Human beings respond to incentives and penalties in different ways. An incentive is something that motivates an individual to take an action or to apply more effort in an activity or task. Certainly, an individual will put in a lot of efforts when he or she knows too well that his efforts will be rewarded after completion of a task or after achieving a certain pre-determined goal. For instance, a company may have an incentive scheme for employees such as bonus, promotion and reward and recognition system that it follows to the letter. In companies where such incentive schemes are clearly spelt out, employees seem motivated and strive towards achieving organizational goals and objectives. This has the net benefit of increasing organizational growth and productivity. It is also important to note that existence of such incentives in organizations such as promotion may hinder team work as individuals may tend to be self optimized in order to be recognized.
Penalty on the other hand refers to a kind of punishment that is meted out for failing to undertake a certain exercise or for failing to achieve a particular goal. Penalty can also be used to motivate action towards attaining a designated goal. In organizations where there are elaborate schemes for instituting penalties, employees usually feel coerced to undertake certain tasks as such it instills fear on the side of employees in order to avoid the penalties. Penalty also enhances accountability as individuals would not want to be penalized for their mistakes. On the contrary, penalty may have adverse effects in an organization as it tends to instill fear amongst organizational staff hence staff members would be hesitant to take responsibilities in fear that the outcome may attract penalties like salary cuts, dismissal, demotions and any other form of punishment that may be instituted by an organization for such mistakes. Imposing punishments on individuals tends to make them concentrate more on omission of errors to avoid mistakes rather than the overall objective of a company.
Human reaction to incentives and penalties is supported by Goal setting theory which puts forward two determinants of behavior. According to the theory, cognitive determinants of behavior are intentions and values. Intentions are considered as the immediate antecedent of human action while behavior presents itself in acceptance or choice of intentions and consequent obligation to the set goals (Locke, 1968). It is the recognition that instructions inherently affect behavior only if it is accepted consciously and this makes goal setting a cognitive theory of motivation. A goal is defined as the level of performance that an individual is aiming to achieve. As such, it is considered as the object or aim of a particular behavior. According to Locke (1968), goals give direction to attention and action. Additionally, goals mobilize effort in proportion to apparent requirements of a task or goal. Therefore, like expectancy theory, goal setting theory attempts to explain how and why behavior is facilitated or restrained in within organizations. Goal-setting theory avers that the moment a hard task is accepted by an individual, the best thing is to strive and attain the goal or reach a decision to abandon the goal (Locke, 1968).
There is also overwhelming evidence that suggest that both goals and feedback are very necessary for performance improvement. It is also said that incentives, participation and differences at individual level also improve performance mostly through goal setting. McLean and Persico (1994) observed, however, that the goal in question has to be valid. This means that they must meet three criteria namely: data must be obtained from a working system in a setting of statistical control, a valid methodology must be employed and the employees must struggle to meet the goal.
In studying the development program for administrators in a hospital, Wexley and Nemeroff (1975) established that a treatment group that was assigned a performance goal was significantly better at applying learned knowledge, skills and attitude than a control group that had no goals assigned to them. However, Gist, Bavetta, and Stevens (1990) had a dissenting voice on the effects of goal setting and self management as transfer strategies and the use of salary negotiation approach in a simulation.
My personal experience with incentives and penalty is that whenever I am promised a reward by my parents like when I was studying at elementary level, my father promised to buy me a convertible car if and when I attained a B grade at my high school diploma. The promise to be rewarded by a convertible car acted as an incentive and motivated me to work hard towards attaining a B grade and I was able to attain this objective. In the same vein, a penalty has also served a motivation towards attaining a particular goal in my life. An example is when my parents threatened not to allow me to go out and play with my friend in the evening if I had not completed my homework. Since I loved playing hockey with my friend in the evening, I had to ensure that I finish my homework hurriedly in order to get the opportunity to play with my friend. This however, had a negative implication in the quality of the homework that I submitted as my aim was to get an opportunity to play with friends rather than concentrating in my homework. It later came to the realization of my parents that my performance dwindled during this period and this was later attributed to the fact that I took a lot of time playing with my friends in the evening.
The other theory that supports incentives and penalty is Douglas Mc Gregor’s theory commonly known as theory X and theory Y. Theory X holds that an average human being has an intense dislike for work. The theory avers that people are naturally lazy and avoids work at all cost (McGregor, 1984). Theory X holds that such employees can only work when there is a penalty for failing to work. Such employees will only work after being coerced, intimidated and threatened by their superiors. The theory assumes that individuals prefer to be supervised and directed as in order to work. Therefore, managers should be authoritative and strict with their subordinates at their work place (McGregor, 1984).
Theory Y on the other hand considers employees as people who consider work as natural and are motivated to work. Such employees do not need to be followed up by their superiors and would always be motivated to work. Managers believe that the satisfaction of delivering an excellent job is a strong motivation that will propel employees to work hard. Theory Y holds that people have the capacity to accept and seek responsibilities besides applying invention and innovation to any form of problem so long as they are working under the right conditions. The theory also holds that managers should be in a position to share responsibilities with their subordinates. Managers should therefore take advantage of their subordinate’s willingness and ability to work by providing a climate that will not only bring out the best in their staff members but will also give them room for personal improvement and upward mobility (McGregor, 1984).
However, the extent to which this theory applies depends on the type of the organization, ownership, size of the organization and the philosophy of the top management and many other factors.
References
Locke, A. (1968). Toward the theory of motivation and incentives.
Organizational Behavior and Human Performance. New York: Sage publishers.
McGregor, D. (1984). The flip Side of Human resource Development. New York: McGrawHill
Wexley P. And Nemeroff D. (1975). Performance Appraisal in organizations. New York:
Sage publishers
