What Compensation And Benefits Are Used As Incentives
What Compensation And Benefits Have Been Used As Incentives For Employ
What compensation and benefits have been used as incentives for employee productivity and motivation? Provide specific details and show the link between the compensation or benefit and the increased productivity or motivation with facts and figures (without violating any confidentiality rules). Evaluate how effective the compensation and benefits were at motivating employees and increasing productivity. Support your response with at least two to three scholarly references. Write your initial response in a minimum of 300 words. Apply APA standards to citation of sources.
Paper For Above instruction
Introduction
Compensation and benefits are fundamental tools organizations utilize to motivate employees and enhance productivity. The strategic use of financial incentives, alongside non-monetary benefits, plays a critical role in attracting, retaining, and motivating staff. This paper explores various compensation and benefits strategies employed as incentives, analyzes their effectiveness based on empirical evidence, and underscores the link between incentives and employee performance.
Financial Incentives
Monetary compensation remains the most direct and measurable form of motivation. Performance-based bonuses, commissions, and merit pay are common strategies companies deploy to incentivize productivity. For example, a study by Osterloh and Frey (2000) highlights that performance-based pay can significantly boost individual output when designed properly. A notable case is Google’s performance bonus structure, where employees received bonuses based on individual and team achievements, leading to increased innovation and productivity (Bock, 2015). Additionally, performance-linked incentives have been associated with higher sales volumes; a report by Lazear (2000) indicates that sales employees with commission-based pay show 20-30% higher sales figures compared to those on fixed salaries.
Non-Monetary Benefits
Besides direct financial rewards, organizations increasingly utilize non-monetary benefits such as flexible work arrangements, professional development opportunities, and health benefits to motivate employees. Flexibility in working hours and remote work options have been linked to increased job satisfaction and productivity. According to a survey by Bloom et al. (2015), remote workers reported a 13% increase in productivity and an 8% decrease in employee turnover rates. Similarly, investment in employee development through training and education enhances motivation by demonstrating organizational commitment to employee growth (Deci & Ryan, 2000). These benefits have proven effective in fostering loyalty and a sense of organizational support, which subsequently boosts motivation.
Evaluating Effectiveness
The effectiveness of compensation and benefits as incentives varies based on proper alignment with employee needs and organizational goals. Performance-linked incentives tend to be more effective when transparent and tied to measurable outcomes. However, overreliance on monetary incentives can erode intrinsic motivation; Deci et al. (1999) suggest that external rewards may undermine internal drive over time if not balanced with intrinsic motivators such as meaningful work. Non-monetary benefits, when aligned with employee preferences, have shown considerable positive impacts on motivation and retention. A combination of both financial and non-financial incentives tends to produce the best outcomes in enhancing productivity (Gerhart & Rynes, 2003).
Conclusion
Incentives in the form of compensation and benefits are pivotal in motivating employees and increasing productivity. Financial incentives like bonuses and commissions are effective in boosting short-term performance, while non-monetary benefits—such as flexible work arrangements and professional development—support long-term engagement. The optimal strategy involves integrating both types of incentives to align organizational objectives with employee motivations effectively.
References
Bock, L. (2015). Work rules!: Insights from inside Google that will transform how you live and lead. Twelve.
Deci, E. L., & Ryan, R. M. (2000). The "what" and "why" of goal pursuits: Human needs and the self-determination of behavior. Psychological Inquiry, 11(4), 227–268.
Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 125(6), 627–668.
Gerhart, B., & Rynes, S. L. (2003). Compensation: Theory, evidence, and strategic implications. SAGE Publications.
Lazear, E. P. (2000). Performance pay and productivity. American Economic Review, 90(5), 1346–1361.
Osterloh, M., & Frey, B. S. (2000). Motivation, knowledge management, and organizational forms. Organization Science, 11(3), 285–306.
Bock, L. (2015). Work rules!: Insights from inside Google that will transform how you live and lead. Twelve.
Bloom, N., et al. (2015). Does working from home work? Evidence from a Chinese experiment. Quarterly Journal of Economics, 130(1), 165–218.