What Is a Work Incentive Program?

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Employers are always looking for ways to motivate employees and increase productivity. To this end, employers implement work incentive programs. These incentive programs serve as a bonus in addition to standard compensation. When an employee meets productivity goals, the employer will reward him with predetermined bonuses or additional compensation.

Purpose

  • Employers institute work incentive programs to motivate employees. The programs are designed to increase productivity and foster healthy competition. With the promise of reward, employees will theoretically work harder, more efficiently and more accurately to gain the incentives.

How it Works

  • Management meets and sets the terms of the program. It creates the time frame of the program and the limits, if any, on the incentives. Next, management makes the employees aware of the program. Common methods of rolling out incentive programs are through inter-office memos, emails and staff meetings. The employees are told the terms and conditions. If an employee meets the terms, management rewards her with the incentive.

Types

  • Incentive programs vary based on the type, size and needs of the company. Sales incentives are one of the most common variations. An employee is given a goal for either number or amount of sales. If the employee meets this goal, he is rewarded with a monetary bonus. Other types of incentives include vacations or other paid time off, recognition in the form of certificates or awards (e.g., employee of the month) or some form of advancement within the company.

Advantages and Disadvantages

  • The biggest advantage of a work incentive program is increased productivity or sales. Employees want to meet their goals, so they work harder and more accurately. The downside is, without proper planning, the incentives can do more harm than good. If not properly budgeted and implemented, the additional cost of the program can counteract the increased sales numbers. Employers must also ensure that the conditions are clear without room for interpretation. If not, employee morale may suffer, which will be contrary to the goal of the program.

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