Incentive Schemes
PAPER 1
INTRODUCTION
Incentive schemes is a system that a company uses in order to recruit and retain valuable staff, reward performance and productivity and get the best out of its employees. Incentives are rewards that are given when a certain goal has achieved. On the other hand perks are benefits that are given in addition to basic salary. Both incentives and perks can be financial or non-financial and also can be given to individuals or to a group. More explicitly, financial incentive schemes may include bonuses, profit-related and share option schemes, or a commission. As another option, non-financial or indirectly financial schemes may be formal awards, vouchers, gifts, company cars or extra holidays. Perks may include occupational pensions, health benefits, loans, extra holidays, membership of social clubs or an extra training beyond skills needed for job.
USEFULNESS AND EFFECTS OF INCENTIVE SYSTEM
Incentives and perks are a very important staff motivator and should not be seen as a good payment. The benefits that a company has from an effective system of incentives are many and some of them are:
Persuasion of staff to join the business, retention of the existing staff, increase of staff motivation, morality and loyalty, boost productivity, focalization of employees on achieving targets, teamwork building and a link between individual and business performance.
All the above show that, incentive schemes are a very useful tool for leaders in any company. In order to be effective they must be design properly to the business that are going to be used and they must also be a correlation between the job and the incentive that has been chosen. They should be affordable from the company, transparent and they should increase the staff’s motivation.
Like every tool, the use of incentive schemes has its positive and negative effects. In order to check the advantages and disadvantages, this tool will be classified in financial, non-financial, individual and
INTRODUCTION
Incentive schemes is a system that a company uses in order to recruit and retain valuable staff, reward performance and productivity and get the best out of its employees. Incentives are rewards that are given when a certain goal has achieved. On the other hand perks are benefits that are given in addition to basic salary. Both incentives and perks can be financial or non-financial and also can be given to individuals or to a group. More explicitly, financial incentive schemes may include bonuses, profit-related and share option schemes, or a commission. As another option, non-financial or indirectly financial schemes may be formal awards, vouchers, gifts, company cars or extra holidays. Perks may include occupational pensions, health benefits, loans, extra holidays, membership of social clubs or an extra training beyond skills needed for job.
USEFULNESS AND EFFECTS OF INCENTIVE SYSTEM
Incentives and perks are a very important staff motivator and should not be seen as a good payment. The benefits that a company has from an effective system of incentives are many and some of them are:
Persuasion of staff to join the business, retention of the existing staff, increase of staff motivation, morality and loyalty, boost productivity, focalization of employees on achieving targets, teamwork building and a link between individual and business performance.
All the above show that, incentive schemes are a very useful tool for leaders in any company. In order to be effective they must be design properly to the business that are going to be used and they must also be a correlation between the job and the incentive that has been chosen. They should be affordable from the company, transparent and they should increase the staff’s motivation.
Like every tool, the use of incentive schemes has its positive and negative effects. In order to check the advantages and disadvantages, this tool will be classified in financial, non-financial, individual and