Managers are workers with the duty to help the company accomplish its set objects and goals. Depending on the incentive plan used, their performance will be based on how best the management team is motivated. There are different types of compensation plans that can be used to keep managers driven and focused on the set goals and objectives. These incentive packages have different characteristics. This paper discusses the management incentives, theories of management incentives, how the approaches can be implemented in an organization, and the organization-wide incentive plans.
The pay-for-performance package incentive offers pay depending on performance at every level within a company. This strategy is considered the best if one wants to retain a manager and other employees as well. It consists of a variable rate combined with a base rate of pay that is connected directly with how an employee performs. The pay-for-performance model is the one that most managers are most willing to consider because it relates to the achievements of organizational goals and individual performance. Another characteristic it has is that one should consider determining whether indicators that are not financial such as customer satisfaction when awarding variable pay.
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Another strategy is offering stock options. It is broadly used when rewarding managers. It provides workers with the opportunity of purchasing stocks from the organization at a given price. As the organization's stock adds value, the option of stock creates an opportunity for shares to be bought at a decreased cost. This package motivates managers to work hard, exceeding performance objectives and goals to positively affect the stocks of the organization, which in turn increases the stock options value.
The other incentive plan is gain-sharing. This type of model is designed to strengthen an excellent corporate culture, collaboration, and involvement. It is an incentive plan in which all workers gain. Therefore, it is the work of the management team to foster productivity gains, idea sharing, and teamwork spirit that results in improved company performance. This model is based on focusing on achieving an improved functioning of employees with a positive attitude and focusing on the organizational bottom line. Gain-sharing is concerned with the culture or environment of the organization.
Another essential management incentive strategy is the recognition of workers' achievements. It is important to note that companies that put their focus on better-performing employees may fail to remember the part the manager has played to contribute to that achievement. It is therefore essential either to recognize both employees and managers privately or publicly to motivate them in their work. They can be awarded by giving them extra holidays or trophies or gift certificates.
For one to be a good manager, one needs to be capable of inspiring and motivating workers to channel their work towards the main objective of the company. Hertzberg's Two-Factor Theory is about two aspects, hygiene, and motivation. The elements of the association with other employees, salary, and benefits fall under hygiene. The aspects of one having a career path, finding work enjoyable, the excellent effort being recognized fall under motivation. A manager can apply these aspects by offering employees with excellent benefits, salaries, and coming up with ways in which an employee can be recognized for a job well done.
Maslow's Hierarchy of Needs is about the basic needs of employees having being met. These are aspects like an employee being psychologically well, esteem, belonging, and safety. To implement programs that appreciate how people are different and providing diversity training. Managers should also implement more safety options in an organization. The other way of applying this theory is that managers should not be bossy as this interferes with the esteem of employees (Leonard & Siedel, 2019).
Hawthorne Effect on Productivity is about the physical surrounding of the employee. Implementing this theory would involve mangers monitoring consistently or randomly to ensure increased productivity. Expectancy Theory of Performance, which states that workers work accord to what the results will be. Managers can implement this theory by rewarding employees according to what they value (Greene, 2018). The Attribution Theory and Response to Success or Failure are about how works respond to failure or success. Managers implement this by taking employees through reviews of various matrices to identify what causes the employee to fail.
The advantage of Pay-For-Performance is that it encourages the retention of top talent and it motivates workers. Its disadvantages are that it is subjective when it comes to performance measurement, and performance review has become ineffective. The benefit of Offering Stock Options is that it makes the employee committed and loyal to the company. Its disadvantage is that there is undue risk upon unsuspecting employees. The advantage of profit sharing is that it brings employees to work together towards a common goal. Its disadvantage is that the workers' salaries equally go up without the basis of promotion or merit. The advantage of Recognizing Employee Achievements is that it allows an employee to feel recognized and appreciated for working hard. The disadvantage is that if a wrong method of appreciation is used, an employee who works hard will feel demotivated (Williams & Siedel, 2019).
Organization-wide incentive model rewards workers depending on how successful the organization is over a specific period. Employee stock ownership plan is a model that involves employee investing in company stocks. This model works for the company because it can retain the best employees, and they remain committed to the company.
References
Greene, R. J. (2018). Rewarding performance: Guiding principles; custom strategies . Routledge.
Leonard, K., & Siedel, M. (2019, March 11). How to Apply Motivational Theories in the Workplace. Retrieved from https://smallbusiness.chron.com/apply-motivational-theories-workplace-10962.html
Williams, O., & Siedel, M. (2019, March 5). Examples of Management Incentive Plans. Retrieved from https://smallbusiness.chron.com/examples-management-incentive-plans-63109.html
