Incentives refer to rewards given to employees in monetary on non-monetary form in order to motivate them to work more efficiently.
It is also known as payment by results (PBR) as they are paid in lieu of outstanding performance by an employee. An employee is paid an incentive in monetary or non-monetary form on the basis of his individual performance. Incentive vary for individuals at different positions in an organizations hierarchy and for different time periods and situations.
Types of Incentives
Monetary IncentivesNon-Monetary IncentivesBonusFlexible HoursPromotion (Increment in Pay)Job EnrichmentFinancial IncentivesJob SecurityStock OptionsGood Working ConditionsMedical And Child Education BenefitsCoffee and Lunch breaksProfit Sharing or CommissionsJobs with more ResponsibilityCorporate DiscountsGiftsInsurance BenefitsAppreciation and RecognitionContribution to Employee Provident FundPromotion(Better Status or Designation) Holiday Packages
Types of Incentives Schemes
Individual Incentive Scheme – Under this scheme an Incentive is paid to employees on the basis of their individual performance. E.g. Rowan plan, Halsey plan, Straight piece work, Emerson plan etc.
Group Incentive Scheme – Under this scheme Incentives are paid to all employees on a collective basis i.e. on the basis of group performance. E.g. Priestman production plan, Towne plan, Gain-sharing plan etc.
Enterprise Incentive Scheme – Under this scheme Incentives are paid to all organizational members on the basis of organizational success over a period of time, usually one year. E.g. ESOP, Stock options, Profit-sharing plan etc.
Prerequisites of an Effective Incentive Plan
Cooperation of workers must be obtained beforehand
Performance evaluation must be done scientifically
Realistic work standards must be set for employees
Employees must be motivated to give better performance than before
Employees must be provided with adequate resources to conduct their work effectively
Indirect workers like Foreman, Supervisors, Clerical, Store keepers must also form a part of an incentive scheme
Distribution of Incentive must be Just and Equitable
It must have the ability to attract and retain employees.
#Incentives #Typesofnonmonetaryincentives #TypesonIncentiveSchemes #PrerequisitesofaIncentivePlan #TypesofIncentives #TypesofMonetaryincentives #Monetaryincentives #IncentivesinHRM #Nonmonetaryincentives