Working incentives in organisations

Workingincentives in organisations

Workingincentives in organizations

Theadvantage of using individual incentives in a work environment isthat it increases the output of a worker. When an organization usesit, the employees continuously work to outdo each other, and thisresults in increased productivity. For example, in a water processingorganization, individual incentive dictate that the entity offersbenefits to the worker who produces the highest number bottled water.However, this incentive can only be applicable in an industry wherethe output is quantifiable (Noe, 2013). Thus, is a disadvantage toservice firms. Additionally, it makes it difficult for an entity tocultivate a culture of team spirit.

Unlikeindividual incentives that measure the performance of an individualworker, group incentives look at the wider picture and use rangeslike low operational costs and increased efficiency to gauge theperformance of a work group. The advantage of this system is that itlimits competitions among individuals and opts to allow people tocompete as a team. This ensures that there is coordination and thedevelopment of a team spirit among workers (Noe, 2013). However, thestrategy has a limitation as it acts as a disincentive for topperformers in the entity to work hard as they are forced to lowertheir performance rate in order to accommodate low performers.

Organisationwide incentive is a policy that translates to sharing of the gains bythe entity with the employees. For example, if a company’sperformance and revenue increases, management takes a portion of theprofits and distributes it is to the employees. This strategy has anadvantage of cultivating an innovative spirit in the entity asworkers know that when the performance of the entity improves, theywill benefit (Noe, 2013). Additionally, the policy encouragesemployees to align their personal goals with those of the entity, andthis results in improved performance at all levels. The disadvantageof this strategy is that it blanket reward of all employees resultingin similar benefits for top and poor performers, and this maydemotivate some workers from increasing their productivity.


Noe,R. A. (2013). Human resource management: Gaining a competitiveadvantage. New York: McGraw-Hill/Irwin.