Motivation is the work a manager performs to inspire, encourage and impel people to take required action.
Motivation refers to the driving force that initiates, directs, and sustains human behavior towards achieving a particular goal or objective. It is the internal or external factors that arouse enthusiasm and persistence in individuals to take action and achieve their desired outcomes.
Table of Content
- 1 Motivation
- 2 Theories of Motivation
- 3 McClelland’s Need for Achievement Theory
- 4 Requirements of a Sound Motivation System
- 5 Measures to Build Up High Employee Morale
- 6 Individual and Group Incentives
- 7 Objectives of Wage Incentive Schemes
- 8 Advantages of Wage Incentive Schemes
- 9 Competency and Skills-based Pay
- 10 Broad Categories of Wage Incentive Schemes
- 11 Requisites for the Success of an Incentive Plan
Theories of Motivation
There are several theories of motivation that have been developed over time to explain why people behave in certain ways and what drives them to achieve their goals. Here are some of the most influential theories of motivation:
Motivation to work is very complex. There are many internal and environmental variables that affect the motivation to work.
Behavioural scientists started to G29 search new facets of and techniques for motivation. These theories are termed as theories of motivation. The most important theories are explained below.
Mcgregor’s Theory X and Theory Y
Different styles of management have a different bearing on the motivation of workers in the organization. The style adopted by a manager in managing his subordinates is basically dependent upon his assumption about human behaviour.
Theory X is negative, traditional and autocratic style while Theory Y is positive, participatory and democratic. Thus, these labels describe contrasting set of assumptions about human nature. Douglas McGregor has classified the basic assumption regarding human nature into two parts and has designated them as ‗theory X‘, and ‗theory Y‘.
This is the traditional theory of human behaviour, which makes the following assumptions about human nature-
- Management is responsible for organizing the elements of productive enterprises money, material, equipment, people in the interest of economic ends.
- With reference to people, it is a process of directing their efforts, motivating them, controlling their actions, modifying their behaviour in order to be in conformity with the needs of the organization.
- Without this active intervention by management, people would be passive even resistant to organizational needs. Hence they must be persuaded, rewarded, punished and properly directed.
- The average human being has an inherent dislike of work and will avoid it if he can.
- He lacks ambition, dislikes responsibility and prefers to be led.
- He is inherently self-centred, indifferent to organizational needs.
- He is by nature resistant to change.
- He is gullible, not very bright.
The assumptions of theory Y, according to McGregor are as follows:-
- Work is as natural as play or rest, provided the conditions are favourable; the average human being does not inherently dislike work.
- External control and the threat of punishment are not the only means for bringing about efforts towards organizational objectives. Man can exercise self-control and self-direction in the service of objectives to which he is committed.
- Commitment to objectives is a result of the rewards associated with their achievement. People select goals for themselves if they see the possibilities of some kind of reward that may be material or even psychological.
- The average human being, under proper conditions does not shirk responsibility, but learns not only to accept responsibility but also to seek it.
- His capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organizational problems is widely, not narrowly distributed in the population.
Under conditions of modern industrial life the intellectual potentialities of people are only partially utilised. As a matter of fact, men, have unlimited potential.
Theory Y emphasises decentralisation and greater participation in decisionmaking process.
Maslow’s Need Hierarchy Theory of Motivation
According to Abraham Maslow, a U.S psychologist, man is a wanting animal. He has a variety of wants or needs. All motivated behaviour of man is directed towards the satisfaction of his needs. The theory postulated that people are motivated by multiple needs, which could be arranged in a hierarchy. Maslow offers a general theory of motivation called the ‗need hierarchy theory‘. The features of his theory are as follows-
- People have a wide range of needs, which motivate them to strive for fulfilment.
- Human needs can be definitely categorised into physical needs, safety or security needs, affiliation or social needs, esteem needs and selfactualisation needs.
- These needs can be arranged into a hierarchy. Physical needs are at the base whereas self-actualisation needs are at the apex.
- People gratify their physical needs first, when that need is satisfied, they feel the urge for the next higher-level need.
- Relative satisfaction of lower level need is necessary 10 activate the next higher-level need.
- A satisfied need does not motivate human behaviour. i.E. only triggers of activates, the urge for the next higher level of needs.
Herzberg’s Theory of Motivation
Herzberg developed a theory of motivation on the premise that human nature has two separate elements the motivators and the maintenance factors.
