Whether Financial Incentives Are the Best Way to Motivate People for Optimal Performance Outcome - Assignment Example

Introduction In the highly cut throat business, the organization needs to create appropriate climate that inculcates confidence and mutual trust building. The encouraging and incentive driven work environment promotes retention of employees and gives the organization better leverage to compete with their rivals. The experienced and motivated workforce is conducive to higher degree of creative inputs and innovative approach. It is able to give a unique positioning to the organizational products and services. Thus, motivation for the workforce becomes a critical factor for the managerial leadership. The paper would primarily be discussing the issue vis-à-vis arguments for and against the fact that financial incentives are the best way to motivate people for optimal performance outcome. Arguments for the topic The rapid globalization and fast advancing technology have unleashed a plethora of opportunities for people and organizations. The workforce needs to be looked as resource that can be tapped to improve and improvise the performance of the organization in the fiercely competitive business setting (Taylor, 2008). The merit based remuneration and pay equity greatly inculcates confidence and mutual trust building. Thus, financial compensation is vital element of improving and improvising performance outcome of the individuals. Financial and emotional security within the job is vital factor for continued improved performance. The timely and fair promotional avenues accompanied with adequate financial incentives are highly relevant to create a cohesive and committed workforce. Quick et al.(1977) affirm that it is possible that psychological well-being and employee performance are related. Emotions and feelings are intrinsic part of human behaviour and emotional stability of the person in an organization is extremely important for rationalized decision making processes within the work environment. Indeed, socio-psychological well of the employees is reflected in his or her work performance. While increased pay scale is the fundamental issue with the workers, other types of fringe benefits, related to performance, serve as huge attraction for continued high performance. Cascio (2005) believes that workers intrinsically link performance with various factors like increment in pay, free time and paid vacation, benefits in kind, special privileges etc. Thus, when such benefits become part of work culture, the workforce is significantly motivated towards higher performance. Indeed, measuring workers’ performance against financial rewards, hugely encourage flexibility and quality which reflects in the improved organizational performance. Various scholars think that sharing profits with the employees considerably increases the organizational performance through more commitment towards work and facilitates mutual cooperation amongst the employees (Bratton & Gold, 2007; Foot & Hook, 2008). Rewarding the employee with bonus shares of the firm sends a positive message of ownership that greatly helps to forge new bonds of mutual interests. It is also one of the most attractive motivations for their improved performance. Becoming a shareholder of the company develops more personal relationship with the firm and encourages committed goal linked performance. Providing insurance options and extending financial assistance for children’s education are also important considerations that motivate employees for enhanced output. Fisher (2005) believes that various schemes that benefit the employees and provide them with wide scope of options become important ingredients of motivation for improved performance. The education and healthcare are increasingly becoming costly. Thus, the organization’s policies and welfare schemes become the motivating factor for the employees to achieve organization’s goals with more enthusiasm and creativity. While the young may go for comprehensive health insurance, the older employees prefer pension plans. Last but not the least important is the fact that appraisal system is an important aspect of rewarding outstanding employees and serves as important feedback for others to improve their performance (Armstrong & Murlis, 2007). A uniform appraisal system ensures that employees across the world are able to access equal opportunity for personal and professional growth. Disparity in the performance appraisal systems that is considerably influenced by the individual and regional interests not only adversely impacts the performance outcome of the organization but they also demoralize employees and promote distrust. Hence, effective and regular performance appraisal that is linked to the compensation is important tool to evaluate and assess the employees’ worth to the organization. It also becomes one of the most portent tool of motivation for the workforce. Argument against the topic One must realize that globalization has brought in a new socio economic order with the advent of multicultural societies with people coming from different nation, race and culture. The wide scope of new social equation has also given us an opportunity to evolve new paradigms that promote understanding of mutual cultures and values. The traditional process of labour deployment is undergoing a fast transformation, both in terms of quality and quantity. Armstrong and