Offering monetary or non monetary incentive programs has become mandatory in every organization. Incentive can be better explained as reward promised in fulfillment of a certain task or for over achieving a given goal (Sullivan, Jim. 2000, August).
Importance of Incentive
Incentives keep employees motivated. It gives them a feeling of appreciation. They feel the work that they do is well recognized and adds value to the organization. A good incentive plan for middle management can be highly profitable for many reasons. Being a center point between the lower and higher management they are easily approachable. Their leadership quality keeps a balance between higher management’s suggestions and lower staff’s demands. Finding and retaining such competent managers can be very difficult.
Incentive plans always results in extra performance and guidance quality to manage subordinate. It boosts up a manager’s moral that he spends adding significance to the place he is working with his expertise. It is also a way of expressing a company’s concern for their workers. A provoked manager always generates leads and improves quality and productivity of his job description.
Good incentives keep employees motivated to the organization. A qualitative incentive plan decreases employee turn over to a great extend and the fine word of mouth from employees also increases goodwill of the company.
Short Term Incentives
Short term incentives are an addition to the base pay given to employees in the current year. Short term incentive plans are based on performance made in the current fiscal year, ability of a manager to get work done in a team and initiations and innovations made by team are a few ways to judge them.
Bonus still is the most commonly used incentive plan by many companies. When a firm makes profit all the employees and shareholders are made a part of it. They are mostly disbursed at time of some occasional celebration like Christmas or Easter in form of additional pay check.
Pay for performance
This type of incentive is very common in sales related job. An employee is given extra money when he achieves his sales target. That keeps an employee aggravated and he is constantly thriving to meet his target to attain that reward.
Over time pay
A manager being more of a supervisor at times stays late hours to get the work done. This prolong working hours can be compensated through overtime pay. This strategy will keep a manager motivated and attached to his work.
A manager should also be given the facility of paid leaves. If he is sick or has some family gathering to attend the organization must be flexible enough to let him avail this advantage. This may include maternity leave, casual leaves or sick leaves.
This serves like a magnate in sales oriented companies. A manager upon motivating his team to attain a certain goal can be rewarded in many ways. Giving him a paid holiday trip is the most attracting of all the incentives.
A company can also allot its managerial level staff with parking space. This will make their drive to work very convenient.
Flexible working hours
Companies should provide their managerial staff with flexible working hours. Managers performing a supervisory role should not be scrutinized over working hours. As long as they meet their goals they should be given their required space.
Physical working environment
No one would prefer working at a place that does not have good computer system or broken tables or for that matter shabby chair. Management should keep the working place spick and span. It should have latest systems to work on and a pleasant surrounding to keep the interest level developed.
Long Term Incentives
Long term incentives are a form of reward for managerial and executive level employees to stimulate their long term performance by offering them company’s share price. Through this incentive managerial staff takes higher risks with firm’s asset leading them to earn a higher profit. This way they take ownership of the company as they are one of the shareholders and equal partners in profit and loss. They can be divided in cash based and equity based incentive plans (Capclaw, n.d.).
This incentive plan is based on three to five years performance duration and calculated as a multiple of base salary. Every company has its own criteria of measuring managerial performances. They could have their own policies reflecting on long term growth and contribution.
This type of incentive plan facilitates a manager to take active part in business’s future strategy making. This is done through offering them business property options like stock or share plans. Through stock ownership they legally become a stakeholder of the company’s future and profitability or loss. Upon exceptional performance the managerial staff can be granted with contingent shares without any personal investments.
Many companies offer their staff with old age benefits like pension. It is a very thoughtful way of appreciating all the efforts made by the staff in nurturing the company.
Incentive plans are imperative in preserving professional managerial staffs. In this competitive world where all the companies are matching up with financial packages being offered, a good incentive plan can help recruit a skilled and experienced visionary.
Capclaw. Long Term Incentive Pay. Accessed on March 17, 2009.
Sullivan, Jim. 2000, August 21. Recognize the importance of incentives and rewarding employees. Accessed on March 16, 2009.