Employee Productivity - How Incentives Effect Employee Performance

The importance of high morale is the foundation of a successful corporate culture, which can be the result of a number of factors. Including however not limited to, team involvement, individual contribution, strong adherence to a code of ethics, and a unique incentive program to increase performance and to collectively reach company goals. An industry standard for many reasons, incentive programs help to persuade performance, foster team unity, and friendly inner-office competition. It is not always so obvious is to know the most effective means of motivating your workforce.

For the most part everyone wants to be recognized and appreciated for a job well done, however it is also worth noting that not everyone desires the same type of recognition. According to Littauer (2006), the person's personality determines how they will respond to recognition and what motivates them the most. Employee incentive programs can go a long way toward recognizing high achievers and incentivizing others to reach higher.

Perhaps one of the most effective ways to explain how to design an effective incentive program would be to highlight some of the reasons incentive programs fail. Rao (2010), cites the following reasons, according to some experts, as to why incentives plan fail:

Performance pay cannot replace good management. Lack of clear goals, inadequate employee selection and training, and a hostile workforce (or management), are some factors that impede performance.

Pay is not a motivator. Employers should not only provide adequate financial rewards, but also offer opportunities that lead to potential advancement, and positions that are more challenging.

Rewards may undermine responsiveness. When employee's focus is to achieve a specific goal such as cutting cost, any changes or distractions make achieving the goal harder for that employee.

Leadership lacking proper management provokes resentment, in today's tough economic environment everyone is dealing with more issues than ever. Therefore, working in an environment without predetermined boundaries and specific goals fosters poor performance, and increased insensitivity to the goals of the organization. For many if pay were the single reason for performing on the job, the job would go uncompleted. There is always a forward progression for the goal-oriented individual, who seeks opportunities to not only add value to others and their organization, but also personal development. Room for advancement is often included in the description of open positions as a way to attract talented individuals. If your entire incentive program is not built on incremental goals, then the question, (what do I do now?) will be the prevailing thought and hinder the creativity needed to enhance the newly achieved objective. Foreseen changes incorporated in the initial designing of the program will reduce distractions.

One of the primary reasons for low employee morale leading to high absenteeism is that fact that once a job or skill has reached a level of mastery, it becomes more challenging to keep employees engaged. Therefore, the added incentive to complete a project within a certain parameters, coupled with company-wide recognition, and team participation, helps to foster a dynamic culture, create a new level of excitement, and drive for achieving higher levels of performance.