more he or she is able to use motivational policies and strategies to influence.  A greater attention of incentives will also enhance employee commitment to daily routine and achievement of long-term performance goals.  It is generally true that financial incentives are the most effective strategy for ensuring general employee commitment execution of strategy, and high quality performance.

Monetary rewards typically involve a combination of salary increments, profit sharing schemes, performance bonuses, and contributions from the company to employee retirement.  Successful companies are also observed to use non-monetary strategies such as frequent words of appraisal, special recognition at professional meetings, increased or diminished independence, increased job security, opportunities for promotion, or the risk of losing employment or being transferred to a job with no opportunities for promotion or salary increment.  Corporate institutions also make use of other motivational strategies to stimulate high performance; they achieve this by creating attractive stimulants or minor benefits.  These may take the form of full health insurance covers, full compensation to employees for tuition on postgraduate degrees and paid vacations among others.

 Corporate reward and incentive programs require a significant amount of investment, a fact that has led many to question their efficacy.  Recent studies have shown that reward and incentive schemes have the potential to increase employee performances by 25 to about 45 percent; however, this effect can only be achieved if they are implemented in a way, which accounts for all aspects of human motivation and performance (STOLOVICH, 2010).

The research also revealed that many organizations lacked sufficient knowledge or initiative to design efficient programs capable of providing sufficient benefit.  Meta analysis and surveys provided remarkable evidence for the suitability of incentives and rewards as motivational tools to ensure organizational success.  The study proved previous observations that incentive programs improved performance.  In the situations where they were chosen, monitored, and implemented correctly with tangible or monetary rewards, the study showed an average increase of 22 percent in performance.  the study revealed that incentive programs that were kept running for more than one year yielded an increase of 44 percent in performance, while strategies which ran for half a year or less produced  30 percent increase in performance.  This shows that long-term performance produces greater results than short-term goals.  In addition, the study revealed that incentive programs, which were well structured, were crucial to an organization’s ability to attract and keep highly skilled employees (Mellahi, 2010).

All these findings point to the conclusion that effective motivation through incentive and reward programs is the most successful strategy for improving employee performance.

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