Impact of Financial Incentives on Employees
Before starting this project, I would like to thank my supervisor and university for allowing me to do research on this specific topic under _____________ university. Without taking my supervisor’s supports, I am unable to complete my research work in a successful manner, so I am very thankful. Along with this, I also put my positive gesture and respect to my family members because their unconditional supports help to carry out my work. Lastly, I want to say ‘thank you’ to the selected four restaurant managers, who gave their time for my research work to correctly state the effect of financial incentives on employees’ commitment.
For motivational purposes, every organizational head has decided to give monetary rewards to their subordinates. Through this incentive program, companies can improve their effectiveness and productivity. This study tries to examine the importance of financial incentives for boosting employee confidence, organizational productivity and profitability.
Here, the scholar employed primary qualitative approach for collecting data from four managers of different restaurants. Five open-ended questions have prepared by the author for conducting interviews among four managerial personnel of restaurants.
From the interview session, it can be stated that financial incentives help employees to stay motivated, which reflects their performance. Through profit-sharing, offering bonuses, offering stocks, and increasing base pay, companies try to engage employees.
This research work revealed that financial incentives used as motivational tools for boosting employees’ performance along with organizational profitability.
Table of Contents
The Impact of financial incentives on the employees is a term having a lot of mysteries within itself. The factor of motivation is one of the very core parts behind the financial incentives. The motivation is a combination of the “Motive + Action”. The motivation is derived by a certain prospect and it is fulfilled at the very best when that prospect is fulfilled. For example, an employee is planning to go on a trip with his/her family in the coming month and he/she needs some extra money for his/her trip to Hawaii to provide his/her family with comfort. The family’s comfort level provision thought is the driving force of that particular employee and that deriving force puts the employee in a position to work hard and earn some extra money. Now when that employee works hard and gets financial incentives, which can fulfill the comfort need of that person’s family.The person will start showing more performance-oriented behavior as he/she will be motivated to work hard to achieve personal goals as well as the organizational objectives. So, to increase the engagement of employees, the employer of business provides different types of incentives to its employees. These incentives can be of different types like the flexible hours of work, paid leaves, provided with the stocks, options, and many other forms of incentives. But the main aim of this study is to find out the “impact of the financial incentives” on the employees. The type of impact can be positive and negative in nature as well; because it is not always right that the employee is in need of financial assistance for its motivation to work better. So, we are going to analyze the topic for further elaboration.
According to the views of Al-Belushi and Khan, (2017) giving financial incentives can improve the work performance of the employees because this increases the motivation for the achievement of the goals. Moreover, the level of welfare and building work motivation can be achieved with the aid of such financial incentives. The impact of the financial incentives is good in many ways for the employees as they can live a good standard of life as well as they will be satisfied with their payments against the jobs. The concept of Maslow’s hierarchy can be discussed here that a person starts with the basic needs and when these needs are fulfilled that person starts to go for a good standard of life. When the employers start to pay a good salary or the incentives against the job done by the employee. The employees get motivated and do the jobefficiently with more effort put into the job. These incentives basically fall under the umbrella of the compensation management system and are known as the performance-based compensations. According to Dessler (2014)“financial incentives are rewards or replies in the form of the functional form given to employees whose level of production exceeds predefined standards”. Another research done by Lee (2015) proves that the financial incentives have a very significant impact on the performance of the medical personnel and the incentives contribute a great deal in the motivation of the employees.As, we have discussed earlier that a person’s life starts with the basic shelter, safety, and security needs and with the passage of time salary gets better but with the help of the financial incentives as motivators their lifestyles changes, and this point is also clarified by the Basu& Kiernan (2016) where they stated that the financial incentives affect towards the healthy lifestyles changes.We have discussed in the introduction part that it is not always that the worker is going to be motivated with the help of financial incentives. There are a lot of reasons because of which an employee can get dissatisfied and the motivator may change from the financial incentive towards another factor. For example, if the employee is sitting in a space that is not comfortable enough to get him working at his/her 100%, then the compensatory reward should be the provision of a comfortable separate silo or the office. In this situation, the new office or space will be a motivating factor for him.But let’s suppose that the organization still paid him/her the financial incentive it will have the impact on the employee but the negative one as he/she will think that the organization is not understanding them and eventually their performance may get decreased. There are different studies that provide evidence on the fact that the provision of the right incentive to the person motivates that person and vice versa. Herzberg’s theory provides the two factors Motivators and hygiene factors. The motivators factors consist of achievement, recognition, work itself, responsibility, advancement, and growth. Hygiene factors consist of company policies, supervision, relationship, working conditions, remuneration, salary, and security. Thistwo-factor theory actually presents the generally accepted point of the two factors that the employees get satisfied and dissatisfied with depending on these factors. So, basically for an ideal employee, the motivators are the factors that bring satisfaction to the employee and the hygiene factors are like the factors needed importantly for the support of the employee’s motivating factors. If the proper combination of these are not present according to an employee the employee will get dissatisfied. It may be possible that some hygiene factors be the motivating factors for an employee. So, the whole concept of motivation is all about the particular factor which motivates a particular employee to work efficiently towards the organization’s goal achievement.We are assuming that factor to be the “Financial Incentive”, which will motivate the employee, and a positive Organizational citizenship behavior will be expected of that employee as he will be satisfied and work for the organization like its own.The research by the Wasito (2014) also explains that higher the financial incentive of an employee, the higher will be the motivational level of that employee towards the work.Another research carried out by the (permatasari, 2011;Handrian 2015) also concluded that the financial incentive has a positive impact on the motivation of the employee.
