FINANCIAL AND NON-FINANCIAL INCENTIVES
INCENTIVE
A incentive is a positive motivator
that aids in the improvement of a person's performance. As a result, all of the
steps done by management to increase the performance of its personnel can be
classified as incentives. Financial and non-financial incentives are the two
types of incentives available.
OBJECTIVE OF INCENTIVES
Increase Productivity
Productivity is the Out-Put that is
obtained for a certain level of In-Put
Hence, one main objective of
incentives would be to increase the out -put obtain as in relation to the
in-puts.
ABOVE AVERAGE PERFORMANCE
Performance of people is not always
at their best always. There can be a big gap between their ability to perform
and the current level of performance. Incentives could be successfully used to
full people towards their best level of performance and there by operating at
full capacity
Moral Booster
Moral refers to the level of confidence
and the inner desire of a person to do a particular task. Incentives are
commonly use as moral booster in order to get a particular task accomplished
successfully
Control Tardiness and
Absenteeism
Tardiness refers to late coming and
or early departure from work. Absenteeism is unauthorized absence or not being
available for work having reported for work
Incentives could be successfully
used to control both the above
Retention of Competent Employees
Competent employees are an asset to
any organization and retaining them is a challenge for any HR-Manager. Incentives
are one way of recognizing above average performances, so employee will feel
that their efforts are recognized by the organization
Create job Satisfaction
Incentives always provide a sense
of Achievement and Recognition, which is very important for a particular job to
be satisfying for an employee
Reduces Grievances
Grievance is a real or imagined anxiety
on the part of an employee, affecting his or her normal performance. Incentives
if successfully used could reduce the occurrence of grievance
TYPE OF INCENTIVES
1.
Financial Incentives
2.
Non Financial Incentives
Source
:toppr(2020)
FINANCIAL INCENTIVES
Financial incentives are also
called monitory incentives. Financial incentives are considered are the most traditional
and the most common form of incentives.
Any incentive which is in the from
of cash or wealth is known as financial or monitory incentives. In other word
any incentive that could be measured with money is considered a financial or
monitory incentive.
1. Target
Incentives
2. Commotion
on sales
3. Bonus
4. Overtime
payment
5. Differentiated
piece ate
ADVANTAGE OF FINANCIAL INCENTIVES
1. People
are generally motivated for money
2. Cash
provides a sense of security in employees
3. Financial
incentive could be measured with money; hence it becomes much mor tangible than
non-financial incentives
Monitory or financial incentives
are based on the assumption that money is the most important motivating factor,
which may not always be correct.
NON FINANCIAL INCENTIVES
Non financial Incentives are also
called non monitory incentives. Non-Financial incentives relate to social and
psychological needs of the employee.
Thought money is an important need,
employee do not work for only money. There are many incentives that satisfy
many social and psychological needs of employees Non- Monetary incentives
include all social and psychological attractions by which employees are incited
to accomplish the best and more work
Non – Financial Incentives
·
Rewards and Recognition
·
Promotions
·
Enhanced responsibility and challenge
·
Status and Ranking
·
Training
·
Appreciation and Praise
·
Freedom for Decision Making
Advantage of Non-Financial incentives
It satisfies social and
psychological needs of employees
Financial incentives when used
continuously for long duration; looses its attractiveness as employee get use
to it. But non-financial incentives remains more effectives as it’s speaks to
the heart of employees.
All employees are not motivated by
money
More useful in the achievement of
long term goals of the organization through people development
Reference
Toppr (2020)Directing incentives. Toppr
[online]Available at https://www.toppr.com/guides/business-studies/directing/incentives/
Accessed on May 26, 2021
Great article.. worth to read.learn lot of things from that article and recommend to all the people who manage to lead a people in their companies
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI have just finished reading the article you wrote on May about financial and non-financial incentives . I want to tell you how much I appreciated your clearly written and thought-provoking article
ReplyDeleteThank you
DeleteIncentives always provide a sense of Achievement and Recognition
ReplyDeleteIt is a very powerful motivation mechanism. Thanks for the comment.
DeleteIn this pandemic era does it easy to manage non financial incentive? I think its challenging
ReplyDeleteYes. it is a challenge. Then need to come up with new strategies.
DeleteThis comment has been removed by the author.
ReplyDeleteFinancial incentive & non financial incentive will motivate people. This will increase the productivity of the organization
ReplyDeleteAgree and thank you
DeleteAs same as the financial and non financial incentives are motivates the employee
ReplyDeleteThanks for the comment
DeleteIn the contemporary world of business, the focus is shifted to the use from financial benefits to non-financial incentives.
ReplyDeleteBut financial incentives are very impressive. Everyone may not be motivated by non financial incentives. Thanks for your idea.
DeleteThough non-financial increment is intangible, it plays a bigger role by motivating and satisfying people.
ReplyDeleteYes. But not always, I think. Thanks for your idea
DeleteBoth incentives and incentives are important to increase people's performance.
ReplyDeleteAgree
DeleteAs a public servant, the knowledge gained from this will help me to develop my professional productivity.
ReplyDeleteMt pleasure. Thanks for the comment.
DeleteIncentives are a terrific method to keep your staff motivated to accomplish their jobs to their full potential. They have something to work towards when you give them something they can obtain if they hit a specific objective or accomplish something.
ReplyDeleteAgree with your idea. It increases the competitive behavior of employees
DeleteEmployee management refers to the endeavor to assist employees in doing their best job each day in order to meet the organization's wider goals. Employee management encompasses a wide range of jobs and responsibilities.
ReplyDeleteThank you
DeleteIncentives could be successfully used to full people towards their best level of performance and there by operating at full capacity " cited from above and highly agree with your idea !
ReplyDeleteThanks for your comment
DeleteHow do you manage your employees?
ReplyDeleteManaging employees effectively
DeleteOpen the channels of communication. Your team should be able to talk to you.
Create a supportive environment. A feeling of camaraderie and the notion that you're all in it together creates a sense of security for employees.
Take an interest.
Encourage growth.
Say what you think.
What is the purpose of employee management system?
ReplyDeleteEmployee management systems are useful for running a smooth organization, especially organizations of scale. It assists HR personnel to keep track of employee information such as salary details, medical information, attendance/leave records, overall performance and more.
DeleteWhat is effective employee management?
ReplyDeleteEffective employee management often hinges on individual managers and their ability to motivate, communicate, and build trust with their reports. The best managers act as coaches for their employees, recognizing the great work they're doing now while challenging them to improve.
DeleteMotivated employees can do many things. Good job!
ReplyDeleteAgree with your idea. Thanks for your feedback
Delete