Incentives When Employees Are Recognized Essay

  • Length: 8 pages
  • Sources: 13
  • Subject: Leadership
  • Type: Essay
  • Paper: #77072152

Excerpt from Essay :

A company may also decide to combine strategies, such as a generic strategy of low-cost or differentiation with the focus strategy. For instance, an organization may establish a focus / differentiation strategy or a focus/cost leadership strategy.

Before a company decides on an employee motivation program, it should give careful consideration to the company's corporate strategy that is behind the plan implementation. As is the case for every management system, well-thought-out and crafted compensation programs should not be developed as separate entities, just because they are popular at the time or they worked well for one company, so why not for all of them. It is critical to understand the reasons why the plan is being developed and implemented and the specific goals the company hopes it to attain. Compensation goals that are well considered will be helpful in the process of choosing the incentive program format that best supports the company's business and human resource needs (Nederhoff, 2000).

According to Pritchard and Ashwood (2008), whether an organization follows a market-based, performance-based or hybrid plan for its incentive plan depends entirely on the organization's objectives, overall corporate strategy and underlying management philosophy of the company itself. The company's reward or recognition program is best seen as a communication vehicle through which it identifies for its employees and management what mission it expects to fulfill, the strategy by which it will do so and the goals that, when completed, will indicate the satisfaction of the company's purpose.

In order to compete in today's competitive marketplace, organizations have to increasingly look at ways to expand market share, lower costs through greater efficiency and to attract, retain and continually motive top talent. In order to fill their talent pools with the highest quality candidates, companies are increasingly designing more attractive and innovative compensation packages and incentive programs. Creative programs for compensating new ideas, sharing company profits, supporting performance and continually developing better employee skills and competencies all help organizations attain their key business goals in such an intense competitive environment.

If designed in the right way, an incentive program will align with the company's overall strategic business objectives. Thus, if an organization's future success depends on teamwork that will build better niche products and services, it will be necessary for it to reorganize from a hierarchical top-down chain of command to a much flatter and wider cross-functional and integrated organization. In this case, for example, an incentive plan that features a profit-sharing component or incentives may be of help to enhance the teamwork necessary and lessen cross-departmental silos (Pritchard and Ashwood, 2008). Whatever the connection is between a company's key goals and its incentive plan, it must be clearly, definitively and continuously communicated to the whole workforce -- from the top down. Every speech by top management, every newsletter, every Intranet blog or ezine, needs to include information about this program, why it is being implemented and how it fits into the company's strategy. There needs to be small group meetings within departments with managers, as well as meetings with the top management where employees have the opportunity to ask questions. The communication needs to include

1) why the incentive program was designed; 2) The business goal is it designed to accomplish, and in what way does it link to the organization's overall business strategy; 3) How competitive is the program? What behaviors will it motivate? And 4) How does the compensation program impact individual employees? Does anyone stand to benefit or lose anything through this program?

Communication does not only take place when the employee motivation plan is implemented, but on an ongoing basis to all employees. There needs to be articles on how employees benefit in each weekly or monthly newsletter, for example. Just as important, any time a new person joins the company, he/she needs to be completely informed about the incentive program. That person should not hear about the incentives secondhand from other employees or only read about it in the employee handbook. Instead, new employees should be told directly about the programs in their interviews and then again when joining the company directly from someone in human resources in addition to reading written or viewing audiovisual materials. At the same time that the program is being discussed, so too will the company's strategy and mission, vision and goals, since they all go hand-in-hand (Jackson, 2002).

Similarly, supervisors have to be trained on how to support and promote the program to line workers. Through their descriptions and actions, these supervisors will be communicating to employees what the organization values and wishes to reward. If the supervisors do not know the information about the program or do not show interest in it, how can the company expect that the employees will? The supervisors must also demonstrate their ownership of the incentive program and assume responsibility for the decisions they make in agreement with it. At no time should they bad mouth upper management or human resources and its incentive program. Even an off-handed remark can sabotage the best attempts to introduce a new program, which completely wastes all the time and money put into the program as well as sets the company back to square one in its ability to reward its better employees. There are always those who see incentive plans, no matter how well they are designed, as unfair to them and too beneficial to others. In fact, part of the incentive program, itself can be a reward program for those supervisors who best train their employees about the incentive program in a nonbiased, clear way and make sure that their employees are best taking advantage of the rewards and recognition.

The desired outcome of recognition programs is to improve performance and improve employee retention. The most important advantage of implementing an employee motivational program is to boost the employees' morale so they perform at their best. These incentive and/or recognition programs help employees to do their best and to earn the deserved appreciation in return. It is shown time and again that motivated employees work all the harder in order to give their best performance, which equals greater productivity for the company. However, an incentive program cannot stand alone. It must be integrated into the company's overall strategic plan to continuously improve over the years to come.


As is noted in this paper, employee motivational programs have long been a means for enhancing employee loyalty and the involvement of the personnel in the company's future. Although controversy exists between whether to use incentive or recognition programs, both of them can be advantageous depending on the situation. It is important for an organization to first define its strategic goals and then determine what incentive and recognition programs to use to meet these goals. The motivational program should not be decided upon as a separate entity; just because one type of motivational program works well in one company does not mean it will work well in another. When a company institutes its strategic plan and motivational program in conjunction with it, it is necessary to specifically let employees know about how they can be rewarded for their personal efforts. An ongoing multi-faceted communication program is needed to ensure that all employees have equal opportunity to be rewarded for their contributions.

References Cited:

Allen, R. & Helms, M., (2002). Employee perceptions of relationships between strategy rewards and organizational performance. Journal of Business Strategies, 19 (2). 115-139.

Armstrong, M., & Page, K. ( 2007) A handbook of employee reward management and practice.

Cambridge: Cambridge University Press.

Cameron, J. & Pierce, W.D. (2002). Rewards and intrinsic motivation: resolving the controversy. Westport, CT: Greenwood Press.

Holman, P., Devane, T., & Berrett-Koehler, C. (2007) The change handbook: the definitive resource on today's best methods for Engaging Best Systems. Retrieved March 30, 2010

Jackson, M. (2002) Strategy and incentive programs for small businesses. Journal of Incentives 13(1): 23-25.

Milne, P. (2001) Rewards, recognition and knowledge sharing: seeking a causal link. Australian Academic and Research 32(4)

Nederhof, A.J. (2000). The effects of material incentives in mail surveys: Two studies. Public Opinion Quarterly, 47(1), 103-111.

Nelson, B., (January 2004). Everything you thought you knew about recognition is wrong. Workplace Management. Retrieved March 23, 2010 from

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Eldring, J. (2009) Porter's Generic Strategies, Performance and Risk Hamburg: Books on Demand.

Pritchard, R., & Ashwood, E. (2008) Managing Motivation: A Manager's Guide to Diagnosing and Improving Motivation New York: Routledge.…

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