According to this theory of motivation, the items that determine job content are considered motivational factors e.g. achievement, recognition, responsibility, advancement and the work itself. The elements that influence the job context are the hygiene or maintenance factors.
For example company policy, salary, and inter-personal relations, working conditions, etc. They must be adequate and if they are absent or inadequate, they will create dissatisfaction.
- Hygiene Factors – Hygiene factors represent the need to avoid pain in the environment. They are not an intrinsic part of a job, but they are related to the conditions under which a job is performed. They are associated with negative feelings.
They must be viewed as preventive measures that remove.sources of dissatisfaction from the environment. Herzberg believed that hygiene factors create a zero level of motivation and if maintained at proper level, prevent negative type of motivation from occurring. Thus, hygiene factors, when absent, increase dissatisfaction with the job. When present, they help in preventing dissatisfaction but do not increase satisfaction or motivation.
Motivators – Motivators are associated with positive feelings of employees about the job. They make people satisfied with their jobs. Motivators are necessary to keep job satisfaction and job performance high. Motivational factors or satisfiers are directly related to job content itself, the individual‘s performance of it, its responsibilities and the growth and recognition obtained from it. Motivators are intrinsic to the job. Thus, when motivators are absent, it prevents both satisfaction and motivation. When, motivators are present, they lead to satisfaction and motivation. To apply the two-factor theory to the workplace, Herzberg suggests a two-step process.
- The supervisor should attempt to eliminate the hygiene factors that are found to be more basic than factors that lead lo satisfaction.
- Once they dissatisfaction has been somewhat neutralised, the supervisor may be able to motivate workers through the introduction of motivational factors.
Victor Vroom’s Expectancy Theory
Victor H Vroom developed expectancy theory. It is based on the notion that human behaviour depends on people‘s expectations concerning their ability to perform tasks and to receive desired rewards. The expectancy theory argues that the strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of the outcome to the individual. It includes three variables, which Vroom refers to as;
Valance – Valance means the strength of an individual‘s preference for a particular outcome. A valance of zero occurs when the individual is indifferent towards the outcome. The valance is negative when the individual prefers not attaining the outcome rather than attaining it.
Instrumentality – Instrumentality refers to the relationship between performance and reward. It refers to a degree to which a first level outcome (e.g. superior performance) will lead to a desired second level outcome (e.g. promotion). If people perceive that their performance is adequately rewarded, the perceived instrumentality will be positive. On the other hand, if they perceive that performance does not make any difference to their rewards, the instrumentality will be low.
Expectancy – People have expectancies about the likelihood that an action or effort on their part will lead to the intended performance. Workers will be motivated by the belief that their performance will ultimately lead to higher pay for them. Expectancy is the probability that a particular action will lead to a particular first level outcome.
To conclude, Vroom emphasises the importance of individual perceptions and assessments of organizational behaviour. The key to ―expectancy‖ theory is the ―understanding of an individual‘s goals‖ and the linkage between ―effort‖ and ―performance‖, between ―performance‖ and ―rewards‖ and between ―rewards‖ and ―individual-goal satisfaction‖. It is a contingency model, which recognises that there is no universal method of motivating people. Just because we understand what needs an employee seeks to satisfy, it does not ensure that the employee himself perceives high job performance as necessarily leading to the satisfaction of these needs.
McClelland’s Need for Achievement Theory
David C McClelland, a Harvard psychologist, has proposed that there are three major relevant motives in work-place situations. According to him, the motives are-
a. The need for achievement i.e., striving to succeed.
b. The need for affiliation i.e., warm relationships with others.
c. The need for power i.e., control over other people.
According to McClelland, every motive is acquired except striving for pleasure and avoiding pain. He proposed that people acquire these needs for achievement, power and affiliation through experiences over time. On the job, people are motivated by these needs, and the manager can learn to recognise these needs in workers and use them to motivate behaviour. McClelland used the Thematic Apperception Test (TAT) to study human needs.
The TAT process involves asking respondents to look at pictures and write stories about what they see in the pictures. The stories are then analysed to find certain themes that represent various human needs. From his research, McClelland found that achievement motive is a ―desire to perform in terms of a standard of excellence or to be successful in competitive situations‖. They (employees) seek situations where.
- They can attain personal responsibility for finding solutions to problems.
- They can receive immediate feedback information on how they are progressing towards a goal.
- They can set moderately challenging goals and
- They find accomplishing a task intrinsically satisfying.
