Incentive Plans
University of Phoenix Online
MGT/431
December 5, 2006
Incentive Plans
The purpose of organizational incentive plans is to create a working environment where the organization displays company directions and visions and use performance benefits that work best when management has invested the time and energy to create a business plan that defines where the company is heading and how the company is going to get there. Incentive compensation is considered an effective tool in motivating employees and aligning them to organizational objectives. Incentives are rewards for an agreed target goals. The organization can use different types of incentives e.g. bonus, commission, certificates or trips. Incentives are effective when individual, team and overall objectives are taken into accounts.
Incentives are basically motivation tools used to promote individual and company growth. Maslow’s hierarchy of individual needs suggest there are five levels in which an individual is motivated. Physiological needs are required to sustain life. Examples are air, water, food, and sleep. Safety needs require job security, safe living areas, and financial resources. According to Maslow’s hierarchy, if a person feels that he or she is in harm’s way, higher needs will not receive much attention (2002-2006). Belongingness deals with social needs. Examples include want friends, and the need to give and receive love. Esteem is the need to feel important, self- respect, recognition, and achievement. Self-actualization needs involve truth, justice, realism, and wisdom. Self-actualized persons have frequent occurrences of peak experiences, which are energized moments of profound happiness and harmony. According to Maslow, only a small percentage of the population reaches the level of self-actualization (2002-2006).
The importance of utilizing incentives is to insure the main objective is being met. Financial incentives persuade and motivate employees to some degree,...