Posts: 247
Threads: 124
Joined: Nov 2011
Discuss briefly what financial and non-financial incentives can be provided to increase the efficiency of a worker.
Posts: 247
Threads: 124
Joined: Nov 2011
According to Earnest Ditcher "Incentive is a stimulus or a reason for producing actionâ€. Almost all of the human motivations can serve as incentive—anxiety, worries, fear, hope, prestige, money, security and so on—are all actual or potential incentives in our daily life.
An incentive plan has the following important features:
(i) An incentive plan may consist of both monetary and non-monetary results.
(ii) The timing, accuracy and frequency of incentives are the very basis of an incentive plan.
(iii) The plan should be properly communicated to the employees. Incentives may be of two types:
(1) Financial or Monetary incentives.
(2) Non-monetary or Non-financial incentives.
(1) Financial or Monetary Incentives—The underlying idea of monetary incentives is that the money is the most important motivating factor. Monetary incentives mean to give more money to workers to incite to more work. One who works more he is paid. Cash or anything in the form of wealth is known as monetary incentives. Monetary incentives can include wages, salary, commission, bonus, prize or return on investment etc.
Monetary incentives may be positive or negative. Monetary incentives are provided to increase production or to do a work in lesser time. For example bonus, prizes etc. Sometimes a worker may be abstained from doing an act and offered cash incentive for not doing the act. They are negative incentives such as prize for less absence, reimbursement of holidays, minimising wastage of time, labour, material and machines.
The importance of monetary incentives cannot be doubted. They are considered to be more important than non-financial incentives. Cash provides a sense of security in workers. By monetary incentives workers can satisfy their fundamental requirements of food, clothing and shelter, according to their will.
Non-monetary incentives—Non monetary incentives include all social and psychological attractions by which workers are incited to accomplish the best and more work. Though money is an important greed but workers do not work for only money; they take incentive to satisfy their social and psychological satisfaction. Such incentives include job security, recognition, participation in management, sincere interest in the subordinate, pride in the job, delegation of authority and responsibility, promotion, training facilities, labour welfare and social security measures; these non-monetary incentives improve the labour incentives increase interest in industries. Non-monetary incentives can be personal or collective.
