System of incentives in management

System of incentives in management

When we talk about the issue of incentivizing employees it is necessary to understand that it is different from the system of motivation. Incentivizing is primarily a set of techniques and methods by which we can encourage an employee to perform assigned tasks.


There are different types of stimuli. Let’s consider some of them

  1. Material (money) is the basic easiest stimulus however it cannot be applied to all employees. As a rule, this kind of stimulus should be applied only in case when a worker has low income or if there is a need to single out his or her success or reward for a top performance. This type of incentives is relevant in times of crisis and helps workers to gain confidence in the future. There are following recommendations regarding the use of the material kind of incentives: incentive system should be clear to every employee; the size of the promotion must be justified; criteria according to which an individual employee can be rewarded should be clear to every member of a team;

  2. Social and psychological incentives are characterized by the fact that people need to be aware of their importance in the company amongst their colleagues;

  3. Creative incentives help an employee to self-express, be creative, and contribute to creative development. Creative and socio-psychological stimuli are usually used in people-oriented businesses;

  4. Compulsion. This group of methods should be applied only in exceptional cases. For example, these same techniques are common in administrative activities as they imply strict compliance with rules and standards. Application of compulsion methods in creative groups can adversely affect the productivity of employees;

  5. Adjustment. This method is used for the stimulation of top managers as well as people on other key positions in a company. It consists of the fact that the areas of work are matched specifically to the set of characteristics of a certain person and that they are actually are of interest for him or her. These incentives are generally used in modern flexible organizations which are not afraid of innovation, they encourage initiative of employees making them more responsible and more loyal to the company.

It is important to be able to combine these examples of incentives with each other. After all it is actually a skilful combination of these methods that will help to create an effective system of incentives for company’s employees.

In addition, improving your own employees is faster and cheaper than recruiting people from outside the company. Coaching can also be done by external organizations. We usually invite specialists when purchasing new equipment for workshops or software for the engineering department. New skills are the innovation that increases competitiveness.

Here are some other interesting articles: