INCENTIVES
TABLE OF CONTENTS
LIST OF TABLES
TABLE 1 5
TABLE 2 6
LIST OF FIGURES
FIGURE 1 3
FIGURE 2 8
1. INTRODUCTION 1
2. LITERARY REVIEW 2
3. PRACTICES IN ORGANISATIONS 7
3.1 FLEXTIME 7
3.3 FEEDBACK 8
1
3.7 AUTONOMY 12
4. CASE STUDIES 14
5. CONCLUSION 17
6. REFERENCES 18
2
1. INTRODUCTION
The term “motivation” was originally derived from the Latin word movre,
which means “to move”. But this one word is insufficient to describe the processes
with how human behaviour is activated. Given below are some representative
definitions of motivation…..
• The contemporary (immediate) influence on the direction, vigour, and
persistence of action (Atkinson, 1964)
• It deals with how behaviour gets started, is energized, is sustained, is directed,
is stopped, and what kind of subjective reaction is present in the organism
while all this is going on (Jones, 1955)
• A process governing choice made by persons or lower organisms among
alternative forms of voluntary activity (Vroom, 1964)
• Motivation has to do with a set of independent/dependent variable
relationships that explain the direction, amplitude, and persistence of an
individual’s behaviour, holding constant the effects of aptitude, skill, and
understanding of the task, and the constraints operating in the environment
(Campbell & Pritchard, 1976)
Summarising the fore mentioned definitions, Motivation is the process that
accounts for an individual’s intensity, direction, and persistence of effort toward
attaining a goal. Thus from the various definitions it can be seen that primary
concerns while discussing motivation are what energises, channelises, and sustains
human behaviour. By definition, managers are individuals who achieve goals through
other people. The saying “If you want something done right, do it yourself” is very
true as it is very difficult to find people who could do a challenging job well than to
do it yourself. But unfortunately managers can’t step in for their employees who are
not performing well. They have the unenviable task of nurturing necessary
competencies and commitment in their employees. More often the employees are
competent enough to complete a task but they don’t have the motivation to do their
job to their potential. A recent Gallup poll found that a staggering 55% of employees
in the most powerful nation were found to have no enthusiasm for their work. The
necessity to motivate the employees is inherent in the primary objective of any
organisation-increasing profit. It is an established fact that satisfied and highly
motivated employees contribute their best in the workplace. Thus the profits are
maximised. Research findings have found many ways to motivate the employees in
their workplace. Apart from deploying financial and physical resources, every
organisation must utilize its human resources effectively. Motivation enables an
organisation to do so. Employees must be attracted to remain in an organisation. They
must perform the tasks for which they have been hired must do so in a dependable
manner. They must go beyond this dependable role performance and engage in some
3
form of creative, spontaneous, and innovative behaviour at work-a set of behaviours
commonly called “extra-role behaviour.” So for all these we need motivation.
Motivation can be achieved extrinsically by monetary incentives, or through
punishments and intrinsically through non-monetary incentives. This paper discusses
the scope of non-monetary incentives in motivation of employees.
2. LITERARY REVIEW
Managers are individuals who achieve their goals through other people. They
are constantly searching for ways to motivate their employees to make them work at
their optimal level of performance to accomplish the company objective. Various
incentives are provided by the managers to their employees for motivation. The
incentives that are provided by the mangers to their employees can be broadly
classified as monetary incentives and non-monetary incentives.
