If the company could perfectly supervise its employees at no cost, the use of incentive payments would be presented as unnecessary, since the company and employees could negotiate on the level of effort that the latter should contribute, determining the final remuneration based on the compliance or not of what was agreed.
For this reason, it is to be expected that when there are supervisory difficulties and, therefore, it is costly to directly determine the effort or contributions made by the worker, the company will more frequently resort to the use of variable remuneration and motivations of different kinds. Consequently, we should expect a negative association between incentive payments and the amount of resources allocated to supervision.
The company is interested in motivating its employees to make a greater effort when it can obtain greater benefits as a result of the results of the same. Where the effort of the workers hardly affects the results that the company achieves, the use of variable remuneration is not particularly interesting. In the case of productivity incentives, this amounts to saying that they will be employed when it is especially beneficial for employees to accelerate their production rate and manufacture a greater number of product units.
Incentives
It is what is proposed to stimulate or induce workers to observe a certain behavior that, generally, is directed directly or indirectly to achieve the objectives of: more quality, more quantity, less cost and greater satisfaction; In this way, incentives can be offered to increase production, as long as quality does not decrease, to assiduity and punctuality (rewarding it), to saving in raw materials.
A stimulus that is offered to a person, group or sector of the economy in order to increase production and improve yields. Variable part of the salary or a recognition that rewards a result higher than that required.
Origin of the Incentives
The scientific management movement initiated the rise of financial incentive systems by providing objective standards of performance by which employee productivity could be measured and rewarded. Frederick W. Taylor believed that employees could apply more effort if they were paid a financial incentive based on the number of units they produced.
Taylor's system was soon followed by others, who carried the names of leaders in the administrative field such as Gantt, Emerson, Halsey, Rowan, and Bedaux.
Although the plans varied somewhat in terms of the system for calculating incentive payments, they all represented an attempt to more closely relate employee wages to their productivity.
Incentive Objectives
The objective of the incentives is to motivate the workers of a company so that their performance is greater in those activities carried out, which perhaps, this is not a sufficient reason to carry out said activities with compensation systems, such as hourly pay, by seniority or both.
The objective that companies intend to obtain with the application of incentive plans is to improve the performance level of employees, for this to be carried out it is necessary that the plans meet the following characteristics.
- The incentive must benefit both the worker and the company. The plans must be explicit and easily understood by the workers. The plans must have the capacity to control production within the company.
In addition to the aforementioned objectives there are other objectives within which they are.
- Motivate the employee to be as productive as possible Promote increased human resource productivity through more and better education, availability of equipment, etc. Retain valuable staff Discourage undesirable workers from remaining in the company Attract the best human resource available in the market Save as much as possible, especially with regard to social charges and management of some particular benefits, such as insurance, pensions, etc.
Incentive Advantages
Among the advantages of the incentive payment we can list the following situations, which are the result of the study carried out to determine when to make use of the additional incentive payment of the base salary.
- Incentives focus employees' efforts on specific performance goals. They provide true motivation that produces significant benefits for the employee and the organization. Incentive payments are variable costs that are achieved with the achievement of results. Base salaries are fixed prices that are largely unrelated to performance. Incentive compensation is directly related to operating performance. If the operation objectives (Quality, Quantity or Both) are met, inventories are paid; otherwise, incentives are retained. Incentives drive teamwork when pay is based on team results. Incentives are a way to distribute success among those responsible for generating it.
Types of Incentives
The three main types of motivational programs are:
- Incentive pay programs Job enrichment Goal management
Incentive payment programs
The most common types of incentive plans used in the organization include: merit salary increases, individual performance bonus, piece rate or piece rate and commission, incentives for group performance, and profit sharing.
A merit pay raise is an increase in an hourly rate or an employee's salary as a reward for superior performance. A performance bonus is a cash payment for superior performance during a specified period.
The piece rate is based on an employee's output. The employee receives a certain amount of money established for each production unit above a certain standard or quota. A commission is similar to a piece rate, but is used for sales people rather than production. Employees earn a percentage of the successful sales volume.