Job satisfaction is the most predominant factor in the workplace. Receiving financial incentives leads to a positive reflection that accelerates the loyalty and productivity of the employees eventually. According to Elumah Lucas, Ibrahim Olaniyi, and Shobayo Peter, (2016), financial incentives are considered as the resolution for meeting the fundamental needs of the employees. After analyzing the performances of the employees, the financial incentives are delivered to the employees from the management that eventually lead to employee motivation and job satisfaction. In the contemporary business world, financial incentives lead to visible achievements from the end of the employees. In most of the cases, the employees working in the sales or consulting departments are delivered with huge incentives for their identifiable achievements. This as a consequence, stimulates employee motivation that enriches the productivity of the entire company. Kettles, St Louis, and Steinbart, (2017), stated that there is also a huge psychological factor that influences the impact of incentives of the employees. Positive feedback and rewards are referred to as extrinsic motivation that stimulates the individual from outside. Moreover, the intrinsic motivation is stimuli from inside. These are influencers for motivating the employees towards hard work.
Singh et al., (2017), in this regard, stated the importance of financial incentives arguing that, if the incentives are taken away from the employees, their job satisfaction will decrease and as a consequence, the company will confront various issues including growth. Moreover, incentives are required highly for the employees whose wages fail to meet even the most fundamental needs. Money is considered as an effective technique to convince the individual about their values and worth in the workplaces. It also initiates the accomplishment of any intangible goals. Money in the workplace as financial incentives works as a leading influencer of high performances than the non-monetary ones including gifts, rewards, travel. There are various objectives of financial incentives in the workplace. It gives the employees control over their earning level that also creates a better commitment towards their job. Moreover, this process also works as a stimulator for the employees to work harder. Landry et al., (2017), argued that skill-based approaches and job-based approaches are the two categories in which the compensation tools are divided. These tools make pay decisions for the management of the companies. The companies that create an internal environment leading to competitiveness, can sustain their profitability in the long run.
According to Achie and Kurah, (2016), rewards and financial incentives impact the loyalty or commitment of the employees positively. The companies should maintain a healthy relationship with the employees as the employees are considered as the bones of any business organization. Giving financial incentives to the employees is an effective management technique of the human resources. The competitive market and environmental uncertainty have accelerated the organizational structure of the companies in the recent years. Nowadays, the companies are providing financial incentives to the employees based on their skills, competencies, knowledge, and performances. These schemes eventually help the organizations to become capable of attracting, retaining, and motivating the employees. However, along with the positive impact, there are some disadvantages, too of financial incentives. The desire of getting incentives can push the employees towards more hard work that can impact both the employee’s health as well as mind. This can ultimately lead to humanitarian and social issues that the employees can confront in the future. In this regard, Andon et al., (2018), argued that financial incentives cannot apply to the job categories that are not usually based on the production quantity but corporate services. Besides, financial incentives in some cases, are limited only to fulfilling the basic requirements and the employees can eventually lose interest in the static amount of incentives as they start expecting more monetary incentives. Also, some employees do not try to increase the number of incentives and as a result, they do not prefer to work hard as the basic incentives are sufficient to meet their basic requirements. According to Barte and Wendel-Vos, (2017), this eventually put a negative impact on the entire company’s productivity. The increase in production and the interest of the employee are interconnected with each other and financial incentives are a crucial part of an organization to increase the stability of the company and revealing potential and skill from the employees.
