Human behaviorists identify two possible sources of human motivation: intrinsic and extrinsic. Intrinsically motivated people are able to motivate themselves from within. Extrinsically motivated individuals receive their motivation from external sources. The incentive motivation theory can be used to extrinsically motivate someone, but the attainment of the incentive goal can also be supported by intrinsic motivation as well.
An incentive is an act or promise given or offered to stimulate new or improved action or effort in one or more workers. An incentive is commonly in the form of recognition, job promotion, or an increase in wages. However, to some workers just a kind word from a company official is also an incentive. Incentives reward achievements. While most incentives are extrinsic motivators, some may be intrinsic motivators as well, such as one's own job satisfaction, job security and a pride of accomplishment.
There are two major forms of incentives: monetary incentives and nonmonetary incentives. As their names imply, monetary incentives offer raises, bonuses, stipends or cash payments. Nonmonetary incentives offer promotions, recognition, title changes and job security.
Reasons for Incentives
A company offers incentives to its employees to accomplish the goals or objectives of the firm. The company may need to increase its productivity, improve quality, implement new processes or procedures, or to discover or develop new capabilities in their workforce. To realize these goals, the company offers its employees a reward system to stimulate their participation.
An incentive can be either positive or negative in intent. A positive incentive provides an assurance or assent for the accomplishment of a desired outcome and are optimistic and psychologically rewarding to employees. A company will offer a negative incentive to correct an unwanted or unexpected outcome, such as a failed positive incentive. Such inducements as a threatened demotion, transfer, suspension or even termination can serve as an incentive, but in a negative way.
Successful Incentive Programs
To succeed in motivating employees through incentives requires an understanding of the people the incentives intend to stimulate. Those employees who have high visibility and close accountability, and are motivated through short-term gratification, are easier to motivate than those less in view with lower job-related gratification. Salespeople are easier to motivate with an incentive generally than those working on a production floor. However, in either case, the recognition that they are the "best" at what they do can be a strong incentive. To be successful, an incentive motivation program must be tailored to the wants, needs, desires, and goals of the group to be stimulated.