An incentive for group performance, the award is based on a measurement of performance by the group rather than on the performance of each member of the group. Group members participate in the award equal to or in proportion to their hourly pay rates.
Job Enrichment
Job enrichment is an approach to job redesign to increase intrinsic motivation and job satisfaction.
Intrinsic motivation is a term used to describe the effort expended in an employee's position to meet growth needs such as fulfillment, competence, and updating. Positions are enriched by allowing employees greater responsibility for self-direction and the opportunity to perform interesting, challenging, and meaningful work. Job enrichment includes steps such as the following; combine several positions in a larger position to understand more skills provide each employee with a natural unit of work, allow employees greater responsibility in quality control and self-determination of work procedures, allow employees to deal directly with the clients.
Incentive Classification
Incentives can be classified as: "financial" and "non-financial" however it would be more convenient to classify them as "competitive" and "cooperative".
Organizing people into meaningful groups and making them work together toward a common goal leads to greater learning at the educational level and greater production at the industrial level. The term incentive is used as a driving force that is used as a means to an end. An incentive increases activity in the direction of that end.
In the industry, the incentive is often used as a means to encourage the employee to achieve someone else's goal, they may not be interested in reducing costs or increasing production; But you can be persuaded to reach that goal through an incentive.
Competition and cooperation can be seen as incentives. Competition requires each individual to do a better job than the one next door. Cooperation requires that people contribute equal and maximum efforts towards the achievement of a common goal. Competition and cooperation are not mutually exclusive, especially when individuals cooperate in groups to compete with other groups.
Economic incentives to the worker, there are salary increases, bonuses and, among the non-economic ones, assistance, recreational social support, among others.
These are explained below.
- Salaries It is an economic benefit, the basic point of remuneration and is represented by the money that the worker receives for the services rendered to the institution. They are another type of economic benefits, represented by annual premiums, pensions, salary supplements, bonuses, loan plans, reimbursement of medical services and medicines.
Non-economic incentives: They are granted through support for the comfort and safety of the worker, such as dining room service, nurseries, medical and dental care, among others.
Social support. It seeks to provide security and comfort to the worker and their family group, as a means of dedicating all their effort and attention to their work tasks and responsibilities, and correspond to the non-economic benefits contemplated in the incentive plans.
These benefits in turn can be of three types:
- Assistance. They seek to provide the employee and their family group a certain degree of security in cases of unforeseen needs, such as. Medical, hospital, dental care, accident insurance, recreational services. Seek to provide conditions of rest, fun, recreation and mental hygiene, to the worker, and in many cases to her family group. They aim to provide the worker with facilities, comforts and utilities to improve their quality of life, such as: transportation, dining room at work, parking, mobile schedules, consumer cooperatives, banking agencies in the workplace.Training can also constitute an important incentive for the worker, since in this way the organization itself gives him the opportunity to prepare more adequately for the functions he performs.
Incidence of Incentives at work
The incidences of incentives at work will be notable since through these, the directors of the companies obtain the proposed objectives and encourage workers to increase their returns. But in addition, the workers themselves obtain their benefits, whether they are economic or non-economic, and thus in this way, they feel fulfilled because for their effort they are being rewarded in one way or another.
Incentives for managers and executives
Generally, this type of incentive is linked to the annual profits of the organization, especially in the case of short terms.
But it is important to ensure that they are balanced according to short and long-term results, and not forget that they correspond to the needs of executives, for example, it must be taken into account if the incentive is wanted in cash or not, or if they prefer to buy shares in the organization.
At the same time, there are other forms of incentives, such as designing your own compensation package, but in general, whatever it is, it is linked to the performance of the organization as the key to be called incentives. Performance evaluation can also be used in these cases, to incentivize executives to obtain long-term benefits for their companies.
Taking into account the above, it is said that the income of an executive must take into account:
- The size of the organization Its profitability The earnings obtained by the holders of the company's shares The complexity and importance of the work performed.
