The Impact Of Incentive Plans On Employee Performance

The Impact Of Incentive Plans On Employee Performance

Abstract

The purpose of the study was to enlighten businesses and institutions in both the public and private sectors about how incentive strategies affect workers’ performance.

50 respondents, with a mean age of 33 years and ages ranging from 21 to 60, were included in this study’s population. Of these, 38 were men and 12 were women. 40 Junior State students and 10 Senior Staff members were randomly chosen as the study’s sample using the random sampling approach.

The study was divided into two phases: standardization of the test instrument came first, and assessment came next. The data showed that the instrument utilized had a substantial positive correlation coefficient. Additionally, it was suggested that monetary and non-monetary incentives be reviewed on a regular basis in order to keep track of how the workforce is evolving in the direction of bettering employee performance.

Chapiter 1

1.1 The History Of The Study

The personnel department’s complex and ongoing task is to create an organization’s remuneration package. This may explain why every personnel department structure, regardless of how big or small the firm, has a section tasked with making sure that individuals are paid properly and adequately.

Therefore, the term “compensation” refers to the provision of employees with just and sufficient compensation.

Money given to a worker directly in exchange for completing a task assignment is referred to as direct remuneration. earnings and salaries, while.

Incentives, fringe benefits, and other benefits provided to employees are considered to constitute indirect pay.

To encourage or stimulate an employee to work more, incentives are benefits (outside of income or compensation) that are offered to them.

An incentive scheme, on the other hand, is a plan or program to stimulate individual or group performance (Burack and Smith emphasize that salary/wages are used to attract employees and they are money paid for job done). An incentive program may contain a range of non-monetary rewards or prizes, although it is typically built on monetary rewards, such as bonuses or incentives pay. It covers a variety of inducements given to workers to push the boundaries of what is reasonable in terms of quality and quantity of work.

The development of incentive programs, a personnel department subsidiary, will be the focus of this research project. However, it must be considered that rewards are given as part of a motivational system, with incentives serving as a support for motivation.

Statement Of The Problem

Given the current state of the corporate world’s dynamic character, the usage of incentives in organizations or sectors is becoming more and more crucial. There are several causes. The first is a financial one. Economic theories of compensation and benefit. Administration, When a business is experiencing financial difficulty, it is difficult or impossible to reduce current employees’ pay. Wages are firmly on the downside. In this manner, wages are fixed. Cost. The employer’s only option to reduce costs is to fire employees, and for the past 20 years, this has been the norm for American businesses. By somewhat reducing the cost of living for all employees, incentive pay can mitigate the need to lay off people.

The “payment for results or performance” notion is retained for a second reason: if the business links compensation to the desired goal, the likelihood of achieving that end will be higher. The employee may do this by working harder, faster, or longer. Companies have had to develop new skills and increase their efficiency as a result of layoffs. Today’s businesses find the promises of incentive pay to be highly alluring because it allows them to accomplish more with fewer employees.

Third, with the decline of union influence and the spread of participate management ideas, there is a greater desire to engage employees in not only improving their performance on the job but also in how well the entire organization is doing. Some incentive pay plans focus primarily on attempting to engage employees in working with management to build a successful company. Therefore, it is imperative to inspire employees to work harder and more productively in order to achieve corporate goals like profit sharing, holiday bonuses, and flexible work schedules.

Profit sharing: This well-known organizational-wide program, which is frequently categorized as a gain-sharing scheme. Compared to a cost sharing plan, this kind of plan can be created considerably more easily. The management seeks to alter employee attitudes about the employee, not the revolution in employee-management relationships that cost-saving strategies produce with profit sharing. The purpose of profit sharing is to give employees a sense of allyship with the company. However, the majority of plans go above and beyond, utilizing profit sharing as a strategy to retain key personnel and promote thrift among employees.

Clearly, in any organization-wide incentive plan, the link between effort and performance becomes very shaky. Even if the incentive (a percentage of the profit or savings based on compensation) and the performance (profit or cost savings) are both evident, their relationship to the work that the employee does on a daily basis is not. The majority of organizational-wide plans really fit the membership model more closely than the performance motivation model.

The largest benefit of profit sharing appears to be the increased membership motivation. To the degree that employees want to maintain their membership and to make the additional contributions that increased membership implies, the profit sharing purpose of establishing a sense of cooperation is achieved.

