The benefits of implementing incentive plans
Managers have to be familiar with how to use the power of incentives to drive for individual motivation and organisational effectiveness. It can be a highly efficient motivational tool and should be employed under the appropriate circumstances (Bennett, 1993). Most notably, performance-related pay plays an important role in economy downturn. Since companies generally have a smaller amount of capital to allocate for compensation during an economy slowdown, offering salary increases or bonuses in varying amounts to the best performers or the most essential employees would be better than giving everyone an equal but minimal increase to their base pay. By rewarding good workers, it can increase productivity and secure dominance in potentially lucrative markets (Bates, Mirza & Fox, 2003). Although these bonuses may be very small, it represents a promise to the employees that better performance results in better compensation. In addition to this, forward-thinking companies believe that this is the time to capture market share, by doing things that are uncommon in a down economy to gain competitive advantage (Bates, Mirza & Fox, 2003).
Team incentives do motivate
The current trend in organisations is toward less hierarchal and more teamwork based with an increasing emphasis on cooperation among employees themselves. According to Cumming’s (1994) article, it proved that team incentives are really motivational. Given the facts of the manufacturer case, team incentive programs encourage employees to work together to generate ideas for improving operations and to implement changes that they agreed would assist in meeting the incentive goals. Additionally, it helps to reinforce a new attitude among employees in achieving the goals. In an environment where individual contributions are clearly measurable, targets are clear and realistic, and employees can be aligned to focus on a common goal where team incentives are most effective. It is clear that team incentives can work well when there is a group of like-minded people with clear organisation goals working together. This helps to build cooperation and collaboration, as it acts like a glue to make people work together to share their knowledge and get along better.
Drawbacks of team incentives
Despite the fact that teamwork is becoming more widely used in all types of organisation, firms are shifting from individual incentives to collective incentives. Team reward systems are difficult to implement because it can be hard to accurately measure the performance of a team and if the incentive plans are not well designed, it can be demotivating. Employers can recognise special effort by awarding prizes to top performance, but this can also alienate the rest of the team. For instance, if the top...