Management of Incentive

Incentive is a special reward that drives an employee to perform beyond the normal level of performance. Also incentive can identify as something additional than base salary. Basically incentive pay for performance. This link reward cost and organizational performance. Incentive alternatively called as variable pay and contingent pay.

Management of incentives can defined as the process of development, implementation, and maintenance of a fair and adequate system of incentive.

If employee perform in normal level of performance or non performance in normal level both of those receive base salary and wages.


  • Provide real motivation for the employee.
  • Incentive payments are variable costs link to the achievement of result.
  • Good way to evaluate organization hard work prople1s performance.
  • Help to attract only top performances, when salary budgets are low.
  • Incentive encourage team work and unit cohesiveness. (When payments based on team result)

Types of Incentive Plan

Individual Incentive Plan

Focus on individual job performance. This discourage team work. This may develop “hostiled atmosphere” among employees some may be jealous on others. Performance threshold in minimum level of performance to qualified to meet incentive payment.

  • Piece work

– Straight peace work

Employee pay a sum for each unit produce by him.

Ex: organization pay 1$ per 1unit. Normal produce 50 units per 1hour if employee produce 60 units per 1hour. Other extra units also pay as using same peace amount.

– Differencial piece rate

Employee paid piece rate for each of the units upto standard outputs. Higher piece rate for each unit produce over the standard.

Ex: Upto 50 units per 1hour organization pay 1$ per 1 units. Extra units than 50 units per 1hour, each piece paid as 3$.

  • Standard hour plan

Employer pay incentive if employee complete the work in less than standard time. This method use service organizations.

  • Bonuses

One time payment usually per year. This is an additional income for the employee. Common among managerial and incentive employees.

2 ways of paying bonuses

– Certain Parentage of base salary.

– Monthly wise ( give monthly salary as bonus )

  • Merit pay

Paid based on employee individual performance measured through employee performance evaluation system. Usually become a part of employee base pay. This payment add for base salary. After that also calculate EPF and ETF amounts. Merit pay is cumulative.

  • Lum-Sum Merit pay

This not add to the base salary. This is not cumulative. After job performance review, calculate this amount.

Team Incentive Plan

Focus on group job performance and paid collectively. For high performance organization pay high incentive. This motivate employees to engage with team work.

  • Team incentive plan

Organization give time frame for team, if they achieve target within the given time period then they receive incentive.

  • Gain sharing

Advantage which have obtain by effort of employees.

Advantages- Increase cohesiveness

Increase employee motivation

Organization team culture will be develop

Knowledge sharing will happen

Disadvantages – Free-write effect ( some people are gain incentive without performing)

Inter group conflicts happen

Low performance people become demotivate

Complex payout formula difficult to understand for everyone

Organizational Incentive Plan

Focus on entire organizational performance. Incentives are paid organizationally. This reduce competition among employee. Encourage all employees work together to generate better organizational outcomes. Based on hierarchy incentive amount will depend.

  • Profit sharing

Shares profit among all the employees within organization.

  • Stock options

This is the way of achieving employee ownership. This give employees the opportunity to buy a company shares at a previously fixed price.

  • Employee stock ownership

That gives employees certain tax and financial advantages when stock is granted to employees.


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What are the Strategies for improving Helath & Safety?

Strategies for minimizing Occupational Accident

  • Environment design Have to design work environment in safety manner. In here we should store dangerous equipments and tools in a separate place. Request employees to use safe equipments. Such as helmet, eye guard, boots, gloves and nail guard.
  • Floor cleaning should maintain clean floor. It should not be wet. It is best to follow daily floor cleaning method.
  • Maintenance. Should do reapair and maintain machines frequently. Should follow maintenance plan. Through that can avoid corrective maintenance and accidents to the employees.
  • Continues Inspection. Before and after working, regulatory should check machines to identify whether those machines are working or not. As an example cleaning dust, check oil level and so on.
  • Safety Training and Education. HR division can provide training to prevent from accident. Such as fire training. In here can take machine operators involvement to do machine maintenance work. Because of that they will operate machine more carefully.

Strategies for minimizing Occupational Diseases

  • Medical Examination. can conduct medical test annually, semi annually, quarterly and so on. Participation of every workers are very important.
  • Physical fitness program. Conduct various exercise sessions for workers. Such as jimnasium, yoga classes and etc.
  • Health Education. Through doctors conduct seminars and workshops provide health education for workers.
  • Enclosure keeping such hazard thing keep away from every employees. It is good to use separate place for that.
  • Maintain Sound Physical Working Conditions such as ventilation, lightning, air conditions.

Strategies for minimizing low quality of work life

  • Redesign jobs by considefing both efficiency elements (standardization, specialization) and behavioral elements in order to ensure a proper balance.
  • Apply job enrichment. Give power to plan, do and control the job.
  • Obtain opinion, suggestions and comments from employee before making decisions.

Strategies for minimizing Organizational Stress

  • Ensure job security of the employees.
  • Provide training to reduce stress.
  • Ensure carrer development and give facilities for that. Carrer development is series of job that one person perform with his work period.
  • Give fair and sufficient usages of salaries.