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The Pros and Cons of Employee Incentive Programs

The Cons Of Incentive Programs

The Cons Of Incentive Programs
  • May Encourage Deception: Employees may look for ways to make their performance appear to be good when it isn’t.
  • Misaligned Incentives: poorly conceived ones may incentivize risky and irresponsible behavior that undermines the mission of the company. 
  • Can Lead to Conflict: iI competitive workplaces with limited rewards, employees may engage in bad behavior to get ahead or become convinced that pursuing incentives is a zero-sum proposition and become resentful. 

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The Pros and Cons of Employee Incentive Programs

The Pros and Cons of Employee Incentive Programs

https://www.business2community.com/human-resources/the-pros-and-cons-of-employee-incentive-programs-02153490

business2community.com

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Key Ideas

Tips To Establish A Benign Incentives Program

  • Ongoing feedback from both customers and employees can help provide an indication of how well these programs are working.
  • Deal with issues directly and transparently to ensure that employees are clear about the program’s expectations and goals.

The Cons Of Incentive Programs

  • May Encourage Deception: Employees may look for ways to make their performance appear to be good when it isn’t.
  • Misaligned Incentives: poorly conceived ones may incentivize risky and irresponsible behavior that undermines the mission of the company. 
  • Can Lead to Conflict: iI competitive workplaces with limited rewards, employees may engage in bad behavior to get ahead or become convinced that pursuing incentives is a zero-sum proposition and become resentful. 

The Pros Of Incentive Programs

  • Increased Productivity: Rewarding the delivery of tangible results reinforces that good work will be rewarded. 
  • Strengthens Succession Pipeline: Employees often try to improve their skills in the pursuit of incentives, ultimately increasing their own efficiency. 
  • Encourages Retention: A good incentive program increases employee job satisfaction and overall loyalty to the organization. 

SIMILAR ARTICLES & IDEAS:

Incentive Program Essentials
  • Goals and objectives should be clearly defined for staffers.
  • Workload should be equitably distributed to avoid resentment from staffers who feel they have to carry poor-p...
Effects Of Incentives On Business
  • Motivational Tool: Incentive programs motivate employees to be more productive and consequentially increase the company’s earnings.
  • Promoting Teamwork: members of teams that earn bonus according to collective productivity may support and encourage each other to perform at top levels. 
  • Morale Boosters: if employees see a direct correlation between effort and earnings morale and job satisfaction increases while turnover and absenteeism decreases.
  • Service Levels: employees competing for or striving to meet the goals of an incentive plan may provide higher degrees of service to your customers. 
The Peter Principle
The Peter Principle

It refers to an observation wherein people who perform well in their job gets promoted until eventually, they will reach a stage where they are incompetent for that job.

The Evidence for the Peter Principle

A study looked at promotions and performance of some 40,000 sales workers across 131 firms.

It showed that the best salespeople as measured by sales revenue are more likely to be promoted (top figure) but their value added as managers actually declines in their sales revenues (bottom figure).

The "Purpose" of Promoting Workers
  • To assign the suitable person to the managerial role.
  • To motivate workers excel in their current roles.

However, If firms promoted workers on the basis of managerial potential rather than current performance, employees may have fewer incentives to work as hard.

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What Are the Pros of Incentives?
What Are the Pros of Incentives?
  1. Having a good salary and benefits package is great, but having extra incentives for a job well done makes workers feel appreciated. That decreases turnover and increases profits.
What Are the Cons of Incentives?
  1. Create conflict: those who don’t receive incentives may be jealous of those who do regardless of merit. Those who receive incentives might also be upset if they worked harder than others to get the same reward.
  2. The focus of work becomes competitive instead of being focused on quality and people will only work as much as it takes to earn the incentive.
  3. It eliminates productivity for everyone except top performers who are more benefited by incentives. 
  4. Incentives can become quite costly as they need to continue to rise on a scale of cost in order to remain effective.
The Psychology Of Behavior

In trying to change a behavior, reason will take you only so far, incentives must be taken into account as well. 

In psychology, operant conditioning is a type of learning in whi...

Continuous Versus Intermittent Reinforcement

Studies on reinforcement revealed that the best way for us to learn complex behaviors is via continuous reinforcement, in which the desired behavior is rewarded every time it’s performed. Consistency and timing are the keys.