4
talent and in the long run lose their creativity. Employers also may use monetary
incentives as an extrinsic rather than an intrinsic motivator. In other words, associates
are driven to do things just for the monetary reward versus doing something because it
is the right thing to do. This can disrupt or terminate good relationships between
employees because they are transformed from co-workers to competitors, which can
quickly disrupt the workplace environment. Another problem with monetary incentive
is that it is given to circumvent a bigger problem for a short run. Sales employees are
given higher monetary incentives to compensate for poor management and poor
products, employees are paid more for working in poor work environment. Monetary
incentives can even drive the employees to falsely reporting their achievements. Huge
monetary incentives given to middle mangers are seen as a hook to retain them which
may make them work counterproductively. Though the monetary incentives have a
better effect than the monetary incentives in the short run, they fail miserably in the
long run and in extreme situations downfall of the company (when employees start
anticipating monetary incentives even for routine jobs and in absence of which they
start working inefficiently or go on a strike as in the case of some government
employees). Also most of the non-monetary incentives are intrinsic in nature. Intrinsic
motivation is more effective as the impetus to work is from within. Employees are
working because they feel satisfied or fulfilled by the activity they undertake. Under
these circumstances the management can be regarded as more of a support than
control. So managers should concentrate more on non-monetary incentives after the
minimum level of monetary benefits and properly structure them according to their
employee’s preference. This will ensure high motivational level of the employees
which will get reflected in their better performance at work.
5
Feedback
Achievers
Responsibility Moderate risks
• Goal-Setting theory
This theory supports the idea that specific and difficult goals with feedback
lead to higher motivation and performance.
• Reinforcement theory
This theory states that the behaviour is a function of its consequences. If
employees feel that their efforts are duly rewarded then they will work in a
more effective manner for the organisation.
• Equity theory
This theory states that individuals compare their job inputs and outcomes with
those of others and then respond to eliminate any inequities. If their colleagues
are given recognition employees will work towards achieving those rewards.
This motivates them to perform them to work better which beneficial to the
organisation.
• Expectancy theory
The strength of a tendency to act in a certain way depends on the strength of
an expectation that the act will be followed by a outcome and on the
attractiveness of that outcome to the individual. Thus when expectations from
a employee increases the employee responds with better performance.
From the above theories (however different they may be) it is clear that intrinsic
motivation is desired by the employees.
6
Self management
In employee’s perspective self-management is choosing activities, monitoring
competence, committing to purpose and monitoring progress. The intrinsic motivation
that energises the work comes directly from the four management events namely
activities, purpose, opportunities and rewards. From these four events the employees
make a judgement –of the meaningfulness of the task purpose, the degree of choice
available in selecting activities, the competence with which the activities are
performed, and the amount of progress being made to the task purpose. The
judgements from self-management lead to intrinsic rewards which in turn provide the
energy for self- management which completes the cycle.
OPPORTUNITY ACCOMPLISHMENT
Rewards Rewards
Table 1: Intrinsic
rewards of self-
management
• Sense of meaningfulness
It is the opportunity that makes the employees feel that they are on a path that
is worth the energy and time-that they are on a valuable mission that matters in
the larger scheme of things.
• Sense of choice
It is the opportunity that the employees feel to select task activities that make
sense to them and to perform them in ways that seem appropriate to them. The
feeling of choice is the feeling of being free to choose-of being able to use
their judgement and act out of their own understanding of task
• Sense of competence
It is the accomplishment that employees feel in skilfully performing task
activities that have been chosen by them. The feeling of competence involves
the sense that they are doing good, high-quality work on a task.
• Sense of progress
7
It is the accomplishment felt in achieving the task purpose. The feeling of
progress involves the sense that the task is moving forward, and their activities
are really accomplishing something.
Attentive Employers
Autonomy
Thus it is obvious that the demands of the current generation of employees are
ever increasing and in current scenario where there is low loyalty to the companies,
high attrition rate these demands have to be met reasonably well to attract prospective
employees who can perform really well and to retain the employees.
8
3. PRACTICES IN ORGANISATIONS
and others.
3.1 Flextime
Flextime refers to several arrangements that allow the employee to work a
non-traditional schedule. The employee and the manager agree in advance on the
hours of work. Flextime is a popular option for good reason--it lends balance to busy
lives. Fortunately, flextime also benefits the manager too. Allowing employees to
work schedules that best suit their lives results in more productive workers. The most
common flextime arrangements include:
Compressed workweek
This arrangement allows the employees to work a full, 40-hour schedule in 4
days by extending the hours they work each day. The compressed week can also be
scheduled over 2 workweeks, during which they work 9 longer days and have the
tenth off. In any case, the compressed workweek maintains the same overall number
of hours, just divided up differently. The workload, benefits, and pay are not affected
by the arrangement.