For this reason, in several organizations the incentives are linked to key aspects of the organization that the executives can control, the performance of the executives is encouraged based on the indicators of several essential areas of the organization, they are called verifiable incentives against performance of the organization.
There are also incentives based on deferred option to participation possibilities, where ownership of company shares is granted gradually.
International Incentives
To attract, retain, and motivate executives and key employees, many companies establish incentives for their international staff.
Some choose to pay the costs of accommodation, transportation and tax abroad, instead of covering special bonuses for accepting responsibilities in other countries. Others prefer to establish performance-based motivation systems. It is recommended that international incentives be based on strategic and financial objectives controlled by the overseas branch manager. This system must be established within a flexible framework to adjust it to local needs and reality.
Incentives for groups or teams
This incentive is aimed at a number of workers that is made up of more than two people and directed by a group leader, and is focused on the global achievement of the group or team and will always be considered, according to the overall performance of the group or team, This can be any type of incentive.
Incentives for workers
Here the incentive plays a stellar role in the direct performance of each worker because it is directed directly to the worker and that will be achieved according to their performance, and it can be of any type of incentive.
Incentive plan for the entire organization
The incentive plan in the organization is beneficial both for the organization itself and for the employees, because these compensations are granted in direct relation to productivity and not through the indirect method of the number of hours worked.
If the system motivates employees to increase their productivity, the expenses of the administration of the system are compared with grows, contrary to this it cannot be assumed that an increase in money will result in greater productivity and satisfaction at work.
However, the system of financial incentives that directly relate wages to production is especially effective to stimulate production if adequate standards are formulated and the system is managed effectively.
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Below is a didactic video-conference given by Professor José Vera, from the ENyD Business and Management School, in which the objectives and principles that should govern a remuneration policy that motivate employees are explained. Among others, the following topics are covered: (1) Why define a compensation and benefits policy? How does it help the company? (2) On what principles should a correct remuneration policy be based? (3) Tools of the remuneration policy (remuneration, fixed, variable, social benefits…) and their keys. (4) Examples of remuneration that allow you to identify the different elements. A good complement to continue learning about incentives and motivation at work.
The motivation
They are the stimuli that move the person to perform certain actions and persist in them for their completion.
This term is related to that of will and that of interest.
Different schools of psychology have different theories about how motivation originates and its effect on observable behavior.
Motivation, in short, is the willingness to make an effort to achieve the goals of the organization, conditioned by the ability to make the effort to satisfy some personal need.
Motivation at work
The word motivation derives from the Latin motus, which means moved, or from motio, which means movement.
Motivation can be defined as the pointing or emphasis that is discovered in a person towards a certain means of satisfying a need, thereby creating or increasing the necessary impulse to put that means or that action into work, or to stop doing it.
They are the attitudes that direct a person's behavior towards work and away from recreation and other spheres of life.
"It is the impulse that initiates, guides and maintains the behavior, until the desired goal or objective is reached."
Motivation necessarily requires that there be some need of any degree; this can be absolute, relative, pleasure or luxury. Whenever you are motivated to something, that "something" is considered necessary or convenient. Motivation is the bond that unites or leads that action to satisfy that need or convenience, or to stop doing it.
Motivation Techniques
The following table explains the technique used in motivation.
Needs and Satisfaction
Necessity is simply defined as the lack of something. This lack can be material, spiritual or other, but whatever its origin, people seek its satisfaction.
It focuses on what people require to lead fulfilling lives, particularly in relation to their work.
The following diagram illustrates the motivational theory of needs:
Maslow's Hierarchy of Needs:
This is the theory of motivation by which people are motivated to satisfy different types of needs classified with a certain hierarchical order, Maslow's pyramid.
Theory of needs
There are various theories about the need but we only wanted to take as an example the theory of one of the fathers of the administration.