Nonetheless, some argue that intermittent reinforcement is the most efficient way to maintain an already learnt behavior. It consists of giving reinforcement only some of the times that the desired behavior occurs.

The Benefits Of Intermittent Reinforcement
  • Rewarding the behavior immediately may take time away from the behavior’s continuation.
  • It’s cheaper not to reward every instance of a desired behavior.
  • By making the rewards unpredictable, you trigger excitement and thus get an increase in response without increasing the amount of reinforcement.
  • Since the person is already adapted to not always being rewarded, they take longer to stopping the behavior when reinforcement is removed.

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The power of taking on extra jobs
The power of taking on extra jobs

Many managers and leaders focus obsessively on their current jobs. They don't believe they can be successful without that single focus.

However, most realize that to advance your career...

The value of strategic side gigs

A survey of 122 senior executives from a variety of industries agreed that outside engagements were critical to leadership success now and in the future.

Meaningful engagement should be in activities that expose you to different people, information, and cultures, but is synergistic with your personal interests and your current or future primary work. Think of yourself as having a portfolio where your job is in the middle, the outside activities surround and complement it, and you use what you've learned to advance each sphere.

Finding the time for a side gig

Although executives face a high demand on their time, private and public sector leaders believe that you can find the time if you make it a priority. (Although you may have to give up some nights or weekends.) Make sure you deliver in your job and for your family, then take on additional responsibilities.

Try to spend 10% to 20% on these "extracurricular" activities. The amount needn't be consistent every week or month.

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Two types of motivation

Motivation is categorized into two basic types: Extrinsic and intrinsic.

  • Extrinsic motivation is related to external forces like money or fame.
  • Intrinsic motivation
Money as a motivation

Money as a tool for motivation is limiting at best, and the 'carrot and stick' approach many managers use to motivate employees is will actually achieve the opposite effect of what was intended.

Conditional rewards

‘If, then’ rewards or conditional rewards are when we promise to give something to an individual when they complete a certain task.

These rewards can have a negative impact on motivation as the employees lose the will to work on that task for the sake of working.

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Innovation and Creativity
Innovation and Creativity

Creativity is about formulating new original ideas, while innovation is about how those ideas are being incorporated to produce and introduce new, useful, and feas...

Innovation in Entrepreneurship and Startups

Innovation can be achieved by mature, large companies, not only by startups.

While most innovation comes from startup companies, some of the top innovative companies are mature and large (Apple was founded in 1976 and generates $228 billion. Google: 1998, $78 billion, Microsoft: 1975, $87 billion.) The myth acts as a self-fulfilling prophecy and deters large companies from attempting to innovate like startups.

Being born creative

Creativity can be learned and exercised.

It can be affected by your practices, how you expose yourself to old ideas, procrastinate to let them incubate, trigger the combination of those ideas into new ones, and relax to let it happen. Great ideas might feel accidental, but they are not.

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Our Own Personal Motivation
Our Own Personal Motivation

A whole lot of ingredients go into the cauldron of motivation, and each one of us has different personality attributes, requiring a specific and tailored approach. The Myers-Briggs Personality Type...

Promotion And Prevention Work Personalities
  • In a professional setting, the promotion-focused people are optimistic, speed-oriented, great brainstormers, plan for best-case scenarios and are also open to new opportunities. The people rely on positive feedback and can be dejected when things are not right. They like to think out-of-the-box and dive into work such as musicians, copywriters, inventors and consultants.
  • Prevention-focused people are slow and steady, provide accuracy, and have tried and tested ways of doing things. The people are uncomfortable with short deadlines, praise, and feel worried or anxious when things aren’t going smoothly. Being risk-aversive, they do great in administrative work, bookkeeping, accounting, manufacturing and risk-management work. Any job requiring accuracy and attention to detail would fit these personality types.
Motivational Fit

It enhances and sustains the value of the individual. When managers' motivational strategies do not align with the dominant focus of one employee (prevention or promotion), then it is less likely the individual will achieve one’s goal.

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Tips To Increase Motivation On Business
Tips To Increase Motivation On Business
  • Productivity is what keeps businesses alive and incentives increases it. They might be an incentive in how your office culture is, or how you reward great work – but incentives that dri...