High achievers‖ differentiate themselves from others by their desire to do things better.
Evaluation – Achievement motivated people are the backbone of any organization. As such considerable time and attention must be devoted to constructing ways of developing the achievement motive at the managerial level. Organizational climate must be conducive to high.
Requirements of a Sound Motivation System
It is very difficult for an average manager to sort through all the different motivational theories and models and know when and how to maximise their application in widely differing situations. There should be a sound system of motivation to make the workers put forth their best efforts. A sound system of motivation should have the following essential features.
- A sound motivation system should satisfy the needs and objectives of both the organization and the employees.
- Motivational system should change with the changes in the situation.
- Jobs should be designed in such a way as to provide challenge and variety.
- Managers should recruit the active co-operation of subordinates in improving the organization‘s output. Subordinates should be made to realise that they are stakeholders in the organization.
- The motivational system should satisfy the different needs of employees. It should be directly related to the efforts of the employers.
- The motivational system should be simple so that it is easily understood by
Methods of Motivating People
Several factors influence human behaviour. There are numerous drives and needs, which can act as good motivators moving people to work and getting things done through them as per the plan. People respond to physiological needs, social needs and egoistic needs. Human needs and desires are the doorways through which the manager channelizes his motivation efforts. There are three types of motivational programmes to improve a person‘s behaviour towards his job. These are pay incentive plans, job designing, goal setting, job enrichment and management by objectives.
Factors Determining Response to Motivation
There are four important factors governing employee response to the measures of motivation.
- The intensity or urge of the drive.
- Past Experience:- can he rely upon the promises made by the boss.
- Amount of Reward:-The quantity and quality of the reward can influence the amount of extra effort put forth by the employee.
- Time Relationship of Response to Reward – Long-range promises are less effective than immediate fulfillment.
Here are a few of the things you can do to provide your people with the incentive to do well.
- Help them achieve more – Given the choice, most people prefer to do outstanding, rather than mediocre, work. Show them how to do that and you will spur them to greater achievement. One key to accomplishment is improving methodology rather than merely working harder.
- Give them recognition – Over and above monetary reward, what people crave is praise in some form. They need assurances that their efforts are known, valued and appreciated.
- Make their work more interesting – It‘s a fact of life- Familiarity doe‘s breed contempt. That‘s why one of the great de-motivators is plain old boredom. When people‘s work excites them, they come alive; they walk differently, they talk differently, they work differently.
- Give them additional responsibility – This doesn‘t mean simply giving them more work. It means giving them work of greater importance that requires a higher level of knowledge and skill.
- Help them grow – If any of your people have been in the same job for more than five years, something may be wrong. If they are not promotable, that means they‘ve gained no new knowledge or skills under your management.
Measures to Build Up High Employee Morale
Morale is the indicator of attitudes of employees towards their jobs, superiors and environment. According to Alexander H. Leighton ―Morale is the capacity of a group of people to pull together persistently in pursuit of a common purpose.‖ Improving employee morale is not just the duty of a manger. Employees can also take positive stand in bringing a change to the landscape of their working conditions.
Generally it is believed that high morale will lead to high productivity. However, Prof Keith Davis sates that there is not always a positive correlation between the two. According to him a manager can thrust for high productivity by using scientific management, time studies and close regulations. High production and low morale may result but it is doubtful whether this combination can last. The opposite can also occur; there can be low production with high morale.
Methods to bring out employee morale
- Right to express their feelings and giving remedial suggestions.
- Give employee the opportunities to solve the problems and take constructive actions, the strongest antidote to fear and feeling happiness.
- Establish and communicate clear short-term goals to build confidence and a sense of purpose.
- Celebrate victories and examples of excellence during difficult times; it is important especially as the employees will feel like winners.
Factors that influence employee moral
- Leadership – The actions of managers put forth a strong persuation over the morale of the workforce. Reasonable treatment; fair rewards and appreciation for good work affect morale greatly. Workers feel comfortable when they work under a compassionate gentle manager in place of one who is rigid, autocratic and dominating.
- Co-worker – Deprived approach of co-workers influences others. Working with a person who talks about the negative side of an organization all day long will make each workday an unpleasant experience for others.
- The nature of work – Boring, repetitive and dull work affects employees‘ morale unfavourably. On the other hand if an employee is asked to do something interesting and challenging his morale may be high.
- Work environment – Morale is a direct function of the conditions in the workplace. Clean, safe, comfortable and pleasant work conditions are morale boosters.
