The Effect of Monetary Incentives to the Employees Performance.

Monetary rewards are the incentives which involve direct money to the employee. As
suggested, it is a way of motivating and improving the performance and productivity
of a person. Monetary incentives are given to the employees who are extremely
performing or extremely talented. But, How can we assure the effeciency of the
employees? Does the employees delay their work? or speed it up? Emperical
evidences, However, indicates that monetary incentives have widely varying effects
on effort and oftentimes do not improve performance. According to Admin(2017),
Monetary Reward can work as negative force to the organization because the people
of their organization who are getting monetary rewards only concentrates on money
by leaving the morality which eventually result to a bad performance of the
organization.

People work so as to satisfy their requirements and these requirements may be met
by monetary rewards. Monetary rewards are refund in cash and in form of money for a
given work done by workers in the company. Workers would go any level to enhance
their cash income as they will do something to avoid their source of income from
being removed. The fact that workers fear to lose their jobs, cash has been a very
efficient motivator only because money is necessary for continued existence in an
economy. Monetary reward in modern society is the most transferable means of
satisfying fundamental requirements because it is one of the practical needs of
human being. Agency theory (as cited in S.E. Bonner, G.B. Sprinkle, 2002, p. 308)
articulated that Individual are fully rational and have well-defined preference
that Presumed to be motivated solely by self interest Which contains: wealth and
leisure. Therefore they will focus on their work if it will contribute to their own
economic benefit.

The effort-to-performance expectation is sturdily persuaded by the performance

assessment which is frequently part of the reward system. A worker is probable to
use extra effort if he or she understands that performance will be assessed,
appraised, and rewarded. The expectancy of performance-to-outcome is influenced by
the level to which the worker thinks that performance will be followed by rewards.
Vroom, V.(1964) mentioned that expectancy theory propose that people act to
maximise expected satisfaction with outcomes. Therefore, An individual motivation
and subsequent efforts likely are significantly higher when compensation is based
on performace, Due to both an increased expectancy about the effort and outcome
relationship and an increased (or at least no change) in the valence of outcome.

Reference

Admin,(2017, April 02). Difference between Monetary and Non-Monetary rewards.

Retrieved from http://topdifferences.com/difference-between-monetary-and-non-
monetary-rewards/

S.E. Bonner, G.B. Sprinkle.(2002) The effects of monetary incentives on effort and
task performance: theories, evidences and a framework for research. Retrieved from
https://msbfile03.usc.edu/digitalmeasures/sbonner/intellcont/BonnerSprinkle2001-
1.pdf

Vroom, V. (1964). Work and motivation: Expectancy Theory. New York, NY: Willes
Retrieved from https://www.yourcoach.be/en/employee-motivation-theories/vroom-
expectancy-motivation-theory.php