Introduction
Employee’s incentive programs are responsible for rewarding employees who have done an exceptional job through reaching the company’s goals, attaining milestones or for a job well done. These kinds of programs are meant to reward valued employees. The schemes have proven to be a success I increasing the motivation of employees the performance of a company in general.(Sparks, 231-245) An incentive program is awesome ways to illustrate to employees that you care for their input whiles simultaneously improve the potential of a business.
The number of companies that include incentive programs in their system keep growing daily. This is because of the tremendous effect that such programs have on the motivation of employees. Their performance becomes better and more efficient. Companies make use of various forms of incentives. They range from gift cards, cash trip rewards, clothings, time off etc. However, before a company takes up an incentive program then it should consider a few things. For example, it should consider the effectiveness of its communication system and the much input that employees have on particular projects.
Organisations compensate their employees in different ways. There are companies which pay salary to their workers yet there are others which offer incentive programs such as reward sales, bonus or commissions. These distinct incentive programs come in many different varieties. Each giving extra money or other rewards to workers who succeed in sales (Bruss, 154-206).
A commission based on percentage incentive program rewards retail personnel for making sales. The commission is calculated as a percentage of the amount of sale. This means that the greater the sale, the more the commission. For example, a 20 per cent commission program allows aworker to earn $400 from a $2,000 purchase.
A percentage commission program helps inencouraging personnel in sellingexclusive items and to up-sell extra products to customers. Percentage commission programs can be utilised in adding to a standard basic salary, or as the sole means of personnel reward (Bruss, 340-366).
Auto sales are a prominent industry that is commission-based. People who sell cars are paid wholly on commissions. A typical variation of the commission is 20 to 40% of the front end profit. 30% gives a fair average commission. A front end commission is for instance, a dealer net of $2000 on a car sale. The salesperson then earns $600. In the scenario of a loss net, where a dealer wants to clear out his inventory, a $200 to $300 “mini” imbursement is often replaced in lieu of a percentage of a commission.
Why and how incentive programs work
Improved performance
Reports from the human resource department have it that employees become more productive in companies that have taken up incentive schemes. Such schemes boost productivity in various ways. The employees are given incentives for achieving target goal or doing a good work. The incentives come in varieties but the main objective is to encourage employees to strive for set goals. The promised incentives with well-defined goals, employees become more productive (Jordan, 145-198).
Reduction of absenteeism
Employees engage more in their work when offered incentives that drives. The awards are meant to motivate the employees. The impact of an incentive program can be witnessed from the initial moment it is introduced. It triggers a mass reaction towards quality work. Performance can carry onsteadily under the program.After all, what incentive programs thrive to achieve is boosted by the simple fact that people enjoy rewards for their hard work. If an employer feels valued and is aiming for precise targets that bring rewards then they are most likely to report to work daily.
Appreciation
Employees have shared their need to feel valued by their employers. They want recognition for a work well done. Reports have it that companies which offer incentives create a happy and conducive work environment.
Cooperation
Employees working together are more productive than when working individually. When employees work to obtain rewards or goals, they come together to attain the desired rewards. They use their potential better yet do not feel overworked. Incentives help build team work. Teamwork promotes efficiency and harmony in the working environment.
Motivation
People find it difficult to drive themselves to work, especially when the work becomes monotonous. Employees get inner drive to accomplish a task when they are offered a cash bonus or an alternative incentive. They feel motivated to finish the task at hand faster and efficiently. The employees feel that if their organisation should care enough to reward them for their work then they should as well reciprocate the concern by working harder.
Reduction of cost
Incentives programs have the effect of reducing a company’s cost. These costs can be measured in terms of reduction in absenteeism;lessened cost of recruitment and staff turnover.in addition, there is an increase on investment returns due to improved productivity of the staff.
Improved achievement of objective
Incentive programs are a superb means of achieving the company’s set goals. By using the program, employers can set attainable objectives and reward employees for achieving them. In this way, productivity and morale is boosted yet company goals are fulfilled.
Increased morale of company
Incentive programs contribute to a happy and harmonious workplace. The setting of goals and target objectives help create focus with purpose. Therefore, an incentive program can be credited for increasing the morale of the company which in turn lessen absenteeism and the total company cost ( Skule, Reichborn, 35-46).
Increased company loyalty
The loyalty of company cannot be bought. However, rewards and incentives can help secure commitment form workers. Employees who are offered incentives feel valued for their input. In return, they pledge an allegiance to the organisation.
A decrease in turnover
An incentive program forms a conducive and productive workplace. Employees tend to enjoy such environments and opt to stay for a long term. That is to say the incentives reduce the company’s turnover. The advantage of having consistent staff is that money spending on recruitment of new staff is cut shot. In addition, the company retains its loyal and committed employees.
Designing an incentive programs that is successful
An incentive program signifies considerable investments to most companies. When all the employees are engaged to partake in the program. This will help the company to receive an adequate return on what they have invested. According to the idea of quality performance, the incentive programs boost the perception of an employee about themselves in obtaining the goals of their program. In order to motivate employees properly, programs should be planned to give a various products and services to them on the basis of their needs and interests. The programs should have a method of rewarding employees while ensuring that their motivation remains in place. Furthermore, a fruitful movement needs rules that are clearly defined, rewards well aligned, communication strategies that are efficient and success metrics that are measurable. When they mix each of the mentioned elements then companies are in a better position to make everyone participate while at the same time improve the overall effectiveness of the program.
Conclusion
An incentive program has rippling effect on staff. It brings the needed drive that brings in the big cash for a company. It is of a mutual benefit, both for the employed and the employer.(Williams, 45-51) It initially helps create a good relationship between the boss and his workers. The employer feels valued and reacts positively by being productive. The company benefits from such efforts and loyal employees. Ultimately, everyone is happy. However, it is important that the scheme is properly designed. The strategy is to focus on the objectives of the company. After having clearly defined goals, the system should communicate to the employees what is expected of them. Lastly, the incentive programs should have rewards that are of relevance to their employees. Something that they would desire. It should be of various varieties but attractive for the employees. The incentive program cannot be a success if a proper structure is not put in place. It can end up being an expensive project for the company. However, if it is well strategized then both the employees and the employers can enjoy the numerous benefits. Therefore, we can conclude, without reasonable doubt that incentive programs bring a mutual benefit to both the company and its personnel. It is advisable for the company to incorporate such programs into the system to yield greater profits.
Works cited
Bruss, Robert. “Agent's Commission is Only One Factor To Consider.” Orlando Sentinel (2001): 340-366.
—. “You can deal on service commission,but does it pay?” Orlando Sentinel (2008): 154-206.
Jordan, Bay. “Improving Morale And Organisational Performance.” Employee Incentive Programs (2012): 145-198.
Sparks, Sarah D. “Ed sweeten the deal for evaluating teacher's incentive fund.” Education Week (2007): 231-245.
Sveinung Skule, Anders N. Reichborn, European Centre for the Development of Vocational Training. Learning-conducive work. Europe: Office for Official Publications of the European communities , 2002.
Williams, Terry. the brain-based boss. new zealand: Fishpond ltd, 2012.