Maslow's hierarchy of needs: notes that a state of complete satisfaction is never reached. As soon as the needs of a lower level are met and satisfied, those of higher levels predominate. The lowest priority needs are located in the lowest part of the structure and the lowest priority needs in the upper part. The needs according to Maslow, from lowest to highest level in the hierarchy are:
- PHYSIOLOGICAL: needs related to their survival. Among these we find, among others, homeostasis (effort of the body to maintain a normal and constant state of blood supply), food, thirst, maintenance of an adequate body temperature, there are also needs of another type such as sex, motherhood. SECURITY: Needs related to the fear of individuals to lose control of their life and are intimately linked to fear, fear of the unknown, anarchy. Among these we find the need for stability, order and protection, among others. SOCIAL OR RELEVANT: Needs related to the company of human beings, with their affective aspect and their social participation. Within these needs we have to communicate with other people,that of establishing friendship with them, that of showing and receiving affection, that of living in community, that of belonging to a group and feeling accepted within it, among others. ESTEEM OR RECOGNITION: Also known as the needs of the ego or of the self esteem. This group is based on the need of every person to feel appreciated, have prestige and stand out within their social group, in the same way self-worth and self-respect are included. SELF-REALIZATION: Also known as improvement or self-actualization, which they become the ideal for each individual. At this level, human beings need to transcend, leave a mark, carry out their own work, develop their talent to the maximum.that of belonging to a group and feeling accepted within it, among others. ESTEEM OR RECOGNITION: Also known as the needs of the ego or self-esteem. This group lies in the need of every person to feel appreciated, have prestige and stand out within their social group, in the same way self-worth and self-respect are included. they become the ideal for each individual. At this level, human beings need to transcend, leave a mark, carry out their own work, develop their talent to the maximum.that of belonging to a group and feeling accepted within it, among others. ESTEEM OR RECOGNITION: Also known as the needs of the ego or self-esteem. This group lies in the need of every person to feel appreciated, have prestige and stand out within their social group, in the same way self-worth and self-respect are included. they become the ideal for each individual. At this level, human beings need to transcend, leave a mark, carry out their own work, develop their talent to the maximum.In the same way, self-assessment and self-respect are included. SELF-REALIZATION: Also known as self-improvement or self-actualization, which become the ideal for each individual. At this level, human beings need to transcend, leave a mark, carry out their own work, develop their talent to the maximum.In the same way, self-assessment and self-respect are included. SELF-REALIZATION: Also known as self-improvement or self-actualization, which become the ideal for each individual. At this level, human beings need to transcend, leave a mark, carry out their own work, develop their talent to the maximum.
Satisfaction
It refers to the taste that is experienced once the desire for the need to achieve something is fulfilled. It is the fulfillment of the established requirements to obtain a result with a certain degree of satisfaction for an individual.
The role of needs in motivation
Needs play a very important role in motivations, since needs work as a motor that generates it, because as Maslow has already said, needs never end because when one is satisfied, the other is born and with respect to motivations When the objectives are achieved, others are established and the needs to achieve these new goals are accompanying the people who will carry out said tasks and for them other needs arise that motivate them to continue forward.
Nature of needs
Each need has its nature, because both in each individual that makes up society and society itself. Everything will depend on the circumstances of each element that make up the set that generates the needs.
As an example we can take the human needs that are required by each person, but excite business needs, because there is no company that does not have the need to hire the labor of its employees, and so on if we continue analyzing we would find more nature of needs, we would come to think that even nature itself has needs, such as rain for its pastures, sunlight, etc.
Classification of Needs
According to its importance or nature
- Primary Needs: are those needs whose satisfaction depends on survival (life) such as: feeding or eating, sleeping, drinking water, breathing, sheltering, etc. Secondary Needs: Are those needs whose satisfaction increases the well-being of the individual and vary from one society to another or from one era to another. Human well-being is not just about mere survival. The human being seeks his integral development as a person. Examples: having a car, communicating with a mobile phone, leisure activities such as playing the PC, watching television, listening to music, sightseeing, etc.
