Explain different financial and non-financial incentives used to motivate the employees of a company?
Explain different financial and non-financial incentives used to motivate the employees of a company?
Financial incentives used to motivate employees are:
(i) Pay and allowances: For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance, house rent allowance, etc. Some organisations provide pay hikes and increments for better performance.
(ii) Bonus: It is a one time reward for high performance. Bonus may be paid in cash or kind over and above the salary.
E.g.: Performance bonus, 100% attendance bonus, festive bonus etc.
(iii) Profit sharing: It means to provide employees, a share in the profits of the enterprise. This is in addition to their wages/salaries, which motivates them to improve performance and profits in future. It is a group incentive scheme used to improve productivity and profitability.
Non-financial incentives used to motivate employees are:
(i) Status: In business terms, status means a ranking of positions in the organisation. The authority, responsibility, rewards, recognition, perquisites and prestige of job indicate the status given to a person holding a managerial position. It satisfies the psychological and social needs of an individual.
(ii) Organisational climate: Better conditions in an organisation like individual autonomy, reward orientation, consideration to employees, risk-taking, etc provide an organisation to be different from other organisations.
Positive measures taken in these aspects help to develop better organisational climate.
(iii) Career advancement opportunity: When employees are provided opportunities to grow in status and responsibility, they are satisfied and are committed to organisational goals.
Appropriate skill development programmes and sound promotion policy help employees to improve their skills and be promoted to higher levels and exhibit improved performance.
Financial incentives used to motivate employees are:
(i) Pay and allowances: For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance, house rent allowance, etc. Some organisations provide pay hikes and increments for better performance.
(ii) Bonus: It is a one time reward for high performance. Bonus may be paid in cash or kind over and above the salary.
E.g.: Performance bonus, 100% attendance bonus, festive bonus etc.
(iii) Profit sharing: It means to provide employees, a share in the profits of the enterprise. This is in addition to their wages/salaries, which motivates them to improve performance and profits in future. It is a group incentive scheme used to improve productivity and profitability.
Non-financial incentives used to motivate employees are:
(i) Status: In business terms, status means a ranking of positions in the organisation. The authority, responsibility, rewards, recognition, perquisites and prestige of job indicate the status given to a person holding a managerial position. It satisfies the psychological and social needs of an individual.
(ii) Organisational climate: Better conditions in an organisation like individual autonomy, reward orientation, consideration to employees, risk-taking, etc provide an organisation to be different from other organisations.
Positive measures taken in these aspects help to develop better organisational climate.
(iii) Career advancement opportunity: When employees are provided opportunities to grow in status and responsibility, they are satisfied and are committed to organisational goals.
Appropriate skill development programmes and sound promotion policy help employees to improve their skills and be promoted to higher levels and exhibit improved performance.
