How to utilize incentives and rewards

The various organizational units, as well as individuals, must be totally committed to executing the business plan and reaching the established performance targets. managers use a variety of reward systems and motivational techniques to assure commitment to the accomplishment of strategic goals. More than just communicating how crucial the goals are to the organization's survival is expected of those in managerial positions. Regardless of how uplifting and encouraging it is. As a motivational technique, verbal communication is rarely sufficient on its own. To keep workers engaged and energetic all the time, the management team of a business must create powerful 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.

References

Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2014). Constructing and executing strategy the quest for competitive advantage; concepts and cases. New York, NY: McGraw-Hill/Irwin.

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2006). Human resource management: Gaining a competitive advantage.

HAROLD STOLOVICH. (2010). Incentives, Motivation, and Workplace Performance: Research and Best Practices. The Incentive Research Foundation (IRF)

Mellahi, K., & Collings, D. G. (2010). The barriers to effective global talent management: The example of corporate elites in MNEs. Journal of World Business, 45(2), 143-149.