Understanding Incentives in Organizational Management
Incentives are objects that satisfy employee needs and can be positive or negative. Financial incentives like money and non-financial incentives such as status and job security play a crucial role in motivating employees. While financial incentives can satisfy lower-order needs, non-financial incentives cater to higher-order needs like responsibility and recognition. Different individuals have varied needs which can be fulfilled by a combination of financial and non-financial incentives in the organizational setting.
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INCENTIVES Incentives means the objects which are perceived to satisfy the needs of an employee are called incentives. Incentives may be either positive or negative. Positive incentives attract people and when they obtain these incentives they feel satisfied. E.g increase in pay, promotion etc. Negative incentives are those which motive an individual to abstain from doing something. E.g fine for doing something in the orgn. Demotion for not maintain particular efficiency. Individuals have varied types of needs. Some of them can be satisfied by money while others cannot be satisfied by money alone. On the basis of this various incentives which may be used by orgn. These are classified into two parts i) Financial Incentives ii) Non-Financial Incentives.
Financial Incentives: Money has become a means not only to satisfy the physical needs of daily life but also of obtaining social position and power. Human beings first take care of their primary needs of food, shelter etc. Money becomes a basic incentives for individuals. It can gratify both physical and safety needs ie the lower-order needs. Following points are important for analyzing the role of money as motivator. Economic conditions necessarily affect the importance of money as motivator. Money is an urgent means of achieving a minimum standard of living . It is important to some people of their economic conditions for others it id not so important after certain level. The type of orgn. Also determines the importance of money to the people. Most orgn. Money is a means of keeping adequate staff.(hold) People are concerned with not only with absolute amount of money they are paid , for this what others paid also. 1. 2. 3.
1. Status 2. Promotion 3. Responsibility 4. Making job pleasant and Interesting 5. Recognition of work 6. Job security 1. Status: In general status is the ranking of people in the society. In orgn. Status means ranking of positions, rights and duties in the formal orgn. Structure. It is an instrument of motivation It is closely related to abilities and aspirations of people in the orgn. 2. Promotion: It is defined as a movement to a position in which responsibilities and prestige are increased. It depends upon capabilities and good performance, people will try for that if the venues for the promotion exists.
People at same level should be paid same or nearly same money. Money is activate as a motivator in the orgn. Should be given insufficient quantity to the people. They will try to earn money for their higher performance. Social attitudes towards wealth plays an important role in determining human being. Whether money will satisfying the human needs. In some culture money cannot act as a motivator. Non-Financial Incentives: Individuals have various needs which they want to satisfy while working in the orgn. It is importance for the people in higher position their social psychological needs cannot be satisfied by money alone. E.G If an individual gets promotion he got betters status, more challenging job, authority etc. than financially though he gets more pay by way of promotion. Some important non-financial incentives are as follows. 4 5
3. Responsibility: Most of the people prefer challenging and responsible jobs rather than monotonous and routine types of jobs. It satisfies people s natural and inherent characteristics and they put more efforts for completing the job. 4. Making job pleasant and Interesting: The work can be made enjoyable and pleasant if it is so designed that it allows the employees to satisfy their natural instincts. This creates interest in the work and employees take it as natural as play job enrichment- makes the job more pleasant and interesting. 5. Recognition of work: Recognition means acknowledgement with a show of appreciation . When such appreciation is given to the work performed by employees they feel motivated to perform work at similar or higher level. 6. Job Security: Gen. employees want that their job is secure. They want certain stability about future income and work , so that they do not feel worried on these aspects and they can work with greater zeal. In India inadequate job opportunity and too many aspiration exists.
STRESS Stress is basically the impact of one object on another. Three related to stress are stress, strain and pressure. Acco. to Selye who done considerable research on stress, has viewed stress non-specifically induced changes with a biological system . It is non-specific bcz any adaptation to a problem faced by the body, irrespective of the nature of the problem is included in stress. Acco. Ivancevich and Matteson have define stress as follows Stress is adaptive response mediated by individual characteristics and psychological processes, that is consequence of any external action, situation or event that places special psychological demands upon a person From this defn. following features of stress can be identified: Stress may result in kind of deviation- physical, psychological or behavioral in the person. Stress may be result of individual s interaction with environment stimuli. It may be in the form of interpersonal interaction, event etc.
3. It is not necessary that stress is always dysfunctional. On the contrary , there may some stress called eustress like stress for creative work, Industrial activities, keen competition etc. which stimulate better productivity. Distress which is bad and it must be overcome. 4. Stress can be either temporary or long term , mild or severe depending mostly on how long its causes continue, how powerful they are and how strong the individual s power are. If stress is temporary and mild most people can handle it or recover from its effects quickly. Similarly person who have strong power for tolerating stress cope with stress more quickly.
