Incentives – Human Resource Management

Incentives – Human Resource Management

Incentives refer to rewards given to employees in monetary on non-monetary form in order to motivate them to work more efficiently.

It is also known as payment by results (PBR) as they are paid in lieu of outstanding performance by an employee. An employee is paid an incentive in monetary or non-monetary form on the basis of his individual performance. Incentive vary for individuals at different positions in an organizations hierarchy and for different time periods and situations.


Types of Incentives 

Monetary Incentives

Non-Monetary Incentives
BonusFlexible Hours
Promotion (Increment in Pay)Job Enrichment
Financial IncentivesJob Security
Stock OptionsGood Working Conditions
Medical And Child Education BenefitsCoffee and Lunch breaks
Profit Sharing or CommissionsJobs with more Responsibility
Corporate DiscountsGifts
Insurance BenefitsAppreciation and Recognition
Contribution to Employee Provident FundPromotion(Better Status or Designation)
 Holiday Packages


Types of Incentives Schemes 


Individual Incentive Scheme – Under this scheme an Incentive is paid to employees on the basis of their individual performance. E.g. Rowan plan, Halsey plan, Straight piece work, Emerson plan etc.

Group Incentive Scheme – Under this scheme Incentives are paid to all employees on a collective basis i.e. on the basis of group performance. E.g. Priestman production plan, Towne plan, Gain-sharing plan etc.

Enterprise Incentive Scheme – Under this scheme Incentives are paid to all organizational members on the basis of organizational success over a period of time, usually one year. E.g. ESOP, Stock options, Profit-sharing plan etc.


Prerequisites of an Effective Incentive Plan 

  • Cooperation of workers must be obtained beforehand
  • Performance evaluation must be done scientifically
  • Realistic work standards must be set for employees
  • Employees must be motivated to give better performance than before
  • Employees must be provided with adequate resources to conduct their work effectively
  • Indirect workers like Foreman, Supervisors, Clerical, Store keepers must also form a part of an incentive scheme
  • Distribution of Incentive must be Just and Equitable
  • It must have the ability to attract and retain employees.

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