Incentive systems Essay Example | Topics and Well Written Essays - 1500 words

Incentive systems - Essay Example An incentive system entails the use of different tools and modalities by human resource throughout the entire level of the organization. Their sole use is the promotion of improvement of results in relation to preset annual objectives associated with the organization. Incentives may be fashioned in four distinct modes, which are material, status, purposive or solidarity. As such, it is consequently self evident that it is in the best interest of organizations to design and implement incentives systems to operate within their structure. There exist several objectives which incentive systems can be designed to achieve. However, this paper will only outline three objectives, which can be considered basic, in relation to the organization. Evaluation Above all else, the primary purpose that incentives are tasked with is rewarding efficiency of an employee. As such, this objective should take the top priority when designing an incentive system. It has been noted that in situations whereby the efficiency of employees is not recognized and subsequently rewarded, the morale of these employees frequently experiences a reduction (KRESSLER 2003, p. 21). This overall effect is to the detriment of the organization as a whole. Rewarding efficiency is an important mechanism of maintaining and subsequently raising the levels of motivation of the workers. Organizations strive to employ skilled labor so as to boost the quality and quantity of their output. However, these employees have thousands of opportunities, aside from their position at the firm, that are available for them. Thus, recognizing their performance is highly instrumental in maintaining their service in the organization. This should be regarded with utmost importance as it has been note that the performance o an organization is directly correlated with the quality of performance of its human resource. Aside from building business in the present situation, treating the human resource as assets to the organization f urther ensures that the organization will also be viable, with respect to the market, in the future. Recognizing and rewarding efficiency enables the management and employees to work in tandem, resulting into the development of a talented and dedicate workforce, which is focused in achieving organization goals. Aside from raising the motivation levels, rewarding employee efficiency leads to a direct reduction in the rate of attrition. The top management is tasked with, among other responsibilities, planning how to achieve preset goals. However, it is the work force that executes these plans. In the absence of a talented, motivated and dedicated workforce. There are two means that can be employed in rewarding the efficiency of an employee, these are monetary and non-monetary. Monetary rewards can range from a raise in wages to monetary allowances amongst other forms. While non-monetary rewards can range from trophies, certificates to letters of appreciation. When these two mechanisms are combined, in an effort to reward employees, there would be an improved drive to quality performance by employees. The second basic objective of incentive systems entails the reduction of production cost. This is in regards to the cost of producing a single unit of output. The primary goal of all businesses is to minimize total costs and maximize on profits. This enables the firm to be able to maintain its relevance in the industry of operation. It is for this