According to their origin (from whom they arise) or social character
- Needs of the Individual: are those of the individual as a human being. They can be: Natural: eat, drink water, shelter,… etc. Social: they have to live in a certain society: wear a watch, celebrate a wedding, watch television, wear a tie, dress in fashion, …… etc. They change from one society to another. Needs of the Society: they start from the individual and become the whole of society: transport (the subway or public buses), security, public order, etc.
According to its importance for the Economy
- Economic Needs: are those needs whose satisfaction requires the use of scarce resources and the performance of some economic activity. Example: eating, carrying mobile, public transport, etc. Non-Economic Needs: your satisfaction does not require doing any economic activity: Example: breathing.
Motivational theories
Theory of the two factors of motivation
This is the theory developed by Frederick Herzberg in the late 1950s, in which both job satisfaction and dissatisfaction are said to derive from two different sets of factors. On the one hand we have the hygienic or dissatisfaction factors, and on the other, the motivating or satisfying factors.
Below we make a table with respect to the above, by way of comparison with the pyramid that Maslow described.
As for Herzberg's classification indicating the hygienic factors as unsatisfactory, we do not completely agree; Because we consider that both salary and security achieve the satisfaction of physiological needs (necessary means to obtain a decent living condition), which, as Maslow pointed out, would be essential needs to be able to acquire a higher hierarchical level.
ERG theory
This is the theory put forward by Clayton Alderfer. He agreed with Maslow that the motivation of workers could be classified in a hierarchy of needs.
Importantly, ERG theory differs from Maslow's on two points:
In a first point, Alderfer points out that needs have three categories;
- Existential (those mentioned by Maslow) Relationship (interpersonal relationships) Growth (personal creativity)
Second, he mentions that when higher needs are frustrated, lower needs will return, even though they were already satisfied.
Regarding this, he did not agree with Maslow, since he believed that by satisfying the need he lost his potential to motivate behavior. He also considered that people constantly ascended through the hierarchy of needs, while for Alderfer people rose and fell through the pyramid of needs, from time to time and from circumstance to circumstance.
Theory of the three needs
John W. Atkínson proposes in his theory that motivated people have three drives:
- The need for Achievement The need for Power The need for Affiliation
The balance of these impulses varies from person to person.
According to the research of David C. McClelland, the need to achieve has a certain relationship with the degree of motivation that people have to carry out their work tasks.
The need for application is one in which people seek a close association with others.
The need for power refers to the degree of control that the person wants to have over their situation. This is somewhat related to the way people handle both success and failure.
People who fear failure can sometimes be found, and together with the erosion of particular power, it can be an extremely important motivator.
Instead, for other people, fear of success can be a motivating factor.
Equity Theory
The central factor for motivation at work is the individual's evaluation of the fairness and justice of the reward received. The term equity is defined as the portion that saves the individual's labor inputs and labor rewards. According to this theory, people are motivated when they experience satisfaction with what they receive according to the effort made. People judge the fairness of their rewards by comparing them to the rewards others receive.
Theory of Reinforcement
It is carried out by the psychologist BF Skinner. In this it is explained that the past acts of an individual produce variations in future acts through a cyclical process that can be expressed as follows:
conclusion
Regarding the conclusion, we can mention several points that we believe should be highlighted.
First, it is common for incentives and business motivation to be held accountable for the need to find ways to increase worker performance in relation to negative trends in economic and social development.
However, the problem lies in the application of inappropriate policies in a company or organization context without incentives and motivation to its workers and the lack of trained professionals to face such challenges in the work environment.
It is also essential to govern globalization. Active national policies of incentives and motivation are necessary as a weapon of the labor organization to achieve these goals and objectives within the competitive world.
It is of utmost importance to mention that only countries that associated incentives and motivation in organizational work with the global order from their own integration and internal motivational development managed to achieve high levels of development. This is as true today as it was in the past.
We believe that incentives and work motivation will be of relevant importance in this world of competitiveness and productive effort.
Bibliographic data
- www.google.com.dowww.gestiopolis.comwww.agapea.com/libros/Administracion-de-Empresas-Librowww.es.wikipedia.org Business administration book (Angel Baguer Alcalá, 2005 Edition)