According to Bogoviz et al., (2018), Maslow’s theory of hierarchical needs, human requirements are divided among several categories including security, psychological needs, belongings, esteem, and self-actualization needs. Employees tend to reach the utmost level of self-actualization by their hard work and therefore motivating them with financial incentives leads to accomplishment.
The rationale to conduct this study for extracting the motive behind the HRM practices for providing financial incentives to the employees. Currently, IT sector companies are sharing profits with the employees (Tsai, 2019). By doing such acts companies are building a loyal employee base. However, this study has been conducted to identify how performance is improved after getting such financial incentives. According to the views of Ahmad,Maochun, and Rehman, (2019) financial incentives have an important role in boosting employee motivation, satisfaction, performance as well as it can also reduce employee turnover. Therefore, a business can remain efficient even in a challenging situation in the competitive market. The employees who are truly motivated by the financial incentive work harder to get the job done and always bring something extra for the company. We can take the example of “call centers”, where the telesales operations are carried out with no limit to the commission value on sales. The employees doing the sales put their best input for confirming the sale of the company and on those sales, good commissions are paid to the employees. This commission is just like a financial incentive, which becomes a motivational factor for that employee. Whenever the person is motivated, there is some driving force behind that employee’s hard work which creates a sense of achievement and motivation in that employee.Thisresultsinhelping the brand to stay competitive in the market.So, the rationale behind this study is basically the extraction of those Human resource management practices, which are used in order to provide financial incentives to the employee.the point we are trying to explore have a variety of situations and the factors involved. The organization’s first and foremost objective is to maximize the profits for the shareholders and in order to increase the profits for the shareholders the companies need to do more sales or the competitive business in the market. But the question remains. How? The very core part of the organizational sales is the sales team. These sales team and the operations team are motivated by providing them with the percentage of sales they bring for the company. This creates a situation for the employees to get good returns on sales and they stay motivated as well. For example, if you are working in luxury furniture making organization and one set of furniture is going to sell for $1000 and you are promised to have 10% of that sale. You will get $100 on a single sale. This will incline you towards the calculation of the revenue you can earn upon each sale. This is how financial incentives create a motivational situation for employees.So now after very comprehensive examples, we know why we are going to carry out the research on the financial incentive’s impact on the employee’s performance. The performance of the employee is very important for an organization because these employees are like an engine of the organization. This engine needs to be maintained regularly in order to get the best output results. Human resources is one of the core resources of any organization in the world. that is why many companies pay very concentrated attention to human resources to know if they are happy at the organization if they are facing any issues at the organization. They try to resolve the issues of the employees in order to get them back with a positive attitudeso, they can provide the best of their outputs for the company.
1.4. Problem Statement
Financial incentives to employees can create issues with the business because it may create inequality among the employees (Einav, Lee, and Levin, 2019). The basic problem is not the financial incentive but to know who is the right person to get the financial incentive. An employee who’s motivating factor to be the “Achievement” can never be motivated if he is given a good financial incentive, but he is not feeling any achievement in that particular organization. As a result of this, there could be a negative impact on the overall operational performance among the employees. Therefore, the businesses can run into operational ineffectiveness if the right incentive is not given to the right person.
1.5. Aim and Objectives
This paper proposes to investigate the HRM practices with financial incentives foremployees.
- To analyze the role of financial incentives for boosting employee engagement
- To analyze the role of financial incentives for boosting productivity and profitability of an organization
- To find out some suggestions for improving overall employee performance with financial incentives
1.6. Research Question
- What are the roles of financial incentives for boosting employee engagement within a business?
- How the financial incentives of employees boost the profitability and productivity of a business?
- What are the paths for improving the overall performance of the employees to remain financially sustainable in the future?
The case study is about the impact of the financial incentives on the employees. The impact on the employees be negative or the positive can be found out after the research is carried out by gathering the data from different employees of the world. The financial incentives motivate the employee to work hard towards the organizational objectives and the employee work more efficiently as evidence has been provided in the literature review.
Chapter 2: Methodology
2.1 Research Philosophy
This research method gives detailed information about the data sources, which indirectly guide researchers to employ the right process of data accumulation for their work. Moreover, it also helps to develop appropriate assumptions that show a clear path for research work. Among the major four types of research philosophies, the analyst of the paper selected Interpretivism philosophy. Scholars generally used this philosophy, where the sample size is small and they wanted to do in-depth research (Mohajan, 2018). For this study, I prepared to use this philosophy for doing in-depth research for determining the significance of financial incentives on the performance of the workforce.
