Incentives can be said to be business contingent motivators in the sense that they are geared towards motivating and encouraging businesses to produce in large scale, in other words, they can be termed as reward actions meant to boost productivity. Incentives could be given to employees in the form of salary appraisals or job promotions as a reward for their input in the company's operations, or to encourage them to contribute even more by maximizing on their potential (Jensen, Murphy, & Wruck, 2004) . This paper will however not focus on this form of incentive. It will instead build on business incentives, which in this case will be primarily remunerative and financial incentives.
These forms of incentives are in their basic forms a stipend by the government to boost the production of a company. They are majorly given when a company is undergoing a financial crisis and cannot, therefore, sustain its production. They can also be provided when the government realizes that a particular sector of the economy is having substandard, or low volumes of production since there are few investors in that given sector; hence decidedly fewer resources are allocated for the output of that sector. Either way, the goal of this stipend is to boost productivity by plowing in additional capital or to encourage local investments into the industry. When it comes to supporting investments in the said sector, the federal government mainly does this through such initiatives as reduced taxes and other levies charged, since this lower the profitability of such an area. This is particularly the case in federal-run projects such as the engineering and architectural departments of the federal parastatals (Lazear, 2018). This sector enjoys a relatively reduced tax rate than any other industry because it yields relatively lower profits for private investors, this explains why mostly they are run solely by the federal government.
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Additionally, it is equally important for businesses to have incentive plans for the employees. It should be able to put up mechanisms to reward employees for their input into the operations of the company. This is crucial because it is a motivating factor for the employees. When employees witness the elevation of their colleagues due to their hard work, they are equally challenged to do their best so that they too can be recognized and appreciated for their hard work. This creates healthy competition within the workforce. And for any business, such competition is essential in realizing the full potential of every employee and encouraging innovation. This being the case, it leads to the next benefit for the business which is increased profits (Gerhart, 2017). When employees are encouraged to become more motivated and innovative in their work, it leads to increased and high-quality production, which for the company translates to increased sales and high returns.
Loyalty is also another benefit of incentive plans. Every employee wants to be in an environment where they feel their efforts are appreciated and rewarded adequality. By creating such an environment, the business can win the trust and loyalty of its employees. This, in turn, would lead to reduced employee turnover. High rates of employee turnover could be detrimental to an organization in the sense that it lowers production rates as new employees take time to adjust to the business environment and how operations run therein (Allen, Porter, & Angle, 2015) . Additionally, employee turnover could reduce the company's competitive advantage if the organization's competitors lure the employees who resign in the market. Not only do these employees take with them the expertise that facilitated the company's growth, but by having a first-hand insight into the company's strengths, the competitors could use this information to capitalize on the company's weaknesses.
References
Allen, R. W., Porter, L. W., & Angle, H. L. (2015). Organizational Dynamics and Intervention: Tools for Changing the Workplace: Tools for Changing the Workplace . Routledge.
Gerhart, B. (2017). Incentives and pay for performance in the workplace. In Advances in Motivation Science (Vol. 4, pp. 91-140). Elsevier.
Jensen, M., Murphy, K., & Wruck, E. (2004). Remuneration: Where we've been, how we got to here, what are the problems, and how to fix them. Harvard NOM Working Paper No. 04- 28
Lazear, E. P. (2018). Compensation and Incentives in the Workplace. Journal of Economic Perspectives , 32 (3), 195-214.
