IntroductionBusiness leaders that are trying to drivesustained performance inevitably come face to face with this question:”Will incentive plans help?” “If we allocate these financialresources to incentives, will we build enough additional shareholder value tomerit that investment? Will performance improve?” Incentive is just like acoin, which have positive and negative sides. This article will analysis onboth sides of this argument. Analysis and discussion of key pointMost managers believe in the redemptive powerof rewards. However, in the paper “Why incentive plans cannot work?” thebelow 2 key points support an opposing view.1. Pay is not a motivator.
Studies haveshown that although too little money can irritate and demotivate, that does notmean that more money will bring about increased motivation. Studies show thatwhen people are asked to guess what matters to their coworkers or subordinates,they assume money heads the list. But put the question directly – “What doyou care about?” – And pay typically ranks only fifth or sixth.2.
Rewards rupturerelationships. The surestway to destroy cooperation is to force people to compete for rewards orrecognition or to rank them against each other. For each person who wins, there are many others who carry with them thefeeling of having lost. Furthermore, when employees compete for a limitednumber of incentives, they will most likely see each other as obstacles totheir own success. Worse still, few things threaten an organization as much asa hoard of incentive-driven individuals trying to curry favor with theincentive dispenser. Incentive is essential for business operations.
Employees’ abilities andtalents do not directly determine their value to the business. Its ability andtalent to play to a large extent depends on the level of motivation. No matterhow much technology and equipment an organization owns, it cannot be fullyutilized and will not do its utmost unless employees are motivated bymotivation. A survey found that in the absence of incentives for a person’sability to play only 20% to 30%, if fully motivated, his ability can be playedto 80% to 90%, so “the depth of management is an incentive “.
Suchplans promote exceptional behavior during a specific period. In addition, theyattract potential employees to an organization and encourage company loyalty.There are two kinds of rewards: extrinsic rewards and intrinsic rewards.Extrinsic rewards are concrete rewards that employee receive, which includebonuses, salary raise, gifts, and so on. It is more focus on the performanceand activities of the employee in order to attain a certain outcome.
On thecontrary, intrinsic rewards are tending to give personal satisfaction toindividual, which made of feedbacks, recognition and trust. It makes theemployee feel better in the organization.Within different lifecycle, the requirement of them are totally imparity.Pay is a great motivator to young generation who just get start of their careerpath. It is because their salary must cover all the expense of their dailyconsumption.
If they are planning to get married, the burden will be heavier.According to the report from Pandaily (DECEMBER 19, 2017), HUA WEI employeescan get 1 million quarterly bonus. The employees work at Huawei TelecommunicationsEquipment Company all get high wage and incredible bonus but take the cost oftheir freedom. HUA WEI employees’ average overtime working hour is 3.96hrs/day.
On the other hand, pay is not a motivator is because everyone havedifferent requires and for the elderly population, they don’t need to worryabout their income anymore so they will bias a job which is relaxed and lessstressed. It shows that young people prefer extrinsic rewards and elder peopleprefer intrinsic rewards.There are easier way to incentive employees then pay. In addition tocompany programs or incentive processes, managers have the opportunity everyday to provide incentives for employees. A simple thank you, even asking theemployee how they spent their weekend to indicate care and interest, doesn’tcost anything and goes a long way in helping employees experience positiveworkplace morale.
According to Murlis, Michael Armstrong, & Helen. (2004), rewardmanagement is concerned with the formulation and implementation of strategiesand policies that aim to reward people fairly, equitably and consistently inaccordance with their value to the organization. Rewards aim to create andefficiently operation and do have huge impact on organization development andchange. But reward and performance gap are closely linked and interact witheach other. From employees’ performance, managers can the requirement of eachworker and after that can find the way to reward.Management must considered the required performance standards andcompare these requirements to the actual performance of the team member in therole.
Employeeneeds to know exactly what is required and how well they are actually achievingit. Thereare many possible reasons why people don’t achieve the required performancestandard. Possible reasons include: personal problems at home, not fullyunderstand their role, physical conditions in the workplace, lack of jobknowledge, ineffective management or leadership structural problems within theorganization.
Company can suit the remedy to the case to reward, for example give moreannual leave, more training to workers, make workplace more comfortable,enhance management ability and adjust the operation’s structure. Incentives can be tricky for employers. Depending on what isincentivized, employers can encourage teamwork and cooperation or damage it.
Ifyou provide an individual sales incentive to sales staff, for example, youguarantee that your sales force will not work together to make sales. Alternatively,provide a team incentive and employees will follow up each other’s leads, sharebest methods, and work as a team to make sales.When you design an incentive program, make sure you are rewarding theactual behaviors that you wish to incentivize. It is so easy to emphasize thewrong behaviors—often unwittingly.Furthermore, if the pie of rewards is only so big, the granting of somepie to one individual will reduce the amount left for the rest. Incentiveprograms tend to pit one person against another in the scramble to get as muchof the “good stuff” as possible. This can lead to all kinds ofnegative repercussions as people undermine each other, even outright sabotagesometimes occurs.
Since the company will do better if there is harmony and goodteamwork, the granting of specific performance rewards works at cross purposesto corporate well-being. Alfie Kohn puts it this way, “Very few thingsthreaten an organization as much as a hoard of incentive-driven individualstrying to curry favor with the incentive dispenser.” (Kohn, 1993, p 113)So what is a manager to do? Rewarding people for good performance isimportant to keep that stream of performance going, but if it causes people doundermine each other, it is a net negative force for the organization.
I thinka good solution is to have both team and individual rewards. They do not bothhave to be monetary. One time you might give a party for a team that performedwell along with individual financial incentives for the few players who did themost to get that performance. Another time, reverse the logic and give a cashbonus to the entire team for a job well done, but couple that with socialrecognition (no cash) to the lead people on the effort.Traditionally, manufacturing companies incentivized productivity orachieving quantity targets. They found that unless they added the quality backinto the equation, they were delivering shoddy, poor quality parts—althoughlots of them.
AdvantagesBy using positive reinforcement to motivate employees, a manager maybuild a good relationship with his employee that fosters a sense of trust. In agood manager-subordinate relationship, employees may feel respected andcomfortable in their working environment. Providing rewards, both tangible andin the form of praise, can make employees happier. Happier employees oftenperform better at work.
DisadvantagesUsing negative enforcement as a form of motivation could cause employeesto become dissatisfied with their jobs. Unhappy workers typically produce lessquality work, become sluggish or fail entirely to meet deadlines. Applying toomuch motivation or offering too many rewards can also have a negative effect.Employees can become over-confident. They may feel that they are the bosses’favorite workers, even if they start to slack off on their projects or test thelimits of their working relationship with their supervisors. ConclusionIncentives provide a powerful, affirming recognition. Reward managementin business organizations is extremely important as the reward package helps toattract potential employees, assist in retaining good employees, motivateemployees, contribute to human resource and strategic business plans.
Thedirect impact a reward system can have on the organization as a whole isinfluence on performance, influence on motivation, and influence on thecorporate culture.