2.2 Research Approach
The research approach impacts the success of a research project, so the author must choose the right approach for his project to carry out the project in the right direction. In the field of research methodology, three types of approaches are present, and among the three approaches, the deductive approach has been selected. Where the scholar developed some research assumptions based on previous studies and then analyzed those assumptions by employing different forms of data. Here, the scholar employed the qualitative approach for gathering data, so the deductive approach is the suitable one for this dissertation to generate desired and optimistic results (Zangirolami-Raimundo,Echeimberg and Leone, 2018).
2.3 Research Choice
After selecting the above two methods, the scholar selected the research strategy. Considering the research background, the scholar employed a qualitative strategy. However, for getting practical results, the scholar has taken the help of the primary data gathering procedure. With open-ended questions, this study interviewed four different managers of restaurants to accumulate their given qualitative information for the study (Snyder, 2019). Therefore, a qualitative strategy and primary approach have taken into determination.
2.4 Data Collection Process
The research methodology used for this case study will be the description in nature and the qualitative one. For managing working, every business organization incorporates some effective measures, among numerous measures, the financial incentive is one of the most influential ones. For identifying the reason behind implementing the incentive concept within the organization, this study selected four managers of different restaurants. Due to practical reasons, this study cannot be taken from all the managers’ overviews of the world or even from different countries as well. While choosing managers, the research used non-probability convenience sampling. The main reason for doing interviews among managers is that the cultures may differ and working conditions may differ but the financial aspect is the same in every country and everyone wants to earn more, so they work hard in order to get the financial incentives. For motivating workforces, managers implement incentive giving policy. This is the major reason I have taken for managers of different restaurants of the world as a sample. The interview questionnaire will be a combination of 5 questions. The nature of those questions are open-ended. While forming questions for interviews, I have put special focus on some variables, such as motivational factors, their impact, and their relationship with the financial incentives factor. Keeping in mind the recent healthcare concerns, the interviews were conducted online, through the web based platforms. The research made use of recent technical advancements to conduct online interviews.
2.5 Data Analysis Techniques
Understanding the effect of financial incentives on the improvement of employee performance, I have chosen the primary approach for collecting data. Managerial associates of organizations are efficient to state the reason for using this motivational policy for enhancing employees’ performance. Due to this reason, the analyst of this paper developed some variable based open-ended questions for collecting actual information from management in the interview process. For analyzing the gathered qualitative data from the interview process, the field worker of this research employed the thematic analysis process, where I used my interpretation and analytical skills to generate a fruitful result. The first responsibility of mine is to develop a database, where I have pasted the raw information from interviews. After that, I have analyzed the raw data and give a proper explanation to meet the objectives, which are set in the first chapter of the dissertation (Zangirolami-Raimundo,Echeimberg and Leone, 2018). Therefore, thematic techniques help this paper presenter to scrutinize and interpret qualitative raw information in a descriptive manner.
2.6 Research Limitations
The data gathering process is considered an issue as managerial personnel of restaurants are busy with their work and due to this reason, most of them are not going reply questions honestly.The overall answering of the open-ended questions may get difficult for the candidates as the human being has a personality built with a combination of moods and emotions. It may happen that the person who is going to interview may not in a good mood, then they are not taking any interest to provide information (Mohajan, 2018).Another point can occur that the candidates asked interview question, when they are in a happy-emotions, then they gave every information with positive emotions. So, the basic point here is that we try to examine the financial incentives impact on the employee’s performance but this research work only portays the concern of management bodies of a resturnat.In order to have the proper results, the future associates should developed a questionnaire that will only try to measure variables with respect to the financial impact on the employees while keeping other variables constant. Otherwise, we can never say that financial incentives impact the performance of the employees positively.
So, the basic hypotheses for this case study are the;
Ho- The financial Incentives has a positive impact on employees
HA- The financial incentives don’t have a positive impact on employees
2.7 Research Ethics
While doing a piece of small work, everyone should obey some ethical considerations. Likewise, the researcher of this dissertation holds an honest approach throughout the information gathering and interpretation processes, which helped the scholar to get the authentic result. Moreover, this study interviewed four managers of several restaurants, so consent is required for ethically carrying out the project. For this reason, the scholar communicated with the top associates of four restaurants for the research and asked them for conducting interviews with their managers to understand the role of financial incentives for improving employees’ daily performance. The scholar waits for permission for organized interviews with managers and while interviewing managers, the analysts always observed the body language and attitudes along with their given statement. The scholar aware of the Data Protection Act, 1988 and have followed the standards of this law. Lastly, for protecting paper confidentiality, I have not revealed the process of collecting information and analysis processes to others. the prepared database has destroyed after the project for the maximizing project squirty rate (Ulmer, 2017).