- The employees – How the employees look at him (the self-concept) also influences morale greatly.
Individual and Group Incentives
Incentive compensation, also termed as payment by result, is in actuality a managerial device for augmenting the productivity of the worker. Further, it is a method of sharing gains in productivity with workers by rewarding them financially for their increased rate of output. The payment by results scheme is directly related to an employee‘s productivity.
There are many variations of incentive wage system. The simplest method is that of paying a workman by the number of units of a product he produces. The objective of an incentive wage system is one relating wages to output, thereby stimulating greater output at lower costs. Incentive system also helps in narrowing the gap between management and workers and bringing them together with a commonality of goals and targets. Many authors have defined the term wage incentives.
In the words of Hummel and Nickerson, wage incentives – ―refers to‖ all the plans that provide extra pay for extra performance in addition to regular wages for a job‖. According to Scott, wage incentives – ―is any formal and announced programme under which the individual, a small group, a plane work force or all the employees of a firm are partially or wholly related to some measure of productivity output‖.
From the above definitions, it is clear that the incentive schemes help to increase the commitment of the employee towards the organization. The incentive wages systems are based on a standard of performance for the job.
This standard is based on an average worker‘s capacity, without causing him undue strain. Individual output over and above this is then considered for incentives, premium or bonus. Thus, wage incentive is a system of payment wherein the amount payable to the workman is linked with his output.
Objectives of Wage Incentive Schemes
- Incentive schemes help in stimulating greater output at lower costs. This will improve the profit of the firm.
- Incentive schemes help to narrow the gap between management and workers and bring them closer together with a commonality of goals and targets.
- Incentive schemes helps in securing a better utilisation of manpower.
- Incentive helps to increase the worker‘s earnings without straining the resources of the firm because higher productivity helps to pay better wages.
Advantages of Wage Incentive Schemes
Incentive schemes are regarded as beneficial to both employers and employees. They are beneficial for the employers as they reduce the need for supervision and thereby rectify the expenditure on supervision/employee monitoring. For the employees, wage incentive schemes act as rewards for good performance. Moreover, from the point of view of economic development, wage incentive helps in increasing productivity, which in turn becomes an important prerequisite of economic development. According to the National Commission on Labour, ―Under our conditions, wage incentive is the cheapest, quickest, and surest means of increasing productivity‖. The various merits of wage incentive schemes are-
- Wage incentive schemes offer to workers the prospect of earning more thereby raising their standard of living.
- Wage incentive schemes help in improving the industrial relations and discipline in the organization.
- Wage incentive schemes act as rewards for good performance. This encourages workers to come forward with new ideas and suggestions to improve productivity.
- Wage incentive schemes are based on a standard of performance for the job. The standard is usually set after making a scientific work-study. This brings about improvements in methods.
- Wage incentive schemes are beneficial as they reduce the need for supervision and thereby reduce the cost of production.
- Wage incentive schemes bring commonality of goals and targets between the management and workers. This helps in developing a feeling of mutual co-operation between the management and the workers.
Key Points in Wage Incentive Schemes
- Individual payment schemes include payment by results, piecework and bonuses, work measurement (including measured day work) and appraisal and performance related pay.
- Other individual types of scheme include market-based pay, which links pay to what is available outside the organization, and competency/skills based pay, which offers the opportunity for higher reward based on the acquisition and utilisation of additional skills and competencies.
Many sectors of employment use pay systems that contain direct links to individual performance and results. On an individual basis this may be via-
- Payment by results (PBR) e.g. bonus, piecework, commission
- Work-measured schemes and pre-determined motion time systems
- Measured day work (MDW)
- Appraisal/performance related pay
- Market-based pay
- Competency and skills based pay
Individual payment by results (PBR)
The aim of any PBR scheme is to provide a direct link between pay and output- the more effectively the worker works, the higher their pay. This direct relationship means that incentives are stronger than in other schemes. However, traditional bonus, piecework and work-measured schemes have declined in recent years, as many employers have moved to all-round performance rather than simple results/output based pay.
Many bonus schemes incorporate quality measurements or customer service indicators in the assessment to avoid the likelihood of workers cutting corners or compromising safe working methods in order to increase output. In instances where workers regulate their own output to satisfy their individual needs production can be affected and forward planning is more difficult.