Baron (2005) assert that the performance management is a process that relies on effective management of individuals and team for optimal levels of organizational performance outcome. While premium pay package is important factor, the organizational culture, work conditions and stability within the job also become critical elements for improved performance. Maruska (2003) says that hope and expectations of the people within the organization are the most important factors that have direct impact on their performance outcome as well as that of the organization. The expectations of the people and their hope are issues that may have wider ramifications on the performance as they may encompass diverse objectives and meanings. The expectations are about how things should be whereas hope is how people would like the things to be. A good leadership within the organization promotes the relationship building through mutual trust and confidence. BY promoting collection decision making, it is able to link expectations and hopes of the people with the wider goals and objectives of the organization. It is also essential that people are able to exercise their freedom, choose judiciously and interpret things and issues with wider perspectives. Equity in pay and affirmative actions are important criteria for promoting transparency in work culture. Some scholars assert that the gender segregation in occupation has become a major indicator of gender inequality (Reskin and Roos 1990, Walby 1997). But in the cutting edge competition, merit outplays the gender biases and people need to overcome their psychological barriers to compete as individuals. The changing dynamics of socio economic and political variables have increasingly become vital issues within the changing societal norms. Therefore, equity and equitable distribution of opportunities cut across racial divide and gender discrimination and greatly influence the performance. Job satisfaction is another important issue that is intrinsically linked to improved performance. Sweeney, et al. (2002) assert that it is multifaceted and encompasses modules of interpersonal values and criteria that cannot be applied uniformly to all human-beings. The criteria for job satisfaction may vary but it variably encourages retention, quality and consistency in work paradigms. Indeed, Blood et al., (2002) claim that it is directly correlated to improved work performance, high values, better health, reduced absenteeism and motivation. Hence, HR leadership continuously makes effort to create congenial work environment that promote job satisfaction. Learning organizations also hugely influence individual performance. In the contemporary environment of fast advancing technology and rapid globalization, businesses need to evolve with time. The transparent organization structure empowers employees to make informed decisions based on shared learning and understanding. The organizational culture facilitates better understanding, prediction and improvisation in work place that leads to improved performance. They are committed to organizational goals and objectives and work in teams that encourages collective decision making. Conclusion One can therefore conclude that financial incentives are not the only motivating factors for improved performance of the organization. The contemporary business environment has become hugely competitive and one needs to be flexible in its business strategy to meet the challenges of the time. The participatory approach of organizational leadership is highly motivating. Indeed, for any organization to expand and succeed, it is crucial that its people are recognized as vital part of its strategy and organizational goals and objectives be interpreted in the context of the changing paradigms of the times. While financial incentives are vital motivating factors, organizational culture and managerial leadership become major leveraging elements for improved performance. Reference Armstrong, A. & Baron, A. (2005). Managing Performance. London, CIPD. Armstrong, M. & Murlis, H. (2007). Reward Management. 5th Edition, London. Blood, G. W., Ridenour, J. S., Thomas, E. A., Qualls, C. D., & Hammer, C. S. (2002). Predicting job satisfaction among speech-language pathologists working in public schools. Language, Speech, and Hearing Services in Schools, 33, 282-290. Bratton, J. & Gold, J. (2007). Human Resource Management, Theory and Practice. Basingstoke, Palgrave. Cascio, Wayne F. (2005). Managing Human Resources: Productivity, Quality of Work Life, Profit. 7th Edition. The McGraw−Hill Co. Fisher, C. (2005). Performing Management and Performance Management in J. Leopold et al (eds.) The Strategic Managing of Human Resources, Harlow, FT/Prentice Hall. Foot, M. & Hook, C. (2008). Introducing Human Resource Management. 5th Edition, Harlow, FT/Prentice Hall. Maruska, Don.(2003). How Great Decisions Get Made. AMACOM. Reskin B.F. and Roos P.A. (1990). Job Queues, Gender Queues. Philadelphia, Temple University Press. Sweeney, A. P., Hohenshil, T. H., & Fortune, J. C. (2002). Job satisfaction among employee assistance professionals: A national study. Journal of Employment Counseling, 39, 50-60. Taylor, S. (2008). People Resourcing. 4th Edition, London, CIPD. Quick, JC et al. (1977). Preventive stress management in organization. Washington DC. American Psychology Association. Walby S. (1997). Gender Transformations. London, Routledge. Read More