Chapter 3: Result
This study’s main concentration is determining the effects of financial incentive programs of the business firm on employee motivation and performance. For fulfilling this purpose, the study arranged an interview session with four managers for different restaurants in the world. Before starting interviews, the author of this project has taken the interviewees’ permission. By using pen, paper and tape recorder, the scholar tried to capture every information, which is given by selected respondents. Here, the scholar has not created any pressure on respondents and he also gave the right to interviewees to stop the process at any point in time. The accumulated qualitative information has analyzed in thematic techniques to attain the desired outcome.
3.2 Interpretation of Interviews
By preparing the open-ended questionnaire, I have successfully completed interviews with four managerial heads of restaurants to understand the effectiveness of financial incentives on maximizing the number of motivated employees. Here, the scholar employed interpretation and decision-making skills to analyze the accumulated qualitative data.
What about your view regarding employee motivation?
Manager 1 stated that “I believed that motivated employees were always loyal to their organization. Our organization tries to motivate the workforces by using extrinsic and intrinsic motivational theory. We, the management bodies always keep in touch with our subordinates to understand their needs and problems. Based on this, we arranged some lucrative policies for our employees to gain their trust. Apart from trust, employees wanted to get monetary rewards from their organization for the appreciation of their work. Keeping this thing in mind, our HR personnel and other managers designed financial incentive plans for our employees to help them to stay motivated while performing any work. For getting more incentives, employees of our firm are ready to take any challenges. We are also giving them opportunities to earn incentives after reaching the set performance standard of the organization”.
Similarly, Manger 3 claimed, “Our HR management team is strong enough to efficiently manage the demands, desires, and compliances and employees. Before motivating employees, we are putting extraordinary effort into identifying the needs of employees, which truly supports us to make a motivational plan considering the employees’ needs. By incorporating correct motivational plans, our organization can encourage our existing employees for doing their work by taking prime concentration. Currently, our organization installed incentive giving policy, where we give monetary rewards to those employees, who performed well. It motivates employees to improve their performance for getting more incentives. It directly enhances our company’s productivity. Hence, we tried our best to motivate our staff for enhancing the overall efficiency of the firm”.
Analyzing the given data, I can say that every organization should take some measures for motivating their existing employees because the performance of employees has a direct connection with organizational success.
Do you think that financial incentives are more effective than non-financial incentives?
From the statement of Manager 2, it can be observed that “Most of the organizations used the concept for giving financial incentives instead of non-financial incentives for engaging employees immensely. Our organization also gives financial rewards to employees for their good performances along with verbal recognition. We are offered a bonus and stocks to the good performer of the organization, which motivate them to perform well. It creates hunger among employees, which increases competitiveness within the company, and at the end of the day, it enhances the performance of the company. Considering these benefits, our restaurant gives incentives in terms of money to employees. Observing our employee commitment level, I would like to say that yes, financial incentives are truly effective for encouraging employees.”
Manager 4 argued, “Our organization also provides monetary rewards for gaining loyalty from employees, but I personally believed that non-financial incentives have extra power to nullify the efficiencies of financial incentives. As per my understanding, employees need job security in their life. So, this company provides financial incentives along with non-financial, such as recognition, verbal appreciation, promotion, job confirmation, and others. These stated aspects directly influence the commitment level of employees. If an organization can meet the psychological as well as social needs, then the company can get the support of employees and they show their best effort for the enhancement of the firm. Based on these, I want to state that non-financial incentives are more effective in gaining employees’ commitment.”
Here, it can be said that both financial and non-financial incentives are important to influence employee performance, so organizations should emphasize both the fields.
Why you prefer financial incentive programs as a motivation tool for your organization?
Manager 1 said “The prime objective of conducting a financial incentive program is to maximize productivity along with increasing a loyal employee base. This is an innovative and powerful medium, which helps to motivate employees. Our motivated staffs always obey the guidelines, which are stated by the company, and incorporate their innovative ideas for improving not only their performance but also the overall organization. We are also giving them the right to use resources and machinery for enhancing their performance to get rewards. Due to this, employees felt a connection with the organization and considered the organizations their own company. For increasing the retention rate of employees, this is the most appropriate measure, so we are designing lucrative financial incentive policies for increasing employee loyalty. Hence, I can say that this initiative acted as a motivational tool for my organization”.