Piecework, Bonus Schemes and Home Workers
Piecework is the simplest method of PBR – workers are paid at a specific rate for each ‗piece‘ of output. Pieceworkers must be paid at least the national minimum wage and there are special rules for working this out. Other individual PBR schemes include incentive bonus schemes where for instance an additional payment is paid when volume of output exceeds the established threshold, or where there is an increase in sales, which exceeds given targets.
Variable bonuses can also be paid in relation to performances achieved against pre-determined standards so that the higher the performance achieved, the greater the level of bonus generated. Home workers must also be paid at least the national minimum wage, with employers being able to demonstrate that they have worked out rates paid to home workers to ensure compliance.
Work Measured Schemes
Work measurement is often used to determine target performances and provides the basis for many PBR schemes for shop-floor workers. In these systems, a ‗standard time‘ or ‗standard output level‘ is set by rate-fixers, or by work-study, for particular tasks. Work-study calculates a basic time for a task by using laid down methods, observing workers performing the operation and taking into account their rate of working. Incentive payments are then linked to performance or to the output achieved relative to the standard, or to the time saved in performing the task.
British Standard Institution (BSI) formulas are frequently used to calculate the incentive payment. When the organization is considering the relationship of performance to reward there will generally be a starting point from which additional pay is attracted – performance at or below the starting point attracts no additional payment, but performance above the starting point attracts additional payment at a proportion of the basic wage or bonus calculator. Most schemes are ‗straight proportional‘, which allow the reward to rise in direct proportion to the rise in performance.
But the schemes should include provisions covering the effects of downtime or other non-productive time on pay. Arrangements need to be in place to accommodate changes in product, material, specifications and methods – remeasurement of the job may be necessary. Work-measured schemes may be appropriate in organizations that work on short-cycle repetitive work, where changes in methods are infrequent, where shop-floor hold ups or downtime are rare and where management should be capable of successfully managing the scheme to increase productivity.
Measured Day Work
Measured day work (MDW) is a hybrid between individual PBR and a basic wage rate scheme. Pay is fixed and does not fluctuate in the short term providing that the agreed level of performance is maintained. MDW systems require performance standards to be set through some form of work measurement and undergo revisions as necessary. Motivation comes from good supervision, goal setting and fair monitoring of the worker‘s performance.
Appraisal/performance related pay is generally used to link progression through a pay band to an assessment of an individual‘s work performance during a particular reference period, often a year. Alternatively, the reward may be an additional sum of money paid in the form of a bonus. Linking pay to appraisal can also have the disadvantage of turning the appraisal into a backward looking event where assessments are made and where workers may become defensive, as opposed to using the appraisal to look forward and agree new objectives, discuss development and any training needs. Managers need to be trained to operate individual performance related pay schemes and should be aware that team-working may be adversely affected – such schemes may prove divisive as workers seek their own performance.improvements without consideration of any effect on the work-team and perhaps withhold help and information from co-workers.
Market-based pay links salary levels, and progression through the scales, to those available in the market. It is rarely used as a scheme in isolation, but may be part of a reward strategy incorporating several performance elements.
Competency and Skills-based Pay
Competency and skills-based pay schemes have increased in popularity in recent years. A direct link is created between the acquisition, improvement and effective use of skills and competencies and the individual‘s pay. Competency and skills-based schemes measure inputs, i.e. what the individual is bringing to the job, unlike traditional performance based schemes, which measure outputs.It goes along with the increasing tendency for pay to be linked to the abilities of the individual rather than a single set rate for the job. Skills-based pay also rests on workers gaining new and improved skills – often in a manufacturing environment. Reward is given for skills that can be used in other jobs in the same job band, encouraging multi-skilling and increased flexibility.
Competency and Skills-based Pay
Despite the various merits of wage incentive schemes, several studies on the subject show that incentive schemes have a dubious value for increase in output. The belief underlying wage incentive schemes is that an offer of additional money will motivate workers to work harder and more skilfully which will result in an increased rate of output but it has been found to be incorrect. Even where an incentive scheme yields an increased output, it may generate tensions among the different parts of an organization. The various demerits of wage incentive schemes are-
- Some workers are more productive than the others. This helps them to earn more. When the earning capacity among workers differs, it results in jealousy among them.
- Workers tend to sacrifice quality for the sake of quantity. This results in the production of sub-standard goods.
- In order to produce more, this may result in injury to workers and breakdown of machinery.
- Workers tend to overwork and these results in undermining their health.
- Workers very often ask for compensation whenever production flow is disrupted due to fault of management.
