Development Effective Individual Incentive Systems - Literature review Example

Development Effective Individual Incentive Systems BRIEF INTRODUCTION OF THE ISSUE/TOPIC As d by Festre and Garrouste, offering a higher pay to an employee for making him/her to work harder can be related with the notion of incentive(2). From the previous few decades, effective incentive systems have played a decisive role towards the development of multiple organizations in the form of raising the operational performance of their employees. However, from an organization’s perspective, incentive systems can be divided into two parts. The first part is the individual incentive system and the second one is the group incentive system. The individual incentive system mainly focuses towards effective monitoring and rewarding of individual employees within the organizations. Whereas, group incentive system focuses towards monitoring and improvising the performance of an entire group and thus rewarding them accordingly. As reviewed by Magnusson and Nyrenius in the article ‘Incentive Systems an Evaluation of the Motivational Model for Rewards’, it can be apparently observed that incentive schemes are basically formulated through proper evaluation of nomination as well as motivational theories and significant research work done on the opinions of organization’s workforce (2) (Ayer 1-3). With this concern, the main focus of this research paper will be towards analyzing the development of effective individual based incentive systems. Focus will be also provided on the contribution level of individual incentive systems in the field of human resource (HR) development along with depicting personal opinions about this system. 2. SUMMARY OF THE LITERATURE REVIEW According to the journal ‘Individual Incentives within Team Competitions’, which reviewed by Lam, the effectiveness of providing individual incentives is more effective as compared to group incentive schemes (5-6). This particular article is quite useful in the context of analyzing the development of effective individual incentive systems as it demonstrated that employees often show certain sort of indifferences in terms of individual and team performance (5-6). Moreover, depending on the analyses done by Lam, it can be suggested that the incentive provision schemes should be formulated and structured in such a way that these facilitate huge individual rewards to the employees. However, according to the observations made by Condly, Clark and Stolovitch, it can be affirmed that the team based incentive scheme is are much more effective in comparison with individual based incentive (46-47). Condly, Clark and Stolovitch also stated that location factor for this sort of analysis lays no significant effect on the result. Adding to this, a detailed analysis of the reviews made by Condly, Clark and Stolovitch depict that payment of money as incentives ensures increase in an employee’s outcome to an extensive extent in comparison with the offering of other non-monetary and tangible goods or services. The positivity of long-term incentive program planning over short duration plans has also been illustrated in the article of Condly, Clark and Stolovitch (Condly, Clark and Stolovitch 46-47). It can be apparently observed that the incentive system till date has not achieved complete perfection. Multiple flaws exist within this system, which needs to be addressed and mitigated by the managers of an organization. In this regard, The International Society for Performance Improvement in one of their reviews described about various sorts of flaws that exist within individual incentive schemes. One of such identified issue is regarding the inappropriate studies conducted by multiple organizations in terms of the compatibility of incentive plans as per their respective work structure (8). In simple terms, it can be affirmed that the incentive system of one specific organization necessarily cannot be effective in other organizations specifically in terms of employee performance styles and levels. The second issue as per the report published by The International Society for Performance Improvement is about the improper applicability of individual incentive plans. Individual incentive schemes are applied to such employees who perform diverse sort of activities more than average level of performance. However, on the contrary, group incentive schemes are often provided to the team members of a group for their effective performance as a whole towards the accomplishment of predefined set targets. According to the report published by The International Society for Performance Improvement, the occurrence of issues prevailing within the present individual incentive system due to inappropriate front line analysis performed by the companies can be ascertained (14). A suggestive point of view made by The International Society for Performance Improvement portrays that the implementation of individual incentives remain effective only if an employee is capable enough to surpass the targets as set by the respective organizations (14). 