On the other hand, according to Manager 2, “I am very much afraid about eth negative consequences of financial incentives. Because of the misleading incentives may create problems within the organization, which negatively impact the productivity level of organization. Therefore, our skilled HR members prepared well-structured incentive plans for employees, where management put the main focus on employee performance, which is the main determinant. By having well-structured incentive plans, the company can have clear information about its expenses in the field of financial incentives given session. Apart from this, I think monetary incentives can influence the employees’ inner mind and make them loyal toward the company.”
After interpreting to managers’ given data, the study has clearly state that financial incentive program are the main motivation tool for every business startup to gain employees’ commitment and trust.
What kind of financial incentives are used by your organization for encouraging employees to improve their performance?
In the perception of Manager 3, “We are doing in-depth research before structuring our financial incentive plans, because without understanding the employees’ needs, we cannot reach their expectation level by putting our extreme effort. For fundraising and acquiring employees’ trust, our organization also gives the opportunity to those employees to purchase company stock. This strategic measure helps to gain employee commitment because employees feel as business partners. Apart from this, we believed that employees are the main assets, who are mainly responsible for the success and failure of our restaurant. To encourage our people, we organized profit-sharing programs, where we offered a significant percentage of the company’s profit to employees. We generally followed these two techniques while giving monetary incentives to our employees for engaging them toward the work efficiently”.
Simultaneously, Manager 1 argued, “We set some standard for measuring the performance of our employees to identify the good performers of our organization. Our restaurant gives them a hike on their salary for increasing their commitment level. By increasing the basic salary, we try to maximize employee involvement rate. It directly influences the standard of performance. Moreover, we also provide bonuses to employees every year for appreciation purposes. Being a management body, I know the importance of profit-sharing activities in gaining employees’ trust. After getting profits from the company, employees show their efforts and talents for maximizing efficiencies of the organization”.
The major financial incentive plans are offering bonuses, giving salary hike after promotion, profit sharing, and giving the choice to purchase the stock of the company. These measures impact employees’ activity and performance.
What do you think that financial incentive programs help your organization to enhance its employees’ performance?
According to the perception of Manager 4, “Bring an essential part of our restaurant, I wanted to say that for managing employees and improving their efficiencies, I and my co-colleagues formulate a well-structured plan. Based on this plan, we offered special and lucrative offers for our good performers. If any employee reaches their targets, then the company give an extra significant amount of money for recognition purpose. Apart from giving verbal praise, this particular restaurant gives monetary rewards for its ground-level staff for acquiring their trust, which also motivates them to stay confident and motivated. These programs also have a role in preparing potential employees for this organization to enhance profits. Loyal employees are always attentive to show their talents for future development. Based on these, I agreed that monetary incentives help my organization to improve internal stakeholder’s performance”.
On the other hand, Manger 2 asserted that“I fully agreed that financial incentive programs are useful for increasing the interests of employees. This program pushed employees to improve their daily performance standards and attain the desired productivity standard, which helped them to gain extra money from the organization. We are fortunate that the employee retention rate is good in our company. Through this program, we can gain support from employees for incorporating innovative practices within the company for enhancing profitability. Having a hidden intention to maximize the productivity of the restaurant, we offered some monetary amount to employees for the motivation purpose”.
Completion of this interpretation, it can be stated that financial monetary programs must be incorporated by every business organization in order to enhance the effectiveness and performance of the organization.
Thematically analyze the viewpoints of four different managerial associates, it can be comprehended that motivation or inspiration is required for employees to influence their daily base performance. So, higher officials of every global organization should employ some effective measures for encouraging employees to strengthen the sustainability of the organization. Both types of incentives influence the performance ability of employees, so managers should concentrate on both factors equally to motivate employees. Based on the above elaboration, it can be said that financial incentive programs are the most powerful factor, which motivates employees to work on their performance to increase profitability. From the perspectives of managers, it can be said that there are numerous forms of financial incentives, which are profit-sharing, salary increment, bonuses, offering stocks for employee purchase, and others. Organizations are generally offered these financial incentives to employees for motivating them to take some initiatives for improving performance. For productivity enhancement, improving retention and profitability, business forms should take help from financial incentives programs for employees.