1.3 The Study’s Purpose And Objective

Investigating the effect of incentive plans on employee performance is the main goal of this study. This study will also point out several approaches to putting incentive plans into practice for better employee performance. However, the study’s definite goals are to

i. To determine whether providing employees with favorable working conditions as an incentive would boost employee performance.

ii. To ascertain whether offering benefit packages as incentives would increase employee performance by improving employee happiness and sense of accomplishment.

iii. To ascertain whether offering incentives for exceptional work as an incentive would enhance performance.

iii. Examine whether junior employees’ performance might improve if there were channels in place for them to voice complaints and ideas.

v. Discover the precise incentives that employees want.

vi. Call attention to the specific issues that individual departments have had while using incentives as a motivational technique.

vii. Offer remedies for the issues mentioned above.

However, it is important to take employee motivation into account when deciding on different implementation strategies for incentive plans. The role of a manager at work is to accomplish goals through workers. Employee motivation is a crucial component of performance. The manager must be able to properly motivate people in order to accomplish this. However, it is easier said than done. The phrase “I’m going to work really hard today because I have health insurance” has never been uttered by an employee. However, an employee might not find it difficult to put in extra work for a boss who consistently demonstrates trust, respect, commitment, and support, such as through an incentive program.

The source of motivation is also quite individual. People are motivated by different things depending on who they are and how they feel at any one time. Because of this, finding ways to inspire workers is a changing objective. However, research shows that manager-initiated and performance-based incentive is the best, regardless of the size or type of firm. Performance is viewed as the result of both aptitude and drive.

Ability, which depends on training, education, and experience, can be a difficult and drawn-out process. However, motivation can be quickly increased by a number of effective techniques. An organization must have a strategy to reinforce the desired behavior if it wants motivated personnel. It’s critical to keep in mind that employees are people. And most of the time, individuals act on their desires. driven to do it.

Employees who are driven are more likely to realize their full potential and inspire their coworkers to achieve greater things through their enthusiasm and passion.

1.4 Questions For Research

The following research questions would be addressed in an effort to fulfill the aim of this research project:

i) Would improved working conditions boost employee performance?

Working conditions as motivators for personal fulfillment?

ii) Does offering benefit packages as an incentive result in increased feelings of self-worth and accomplishment among employees, hence enhancing their performance?

What specific issues does the personnel department run into when using incentives as a motivating tool?

iv) Would providing methods for feedback and complaints as a means of motivating junior employees improve their performance?

v) The specific incentives that employees desire to get in order to boost productivity.

vi) Does rewarding excellent work as a method of motivation result in enhanced employee performance after achieving personal satisfaction.

1.5 Hypothesis Of The Research

The following theories were investigated and tested in an effort to determine how incentives affect employee performance.

H1: Male employees perform better as a result of good working conditions than female employees do.

H2 Male employees perform better as a result of good working conditions than female employees do.

H3 that offering benefits as an incentive would boost personal fulfillment and boost employee performance—more so for junior personnel than for senior staff.

1.6 The Study’s Scope

There are organizations everywhere, no matter how big or little, whether they are partnerships, single proprietorships, or public liability companies. This fact demonstrates that it would be both Herculean and completely impossible to try a research project that covers every organization; as a result, a focus region that will serve as the study’s scope must be identified.

Therefore, the scope for this research project will be a union. Operating in Nigeria’s Lagos State is a branch of Bank Nigeria Plc. This branch has at least 40 junior staff members and at least 10 senior staff members.

1.7 Applicability Of The Study

The purpose of this research is to provide organizations with theoretical and practical insight into the effects and significance of intensive planning on employee performance.

The report will also be a valuable resource for businesses looking to increase staff performance for productivity in today’s constantly changing business environment. The focus was on determining how employees would respond to various incentive systems and determining the precise rewards that employees would find appealing.

Terms Used In The Operation Defined

It is essential to operationalize some of the key terms from this study in order to facilitate successful communication.

INCENTIVES: These are benefits provided to employees (outside of salaries and wages) with the intention of inspiring or motivating them to work harder.

INTRINSIC INCENTIVES: These are rewards that are not monetary in nature, such as job enrichment or decision-making opportunities.

EXTRINSIC INCENTIVES: These are financial incentives, or pay for time not worked.

SHORT TERM PLANS: These are incentive programs based on increasing output.

LONG-TERM PLANS: These incentive programs are based on team performance and are out-011-t.

THE AMOUNT OF WORK DONE BY A WORKER OR AN INDIVIDUAL IN AN ORGANIZATION IS KNOWN AS EMPLOYEE PERFORMANCE.