3. CONTRIBUTION OF THE LITERATURE REVIEW IN THE FIELD OF HUMAN RESOURCE DEVELOPMENT All the above literature reviews provide a significant insight about various issues and facts that are related towards the implementation of effective individual incentive systems. From a critical viewpoint, it can be affirmed that effectual individual incentive systems lay down significant level of contribution in the area of human resource (HR) development. Since the HRD department of an organization is mainly responsible for managing all the factors related to employee development and retaining, thus it is an utmost necessity for this department to draw critical understanding about the development of incentive processes. Adding to that apart from the employee performance improvement factor the individual incentive scheme also plays significant role towards developing the workflow and output level of the organization (Ratha 1-2). Through proper observations drawn from the review made by The International Society for Performance Improvement, a clear idea about the impact of front line analysis on the functionality of an organization’s HRD in terms of incentives sanctioning can be determined (14). These drawn facts might help the members of the HRD department of respective business corporations in pinpointing out the individuals amid the entire organizational workforce who are capable enough of surpassing their set targets and provide additional benefits to them. Moreover, the analyses might even help the top line managers and HRD department of organizations towards structuring exclusive incentive packages for the chosen individuals as rewards for boosting up their confidence, performance and commitment level towards the attainment of organizational targets. Apart from these, as per the observations made by Condly, Clark and Stolovitch, the effectiveness of group incentive proposal over individual incentive proposal can be ascertained that might provide active support to the organizations in developing the overall performance of their respective workforce (46-47). Based on the above reviews, it can be affirmed from a broader understanding that more research needs to be done in the context of understanding the ways of influencing and motivating the employees. It would be vital to mention in this similar concern that the above reviews provide a brief idea about the effectiveness of tangible and monetary benefits provided to the employees in the form of providing them with intangible and non-monetary incentive schemes. Moreover, from the reviews, the contribution of developing effective individual incentive systems to the field of HRD can also be determined, which would certainly make the organizations to advance this department in order to smoothen the procedure relating to the offering of incentives to the employees (Condly, Clark and Stolovitch 46-47; Lam 5-6; The International Society for Performance Improvement 6-28). 4. REASONS AND THOUGHTS FOR SELECTING THE TOPIC OR ISSUE In this particular section, focus will be laid on discussing my views or thoughts towards selecting this topic, its relevance in the field of HRD and how the topic can be explored further. I consider HRD to be responsible towards preserving the wellbeing of the workforce of an organization. In my opinion, it is the HRD team of an organization, which should make deliberate efforts towards bringing about improvement in the performance levels of every employee within a specific organization. The prime reason for selecting this topic is to acquire a brief idea about the importance of developing effective individual incentive systems and also to ascertain whether these systems actually aid in developing the overall performance of the personnel. According to me, the HRD of an organization should remain much aware about the overall development of an organization, which mostly depends on the performance and the commitment levels of the employees. In this regard, I believe that HRD is not a confined aspect and in future, it can be explored and developed by a considerable extent. The HR personnel must understand that different employees possess different rewarding expectations for their working efforts. In my opinion, an HRD of an organization must be well aware about the fact that offering of high incentives might also help in the area of employee retaining. As for the future perspective, it is quite obvious that with the growth of an organization, there will occur significant increase in the work load as well. Thus, in order to motivate the employees in such scenarios, individual incentive schemes might prove to be very effective. It can be affirmed that the organizations must undertake certain extrinsic studies in order to determine the level of employee satisfaction in terms of salary and monthly incentives received by them. Data, which will be obtained through these sorts of extrinsic studies will further help in formulating more refined individual incentive structures and thus motivating the employees towards facing upcoming levels of challenges. Works Cited Ayer, A. J. “What is Normative Theory?” Normative Theory (1936): 1-3. Print. Condly, Steven J., Clark, Richard E. and Stolovitch, Harold D. “The Effects of Incentives on Workplace Performance: A Meta-analytic Review of Research Studies.” Performance Improvement Quarterly (2003): 46-47. Print. Festre, Agnes and Garrouste, Pierre. ‘”Incentives And Motivations: To What Extend Can Economics Benefit From Psychology?” Introduction (n.d.): 2-3. Print. The International Society for Performance Improvement, “Incentives, Motivation and Workplace Performance: Research & Best Practices”. Value of Tangible Incentive (2002): 6-28. Print. Lam, Lisa. “Individual Incentives within Team Competitions.” Abstract (2009): 5-6. Print. Magnusson, Henrik and Nyrenius, Christine. “Incentive Systems an Evaluation of the Motivational Model for Rewards.” Bachelor Thesis in Management Control (2011): 2-3. Print. Ratha, Bhupendra. “HRD.” Human Resource Development (n.d.): 1-2. Print. Read More