Chapter 4: Discussion, Conclusion and Recommendations
To scrutinize the impact of financial incentives in an organization, this study has taken into consideration the interview programs with the managers from various restaurants worldwide. As a finding of the issue, the perspectives of the managers have been considered to conclude. One of the managers stated that it motivates the employees to remain loyal to their work. It’s also essential to consider both the intrinsic and extrinsic motivational techniques while dealing with monetary incentives (Victor and Hoole, 2017). Its also recommended for a firm to collaborate with the team members to understand their requirements and preferences. In this regard, the role of the HR of a company is crucial. The expectation for receiving incentives eventually lead the employees to confront any job challenges. The incentive plans are effective to encourage the employees and help them reach the highest level of self-actualization. Also, a motivated and smooth working team of employees helps the owner to remain free from investing in long-term development as well. Emotional and tangible financial rewards are helpful and effective technique of retaining the potential employees in the company and also leads to the minimum employee turnover (Sicsic, Krucien and Franc, 2016).
According to another manager, financial incentives are more effective than the non-financial ones for many reasons. In the contemporary era, money is an integral part of the livelihood. It satisfies all the fundamental needs of an individual. Moreover, social, psychological, and emotional needs are also necessary and play a vital role in satisfying the employees. Although the non-financial incentives like hygiene is also important in the workplace and also lead to dissatisfaction of jobs, money cannot replace the non-financial needs of any individual. In this regard, the other manager has also argued that employees are more motivated after receiving the non-financial incentives that include rewards, recognition, flexibility, and opportunities. Therefore, some companies prefer to consider the psychological and social needs to the monetary needs of the employees (Victor and Hoole, 2017).
To answer the next question that highlights the significance of the financial incentives as a motivation tool, one of the managers stated in the interview that it’s really necessary to keep all the employees motivated and running a small business, its more than necessary to pursue this technique. However, it’s not an easy task to perform consistently for the management of the firms but the proper implementation can lead to more job satisfaction in the employees. The most influencing financial incentives include stock options, raises, bonuses, profit sharing, etc. The sock options provide the employees basic rights to purchase a firm stock in return for a fixed price for a specific period (Lu et al., 2016). The profit-sharing programs enable the companies to perform better and the employees to receive more incentives accordingly. Raises are the events performed by the employees annually. Lastly, bonus determined a specific amount of money that is granted to the employees. The financial incentives programs are performed to motivate employees to work with efficacy and efficiency that lead towards the accomplishment of the organizational goal as well. The reward system help in including a particular behavior in the employees that are used to enhance the entire business performance. These financial incentive programs including bonuses, profit sharing, pay and allowances, prerequisites, stock options, and retirement benefits are the most integral parts of the financial incentives that are used by the organizations to motivate their employees (Osborne and Hammoud, 2017).
While interpreting the question that revolves around the importance of financial incentives for enhancing employee performance, one of the interviewees stated that it is an effective technique in convincing the employees of their values in the workplace. These programs help the employees to fulfill their everyday responsibilities and liabilities towards the workplace. These programs also engage the employees with the organization and they are more interested in their jobs (Jin and McDonald, 2017). Therefore, the instant reward systems can be utilized for accomplishing a long-term job satisfaction and productivity of the organization simultaneously. The cash incentives are more likely to attract employees to the jobs. This leads to the individual’s efforts regarding direction, persistence, and intensity towards accomplishing a goal. There are various strategic implementation of the incentive programs that vary from firm to firm. Many companies tend to engage their employees in a health awareness program by declaring several cash incentives in return for their effort to quit smoking or some other health-associated conditions. In return for complying with the guidelines, the employees can receive the determined amount of financial incentives. These benevolent missions are being adopted by many contemporary business companies. In a nutshell, incentives keep the employees engaged in their workplace and leads to the minimum rate of employee turnover for any company (Singh et al., 2016).
The main objective of this study is to investigate the role of financial incentives on the motivation of the employees of a company. This study has taken into consideration the human resource management of the business companies to deal with employee motivation. This issue is being discussed in the literature for a long period. Financial incentives motivates the employee and increases their job satisfaction. Financial incentives lead to the financial satisfaction of the employees in the form of rewards or compensations that motivates the employees for improving their performances. This, in turn, leads to the accomplishment of the organizational goals. This study has taken into consideration the qualitative data collection method to interview a few managers from the various restaurants worldwide. This study has analyzed the role of monetary incentives for improving employee engagement, productivity, and profitability of a business organization. Also, this study has aimed to identify the measures through which the employee performances can be improved utilizing the monetary incentives effectively. The researcher has completed this study with the implementation of interpretivism philosophy, deductive research approach and qualitative strategy to interpret the research problem. The researcher has also created several open-ended questions that relate to the research problem and extract the best perspective of this issue from the specialized individuals. Financial incentives always lead to job satisfaction among the employees which is an effective measure to minimize employee turn over. This, in turn, leads to the profitability of the respective company. In this regard, the intrinsic and extrinsic approaches work as stimulators to employee motivation. These techniques help the companies to attract, retain and motivate the employees to work for their organizations productively. However, there are some disadvantages of financial incentives as this measure pushes the employees towards an extreme workload. This also creates discrimination among the employees. Moreover, there are some job categories to which these monetary incentives are not applicable. In this purpose, Maslow’s theory of hierarchical needs is an effective tool to understand the basic needs of the employees and it also helps the leaders to motivate the employees to reach the ultimate level of self-actualization with their hard efforts and dedication.