Adjusted lunch
9
Working an adjusted lunch schedule doesn’t actually allow any additional
days off. Instead, he employees can take a longer lunch each day, making up the hours
at the beginning or end of the day. For example, he manager may allow the employee
to take your lunch from 11-1 so that the latter can run errands, go to a doctor’s
appointment, or work out, but in exchange the employee works that additional hour at
the beginning or end of your day. This sort of arrangement may be an unofficial
privilege of every worker, especially if it’s used only occasionally.
Core hours
Next to the compressed workweek, this is the most popular scheduling
strategy because of the flexibility it offers. With this schedule, an employee can work
certain hours every day, and as long as the schedule is built around the work time
specified. For instance, if the core hours are 10-3, the employee must work 10-3 every
day, but the starting and ending times can vary. The employee may choose to work
10-6, or 7-3, or any other combination as long as those core hours are covered. If the
employee maintains the same total number of hours, your workload, benefits, and pay
remain the same.
10
3.3 Feedback
People don’t quit organisations, they quit bosses. This can be extended to
colleagues too. Improper communication, negative relationship, backbiting etc can
lead to inefficiency and counter productivity. To overcome this, organisations are
adopting feedback culture. It is the culture wherein all the employees are taught the
skills of effectively receiving and giving feedback which is the degree to which
carrying out the work activities required by the job results in the employee obtaining
direct and clear information about the effectiveness in their job performance. This
includes telling each other frankly, honestly and effectively what they think about
their behaviour, job performance, ideas etc. Employees prefer being told what others
think about them directly instead of in the round about way and they like being given
feedback to self evaluate their performance. They also would like to frankly tell their
bosses the various problems and issues faced by them. Feedback is of two types
positive and negative. Positive feedback improves the morale of the receiver and
negative feedback improves the performance of the receiver. Poor feedback can
reduce morale, the ability to do the job, confidence of employees and can even lead to
conflicts between the management and the employees. Hence great care has to be
taken while giving and receiving feedback. So when both the managers and the
employees acquire these skills of giving and receiving feedback the feedback culture
works out well for the company. The following factors are to be considered while
giving feedback:
• Take responsibility
The manager/employee should take the initiative of giving feedback rather
than putting the blame on others saying that it is not their job. Most often it is
due to lack of skills and unwillingness to give feedback. Employees should
also be encouraged to take responsibility as there is lot of emphasis on
teamwork and empowerment in present day’s organisations which are
becoming flat.
• Balanced feedback
Feedback has to be balanced and accurate. Overstating or understating results
will lead to ineffectiveness of feedback.
11
Similarly while receiving feedback the receiver has to listen attentively to all what is
said, analyse the feedback and take remedial action.
Why Do Merchandise and other Tangible Rewards Motivate Better Than Cash?
12
companies that attempt to motivate with it - is the least lasting type of reward, because
it's typically confused with other compensation and therefore forgotten. Additional
reasons to use tangible rewards rather than cash are summarized below.
Tangible Rewards
13
9. Provide a 3-to-1 return on investment compared to cash. On average, cash
programs cost 12 cents per incremental dollar netted by increased
performance, versus 4 cents per dollar for non-cash programs
10. Do not become an expected part of an employee income or an entitlement;
always seen as a reward for a particular accomplishment or performance
Based upon the fore mentioned factors it can be observed that after the minimum level
of monetary compensation, employees are more and more interested in non-monetary
incentives i.e., tangible rewards rather than the cash rewards.
3.7 Autonomy
Employees want to be able to work independently. They do not want someone
constantly watching over them and questioning their every move. They like to receive
their assignments -preferable with the time frame required for completion and then
have the independence to complete the work given the guidelines and framework you
have set on their own merits.
14
It is the periodic shifting of an employee from one task to another. This
ensures that the employee doesn’t do the same thing again and again for a
considerably long period of time.
• Job enlargement
It is the process of increasing the number and variety of tasks that an
individual performs results in jobs with more diversity. This increases the
scope of the job and makes it more interesting.
