Question

Describe the nature of some important management incentives strategies.

Discuss the potential pros and cons for the main incentives for managers and executives.

Identify and provide an overview of a popular organization-wide incentive plan in use. Why does it work for this company?

Answer 1

Management incentive strategies and their nature:

Management has two options, either to plan incentive based on Profits earning or to give based on performance of each employee.

When they planned on Profit earning basis – As and when the company performance well for any quarter, management can plan to share some part of it with the employees.

Example – Offer bonus shares or can give some part in cash.

When they planned on performance basis- It depends on the minimum output that everyone is expected to achieve than over and above what they achieved.

Example – Target was to achieve 100 points, an employee who achieved 110 will be given incentive based on it.

You can also offer incentive to motivate employee and to make them retain in the organization.

Pros for incentives:

• To Motivate the employee work performance
• It helps to integrate the Organisational Goal with individual Goal
• It helps to create the positive work atmosphere with increased level of enthusiasm among employees
• It can replace the promotion demands for quite some time
• One can be attracted to incentive scheme of the Company when offer of joining is given.

Cons for incentives:

• Since it is based on performance, many employees who performed well but not over and above, can feel de-motivated
• It is also cost to the Company
• Some employees also require recognition than merely incentives

Identify and provide an overview of a popular organization-wide incentive plan

Let’s take an example for Transport company

Main challenge for transport company would be to retain drivers. So, they follow the following tactics to retain employees:

• Apart from cash, they provide recognition awards
• They provide bonus vacation
• They infect take employees to some picnics and all
• They provide performance-based incentives
• They provide incentives and benefits for driver’s illness and injuries.