Question

Explain what is meant by the term incentives, and why is it important to get incentives right.

Answer 1

In simple terms, an incentive is anything that draws and motivates a worker to work. Financial and non-financial incentives are also possible. Both forms of incentives are important in various circumstances. Financial incentives, for example, are thought to be more valuable in low-wage environments.

Non-financial incentives, on the other hand, are desirable where salary levels are high and the tax rate is progressive. However, a review of research findings suggests that the focus of employee and union demands has shifted from financial to non-financial perks.

The term "incentive" refers to a payment system in which a person's compensation is tied to his productivity. This type of payment is also known as "payment by results" (PBR). As a result, PBR stands for a system that allows for the "direct linkage of workers' earnings to a measure of their performance."

Every boss wants to know how to get his or her employees to work harder. Throwing money at the problem is a popular remedy. It may appear to be smart economics, but after speaking with an economist, he recommends that managers reassess their incentive scheme.

Many employers place too much emphasis on money as a motivator and not enough on enjoyment. They frequently underestimate how important it is for their staff to feel in charge of their own future. However, they are quite common blunders, and they usually occur because the employer has a strong desire to be in command. This is frequently counterproductive, and individuals resist it. Employers must ensure that they are completed correctly.

These incentives must be phrased correctly and supported by the appropriate signals; they are, like meetings, a form of social theatre. People need to understand why they were given the incentive and what it signifies for their overall status at work. For example, framing it incorrectly might penalize someone without stating what they are doing correctly. When negative messages are combined with something pleasant, they are considerably more likely to be noticed.

People often believe, whether or wrongly, that bonuses are utilized to reward favorites, which is a common problem with bonuses. They are probably counter-productive if they are regarded that way.

Though the interview is rich of managerial insights, they claim that the art and science of economic incentives can be applied to a wide range of scenarios, from a pain-free trip to the dentist to why students find school so boring.

Answer 2

Answer - Incentives can be defined as the something which motivate a person to perform better and give a greater amount of output. The incentive can be in monetary terms , in kind , or in the non monetary terms. These incentives play a major role in keeping the interest of the workers towards the achievement of the goals of the organisation in which they are working. These need to come from the side of the employer from time to time on a consistent basis.

It is very important to get the incentives right. The incentives delivered in the right form will act positively on the worker and the productivity will increase with the greater will and ability to work. Also it is the right of the worker to get the incentives in return of his work. Also the right incentives will help to take care of the worker on and off the job as well as of their families. Hence the incentives help the organisation to gain the support of the workers and enhance the output.