In what ways can the individual incentive schemes enhance productivity.
CREATING A MOTIVATING WORKPLACE: REWARDS AND JOB REDESIGN Organizations use specific incentives to motivate individuals, teams, and the entire organization to achieve organizational goals such as productivity, reduced turnover, and leadership effectiveness. They can also redesign jobs to create more motivating wo rkplaces Employee Recognition: Showing People That They Matter Expectancy theory tells us that a key component of motivation is the link between performance and reward (that is, having your behaviour recognized). Employee recognition programs cover a wide spectrum of activities. They range from a spontaneous and private “thank you” on up to widely publicized formal programs in which specific types of behaviour are encouraged and the procedures for attaining recognition are clearly identified. VariablePay Programs: Improving Productivity A large body of research suggests that pay is far more motivational than some motivation theorists such as Maslow and Herzberg suggest. Consistent with this research, managers generally look at ways to manipula te pay to improve performance by considering a variety of incentive schemes. Some of these are individually based, some are team based, and some reward all members of the organization for working together toward productivity goals. The rewards used are all forms of variablepay programs . What differentiates these forms of compensation from more traditional programs is that they do not pay a person only for time on the job or seniority. Instead, a portion of an employee’s pay is based on some individual and/ more traditional baseor organizational measure of performance. Unlike pay programs, with variable pay there is no guarantee that just because you made GH¢60, 000 last year, you will make the same amount this year. Instead, earnings fluctuate annually, bas ed on performance. Under variablepay programs, individuals are not guaranteed specific annual wages, making their work experience riskier. People paid under a variablepay structure may worry about not being able to predict wages ahead of time.
However, the Conference Board study suggests that in a unionized setting, variable pay is used as an add-on to base pay, which means there is somewhat less uncertainty about wages. Those working under a variable-pay structure may also be concerned that factors out of their control might affect whether bonuses are awarded, and whether rewards are set by political processes rather than objective factors. Variable-based pay can be applied at individual, team, and company-wide levels, making it possible to link rewards to the appropriate level of performance. Below, we briefly describe some examples of incentives at these different levels of the organization. Individual-Based Incentives Piece-Rate Wages Piece-rate wages are one of the earliest forms of individual performance pay. They have long been popular as a means for compensating production employees. In a piece-rate pay plan, employees are paid a fixed sum for each unit of production completed. When an employee gets no base salary and is paid only for what he or she produces, this is a pure piece-rate plan. Many organizations use a modified piece-rate pay plan, where employees earn a base hourly wage plus a piece-rate differential. For example, a legal typist might be paid an hourly wage plus a certain rate per typed page. Or a sales associate might be paid a base salary plus commissions on sales. Such modified plans provide a basic security net, while still offering a productivity incentive. Bonuses Bonuses can be used for reasons other than improving performance. A recent study showed that 39 percent of small and medium-sized companies used bonuses as a retention strategy, so that employees would not look for jobs elsewhere. Bonuses are not free from organizational politics, and they can sometimes result in negative behaviour. When using bonuses, managers should be mindful of potential unexpected behaviours that may arise when employees try to ensure that they will receive bonuses.
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In what ways can the individual incentive schemes enhance productivity.
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