question_answer 23)

Explain different financial and non-financial incentive used to motivate employees of a company.

Answer:

Financial Incentives Financial incentives refer to incentiv which are in direct monetary form or measurable in monetary term and serve to motivate people for better performance. The financial incentives used in organisations are listed below (i) Pay and Allowances For every employee, salary is the basic monetary incentive. It includes basic pay, DA and other allowances. Salary system consists of regular increments in the pay every year and enhancement of allowances from time to time. (ii) Productivity Linked Wage Incentives Several wage incentives aim at linking payment of wages to increase in productivity at individual or group level. (iii) Profit Sharing Profit sharing is meant to provide a share to employees in the profits of the organisation. This serves to motivate the employees to improve their performance and contribute to increase in profits. (v) Co-Partnership/Stock Option Under these incentives schemes, employees are offered company shares at a set price which is lower than market price. The allotment of shares creates a peeling of ownership to the employees and makes them to contribute more for the growth of the organisation. (vi) Retirement Benefits Several retirement benefits such as provident fund, pension and gratuity provide financial security to employees after their retirement, this act as an incentive when they are in service in the organisation. (vii) Perquisites In many companies perquisites and fringe benefit are offered as car allowance, housing, medical aid, and education etc over and above the salary. These measures help to provide motivation to the employees/managers. Non-financial Incentives Incentives which help in fulfilling our psychological, emotional and social needs are known as non-financial incentives. Some of the non-financial incentives are (i) Status Status means ranking or high positions in the organisation. Whatever power position prestige an employee enjoys in the organisation are indicated by his status. Psychological, social and esteem needs of an individual are satisfied by status given to their job. (ii) Organisational Climate This indicates the characteristics which describe an organisation and distinguish one from the other Individual autonomy, reward orientation, consideration to employees etc are some of the positive features of an organisation. If manager; try and include more of these in an organisation helps to develop better organisational climate. (iii) Career Advancement Opportunity Managers should provide opportunity to employees to improve their skills and be promoted to the higher level jobs appropriate skill development programmes and sound promotion policy will help employees to achieve promotion; Promotions have always worked as tonic and encourages employee to exhibit improved performance. (iv) Job Enrichment Job enrichment is concerned with designing jot that include greater variety of work contentment, require higher level of knowledge and skill, give workers more autonomy and responsibility and provide opportunity for personal growth and meaningful work experience. (v) Employee Recognition Programmes Recognition means acknowledgement with a show of appreciation. When such appreciation is given to the work performed by employees, they feel motivated to perform/work at higher level, e.g., (a) Congratulate the employee (b) Displaying names of star performers (c) Installing awards (d) Distributing mementos (vi) Job Security Employees want their job to be secure. They want certain stability about future income and work so that they do not feel worried on these aspects and work with greater zeal. There is only one problem with this incentive i.e. when people feel that are not likely to lose their jobs, they may become relaxed. (vii) Employee participation It means involving employees in decision making of the issues related to them. In many companies, these programs are in practice in the form of joint management committees, work committees canteen committees etc. (viii) Employee Empowerment Empowerment means giving more autonomy and powers to subordinates. Empowerment makes people feel that their jobs are important. This feeling contributes positively In the use of skills and talents in the job performance.