Incentive systems

Incentive Systems
Name
Institution
Incentive Systems
Employees require motivation to work to work towards achieving an organization’s goals. It is important for firms to design good incentive systems for workers to increase their productivity. Markedly, employees consider gifts to be an important incentive (Froeb, McCann, Shor & Ward, 2016). Some companies offer bonuses to their staff as incentives to increase productivity. Managers should make sure that they give workers gifts that are desirable since not all rewards can be seen as appropriate by workers. This shows that workers should not be given flat salaries; they should also be rewarded based on their job performance.
Employees also want to earn a higher salary. Notably, some companies use performance metrics to create employee incentives (Froeb et al., 2016). Workers often work in firm’s best interest when their good work is recognized. It can be difficult for an organization to achieve its goals if it does not have a good compensation system.
Piece-rate pay has also been found to motivate employees to work toward a common goal. In this case, their income is tied to their performance. According to Griffin (2008), piece-rate incentive plan allows employees to earn a certain amount of money for every task performed. However, this incentive system is at times considered a complicating factor since a worker may fail to earn the minimum wage required by law (Froeb et al., 2016). Therefore, managers should monitor workers to make sure they align their incentives with the goals of the corporation.

Employees also consider it vital to be compensated based on the firm’s profitability. For instance, most salespersons are paid on commission depending on the revenue they make. This makes them suffer when the economy declines (Froeb et al., 2016). Firms should adopt a profit-based incentive plan rather than one which is based on revenue.
References
Froeb, L. M., McCann, B. T., Shor, M. & Ward, M. R. (2016). Managerial economics: A problem solving approach. Cengage Learning.
Griffin, R. W. (2008). Fundamentals of management. Boston, Mass: Houghton Mifflin.