From the findings, it can be said that financial incentives are more effective than the non-financial incentives. However, some companies concentrate more on the non-financial incentive programs to motivate their employees. These incentive programs are more likely to fulfill the social and psychological needs of the employees. The financial incentives are considered as the most effective tool in keeping the employees engaged in the workplace. This increases the loyalty and responsibility of them. There are various types of incentive programs that the companies provide to the employees based on the organizational structure. Among the rest, pay allowances, bonuses, profit sharing, stock options are the most vital programs to retain and motivate the employees. Also, these kinds of effective programs are more likely to enhance the performance of the employees. The employees are prone to fulfill the targets allocated for them. Along with this, this motivational tool is used to promote teamwork in the organizations by enhancing collaboration leading to the productivity of the respective organizations. These incentives plans are capable of boosting morale as well as job satisfaction in the employees and eventually reduce employee turnover. The effective management of human resources, thus, can lead to the absolute success of the business firms. Therefore, a successful implementation of the incentive programs can lead to the desired success for any business organization.
Therefore, after interpreting the issue, it is evident that the companies should define their objectives and goals to all the employees to make the incentive programs successful and effective. To avoid any discrimination, the work pressure should be distributed equally among all the members irrespective of their culture, gender, and any other considerable aspects. This issue is a sensitive one and needs to be handled strategically by the human resource management of the organizations. Along with this, the companies should focus on both individual and group incentive programs to promote teamwork as well. All the employees of n organization should be involved in the implementation, development, and revision of the incentive programs to enhance the collaboration and communication among the employees. Moreover, the companies should ensure the preference and requirements of the employees. It is also recommended to determine a transparent and reasonable standard of performance for the employees to receive the incentives. In this regard, providing a dashboard will allow the employees to keep track of their performances. The reward system of incentives should be transparent and fair and they’re free from any discrimination. Any biasness can lead to the employee’s loss of interest and eventually can deteriorate their performance. Besides, if the top performers are stopped from receiving incentives, the company can lag. Therefore, the company should keep on acknowledging the top performers as well. Along with these, the long-term rewards are also helpful in achieving the desired success by motivating the employees. The competitive rewards should be aligned with the non-competitive reward programs to increase the performances of the employees. Moreover, the companies should keep on changing the incentive structure frequently to surprise the employees and make the overall process more enticing. It should be effective to align the organizational culture and the core values of the organization to maximize the financial incentive programs. For improving the productivity of the employees, the leaders should focus on talent management, too. The bonus tracks should be based on the annual goals and the early performances fo the employees should be based on mentoring. The respective department should monitor the entire program frequently while creating and rolling out the programs also. In the incentive programs, the main departments that should be constructively involved in this incentive program are finance, management, and human resources. All these departments should be aligned to contribute to the organizational growth. The management should provide the employees with goals and metrics to boost their performance. The HR has to analyze the market data developing the compensation, too. The previous plans should not be taken into consideration while making the new plans. There should be terms and conditions well written during the time of recruitment and the employees have to comply with those. Along with this, there should be a well-maintained procedure of performance analysis. Stock options, recognitions, pay raises, bonuses, team activities are the most predominant influencers for improving the incentive programs. There is an advanced and effective tool namely the Enterprise Incentive Management of the EIM tool that is used as a solution to the incentive management programs. This tool can effectively calculate the compensation proving roll out as well. Following these measures, a company can handle and improve its monetary incentive programs.
4.4 Future Research Scope
This research has concentrated entirely on the financial incentive programs and has not addressed the non-financial ones. Along with the financial incentives, the non-financial ones are also beneficial for the companies to retain employees. Sanitisation, health, travel, etc. non-financial incentives are more likely to attract employees to a company. Therefore, there is a genuine requirement for future research that will address all the non-financial incentive programs that eventually led to the employees’ job satisfaction.
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