• Job enrichment
It is the vertical expansion of jobs, increasing the degree to which the worker
controls the planning, execution and evaluation of the work.
• Job sharing
It is the arrangement that allows two or more individuals to split a traditional
40-hour-a-week job. This promotes co-operation amongst the employees.
• Telecommuting
It refers to employees who do their work at home at least two days a week on
a computer that is linked to their office.
There are other ways of redesigning the job which are very similar to the points in 3.1
to 3.7.
15
4. CASE STUDIES
16
some form of competition, for example by means of benchmarking or award schemes,
was recommended. Core aspects of quality management were frequently mentioned,
in particular the establishment of a quality culture, of quality circles for participatory
problem assessment, teambuilding, supportive supervision, and feedback. A number
of good practices could be identified. For example, in Zambia, the introduction of
refresher training for medical staff seems to have led to a very high retention rate. In
Ethiopia a mix of continued medical education, the provision of housing, the
establishment of a clear career structure and a defined number of services in hospitals
has led to improved staff satisfaction and retention. An awards scheme, closer
supervision and team building efforts has improved both some service output
indicators and the motivation to stay in rural districts of Ghana, indicated by a higher
antenatal care and EPI coverage and less applications for transfers. The survey also
asked about the difficulties with the implementation of incentive schemes. The
introduction of performance payment was considered a challenge: it is difficult to
define the performance criteria and even more difficult to implement and apply those
performance criteria, given political interference and lack of good governance, such
as intransparency and corruption as well as nepotism. With respect to allowances and
financial incentives, it was mentioned that their effect on the motivation of staff was
often temporary in nature because they are soon considered as part of the general
benefit package. Although training is seen as a good motivator, the high staff turnover
quickly puts in question the sustainability of staff training. Furthermore, it is very
difficult to change old habits and long-term institutionalised norms and rules foremost
in a bureaucratic context, such as promotion schemes that are based on age rather than
merit. Some respondents mentioned the challenge to overcome cultural norms that
may sanction an outstanding individual who is willing to show initiative beyond one’s
duty.
17
was using keeping the above mentioned diversity in view. For instance, Shroeger
found that college students are more interested in building skills that they can apply
later in their career. As long as these employees saw that they were learning new
skills, they were content to keep working at UPS. So Shroeger began offering them
Saturday classes for computer skill development and career-planning discussions.
Many new UPS employees in Buffalo were intimidated by the huge warehouse in
which they had to work. To lessen that intimidation, Shroeger improved lighting
throughout the building and upgraded break rooms to make them more users friendly.
To further help new employees adjust, she turned some of her best shift supervisors
into trainers who provided specific guidance during new hires’ first week. She also
installed more personal computers on the floor, which gave new employees easier
access to training materials human resource information on UPS’s internal network.
Finally, Shroeger expanded training so supervisors had the skills to handle increased
empowerment. Recognising that her supervisors –most of them were part timers
themselves – were the ones best equipped to understand the needs of part time
employees, supervisors learned how to access difficult management situations, how to
communicate in different ways, and how to identify the different needs of different
people. Supervisors learned to demonstrate interest in their workers as individuals.
For instance they were taught to inquire about employees’ hobbies, where they went
to school, their likes.
By 2002, Shroeger’s program was showing impressive results. Her districts
attrition rate had dropped from 50 percent to 6 percent. During the first quarter of
2002,not one part timer left a night shift. Annual savings attributed to reduced
turnover, based largely on lower hiring costs, are estimated to be around
$1million.Additional benefits that the Buffalo district has gained from a more stable
work force include a 20 percent reduction in lost workdays due to work related
injuries and a drop from 4 percent to 1 percent in packages delivered on the wrong
day or the wrong time.
18
5. CONCLUSION
19
6. REFERENCES
5. http://en.wikipedia.org/wiki/Professional_development
6. http://en.wikipedia.org/wiki/Retirement _planning
7. http://www.maritzrewards.com/pdfs/site-benefits.pdf
8. http://etd.lib.metu.edu.tr/upload/12605141/index.pdf
20