What are the Different Types of Incentives for Employees at Work?
Employers these days are cognizant that when employees are contributing everything they got, including their time, efforts, and dedication for the interest of their organization, then a mere salary is not enough.
Considering this from the point of financial stability, then a limited numeration might be insufficient set against the increased cost of living these days. Taking the discourse otherwise, and towards a pivotal discourse, an organization is the result of the collective effort of the employees. Without motivated and happyhuman resources, the performance of an organization can be significantly impacted. No organization desires that.
That’s why in most companies, the story does not end with fixed remuneration. There are various types of incentives that employees are provided with, to keep up the morale of the employees, and increase the productivity of the organization as a whole.
However, this area is a kind of a blur for most employees who are just at the start of their careers. They don’t know about the incentives, and that is probably why they miss out on a lot and do not reap the benefits that are available for them.
If you happen to be one of them, consider this article your guide to know all about the types of incentives employees are offered at work.
Starting with the basics, there can be two types of incentives – Monetary incentives and Non-monetary expenses. Let’s dive into the details of each of them.
A. Monetary incentives
1. Salary incentives
Not all employees are paid the same; the pay obviously depends on their roles and positions. However, it also depends on the effort of employees. Companies often reward employees with a higher remuneration if they consider the employee to be hard-working, productive, or efficient. It’s one of the most popular types of financial incentives that are in place in almost all organizations.
If an organization earns huge profits, it does not only get distributed amongst the shareholders. Most companies often reward hard-working employees by sharing profits with them.
Apart from being a rewarding tool, profits also act as a motivational tool. When an employee is aware that they might get a share in the profits, they might be extra productive and perform better.
It is another monetary incentive that facilitates the offering of shares. Some companies reward their employees by offering them shares. However, it is to be noted that it does not mean that they are offering them ownership, but just managerial privileges and other monetary profits that other employees do not get. It is yet another way to motivate employees and help them explore and develop new skills, which is not only beneficial for the employee but the organization as well.
A bonus is additional pay, which is often given to employees to reward their contribution to the organization. Bonuses are given out after reaching targets, yearly, quarterly, or on several occasions, it all depends on the company. Most companies offer it in form of money, or in form of coupons to maintain healthier relationships with their employees.
It’s an add-on to the basic salary when an employee generates huge sales for the organization. This motivates them to put in some extra effort, and increase productivity to generate more sales to earn more commission.
6. Retirement incentives
These benefits include provident funds or pensions. Most government companies offer pensions to their employees, in which they offer some amount of money every month. Provident funds on the other hand, are a type of reserve that collects some portion of their earnings that the employees are offered once they retire. This financial incentive is mostly offered by the private sector.
7. Dearness allowance
The essential purpose of this monetary incentive is to combat inflation. It seeks to minimize the effect of inflation upon the employees by paying them an amount on top of their fixed remuneration.
Dearness allowance differs according to industry. Conventionally, government organizations majorly distribute Dearness Allowance, however, in recent times, other private sector companies are joining the queue.
8. Fringe benefits
These are the benefits provided to the employee’s families. These financial incentives examples include education fees of children, medical benefits, housing facilities.
Having said that, not all companies provide such benefits because it can be quite expensive for them. However, companies like Google and Microsoft are some of the few.
B. Non-monetary benefits
1. Delegation of authority
Delegation of authority is when leaders or persons at higher positions give new responsibilities to their employees. Doing so can make the employees feel valued, develop a more responsible attitude, confidence and help them learn new skills.
2. Management participation
An employee needs to feel valued; participation in management is one of the non-financial incentives. Inviting an employee in decision-making establishes a sense of authority in the individual. Moreover, the employee feels that their ideas and suggestions matter and they are not just following orders, but actually contributing to the organization with their ideas.
Promotion can be identified as a step ahead. Most individuals are promoted as a means to reward their contribution, but it is also another way to make them motivated to become even more efficient and productive.
4. Not all companies offer paid vacations, but some companies do when they acknowledge that the employee has given extra time, worked hard, and made personal sacrifices for the benefit of the organization.
5. Gift cards or gifts
Most companies hand out vouchers and gift cards to reward their employee’s dedication and hard work. Most commonly, these types of employee rewards are distributed on special occasions, festivals, but there is no fixed calendar for that, it depends entirely on the company.
Companies often celebrate reaching a huge milestone by throwing office parties. It’s just not to celebrate, but to reward the collective effort of the organization. Some companies even organize short vacations for their firm to feel appreciated and take some time off for their well-being. It’s one of the most common non-monetary incentives examples, that almost every company provides.
7. The final word
These are just some types of incentives for employees at work, there are more and vary from company to company. To know about yours, you can talk with a colleague, they will provide you precise information.
Nonetheless, the purpose behind such incentives is to reward, recognize, celebrate, motivate and increase productivity. Every organization needs to bear this cost to keep their employees happy and reduce the turnover rate.