- Even where an incentive scheme yields an increased output, it may generate tensions among the different parts of an organization. Such tensions often create difficult managerial problems, which may eventually affect output.
Broad Categories of Wage Incentive Schemes
A wide variety of incentive wage plans has been devised by industries under which the workers‘ earnings are related directly to some measurement of work done either by himself or by his group. There are three broad categories of incentive schemes as classified by Dunn and Rachel. They are Simple incentive plan, Sharing incentive wage plan and Group incentive plan.
Simple incentive plan
The simplest of all wage incentives may be described as the straight piecerate system. The piecework method is perhaps one of the oldest and simplest of the incentive plans. The basis of computation is the rate per piece multiplied by the number of pieces produced. For example, if the piece-rate is Rs. 2 for each unit of output, then a worker who produces 10 units in a given time, say 8 hours, will be paidRs.20. Another worker whose production is 12unitsinthe given time (i.e., 8 hours) will receive Rs.24 and so on.
This method of payment is suitable if the process of production is standardised and large quantities are produced by repetition. The system is not suitable where workers by working rapidly to earn more wages are likely to lower the quality of the goods they produce.
There are a large number of plans in this category. These plans are the modifications of the Taylor‘s differential piece rate incentive plan. Under this plan, the workers exceeding the standard or even just attaining it, are entitled to the higher rate and those, whose output is less than the standard output are paid at a lower rate. Taylor‘s philosophy was to attain a high level of output and therefore, there was a differential piece rate, low rates for output below the standard and high rate for output above the standard.
Group Incentive Plan
Individual incentive scheme is not suited to cases where several workers are required to perform a single operation jointly. In such cases, a team approach is called for, with all the members of that team doing their share to achieve and maintain the output. The advantage of group incentive plans is that they encourage team spirit and a sense of mutual co-operation among workers. Under the group incentive plan, the earnings of each member of the group are determined first of all by measuring the amount of the production, which passes inspection as it leaves the group. The total earnings for the group are then determined and if all the members are of equal skill, these earnings are usually divided among them equally.
Requisites for the Success of an Incentive Plan
An incentive scheme is based on three basic assumptions–
- The belief that money is a strong motivator.
- There is a direct relationship between effort and reward and this relationship can be systematically related.
- The worker is immediately rewarded for his efforts.
Though monetary incentive plans do motivate employees, these plans will not be effective unless certain requisites are met. Several authorities on the subject have a list of requisites that monetary incentive plans should meet if the incentive method is to be attractive to the employee. These requisites are given below-
- The relations between management, supervisory staff and workers should be cordial and free from suspicion. Management must, therefore, ensure association of workers during the development and installation of the scheme.
- The incentive plan should reward employees in direct proportion to their performance. The standard set has to be attainable; necessary tools, equipment, training etc., should be provided and the employee should have adequate control over the work process.
- The incentive plan should be well understood by the employees so that they can easily calculate personal cost and personal benefit for various levels of effort put by them. Complicated plans and formulae sow seeds of doubt and distrust in the worker‘s mind.
- The incentive plan should provide rewards that shall follow quickly after the performance that justifies the reward. Employees do not like to be rewarded next month for extra effort expended today.
- The incentive plan must be within the financial and budgetary capacity of the organization. In other words, the plan should not be very costly in operation. It should be ascertained in advance that these costs (incentives) are amply covered by the resultant benefits.
- The work standard once established should be guaranteed against change. The work standard should be viewed as a contract with the employees. Management must strictly adhere to this rule. Once the plan is operational, great caution should be used before decreasing the size of the incentive in any way.
- he standard on which the plan is of be based should be reasonable, i.e. it should not be too difficult or too easy. If the standards set are too difficult, they make the employees unenthusiastic about it. If the standards set are too easy, the employees would hardly experience any competition. Thus, a fair and just standard is the key to any incentive plan.
- The reward must be valuable to the employees. The incentive payments under the plan should be large enough in relation to the existing income of employees.
- The incentive plans must encourage employees to support each other instead of being non-cooperative.
- The plan should not be detrimental to the health and welfare of the employees. The plans should therefore include a ceiling on the maximum earnings by way of incentives.
- cIndividuals or group‘s contributions and efforts must be clearly identifiable, if rewards are to be given for specific performance.
- A guaranteed base rate should be included in any plan. Employees want to be assured that they will receive a minimum wages regardless of their output. This introduces element of security for the employee.