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This paper is going to analyse what incentive motivation is and discuss examples of it. It will also discuss some of the benefits of incentive motivation and why it is important for companies to adopt this marketing style.
What is incentive motivation? A study by Kortum, et al. (1992) found that motivation has four primary components:
(a) the extrinsic and intrinsic dimensions, which consist of the factors that cause an individual to perform a task, and the personal and social gains that the individual perceives from the task.
(b) the three categories of attitudes: task value, task preference and task satisfaction.
(c) the four types of behavioural motivation: task-initiative, persistence, task-approach and task-avoidance.
(d) the five motivational categories: task-initiative, persistence, task-approach, task-avoidance and external motivation.
An incentive motivation, also known as an incentive contract or incentive offer, is a contractual arrangement between business and an individual, which requires the individual to act in a particular way in exchange for some benefit. The incentive agreement may require the individual to purchase the product, for example, or to take a service. It is a type of reward or punishment. The individual can be any individual with an incentive offer made to them, who takes the product, service or performs a task in exchange for the benefit. In the context of business, the incentive offer is also known as an incentive contract or incentive offer, which is a contractual arrangement between business and an individual which requires the individual to act in a particular way in exchange for a benefit.
The incentive motivation is the contractual arrangement that is created as a result of the incentive agreement, also known as the incentive contract. One party to the incentive contract is known as the employer and the other party is known as the employee. The incentive motivation is a contract that is legally enforceable. The other name for incentive motivation is incentive contract.
For the agreement to be effective, the individual’s motivation is crucial. The motivation of the individual will depend on the size of the incentive, the nature of the reward and the relationship between the individual and the organisation. The incentive agreement must be clearly defined and understood by the individual for the agreement to be effective. A poorly defined or misunderstood incentive can result in an individual failing to achieve the agreed benefits or even worse, failing to recognise the benefit of the incentive. An incentive agreement must be well defined and documented.
Examples of Incentive Motivation
The following examples are of incentive motivation:
(a) If an employee is performing work in a particular way that is unsatisfactory, they are given an incentive motivation, for example, an additional bonus.
(b) If an organisation is not achieving its objectives, it will set up a programme of incentive motivation. It will identify the particular area where the organisation is not performing to expectations, for example, the number of orders not being filled, customer service calls not being answered, and so on. The organisation will then set up an incentive contract to make sure that the appropriate individuals are motivated to correct the problem. The organisation can decide to provide an additional bonus to the individual(s) or provide them with a reward or gift certificate for their efforts. The incentive contract will be defined and documented
(c) If a business is experiencing difficulty with a product that it has produced, it will offer an incentive motivation to the person responsible for the product.
(d) An insurance company may offer an incentive motivation to the policyholder to ensure that the policyholder is kept happy and that the company does not have to pay out on claims.
Properties of Incentive Motivation
An incentive motivation will:
(a) ensure that the employee is aware of the incentive motivation,
(b) give the employer clear evidence that the individual is aware of the incentive motivation,
(c) allow the individual to focus on achieving the objectives set out in the incentive contract,
(d) help the employer to demonstrate that the individual is achieving the objectives set in the incentive contract for the organisation,
(e) allow the individual to measure the benefits of the incentive motivation,
(f) help the employer to ensure that the individual is not influenced by outside factors, for example, the media or competitors, and
(g) help the employee to recognise the benefits of the incentive motivation and develop an understanding of the incentive contract.
Benefits of Incentive Motivation
(a) If incentive motivation is used appropriately, it should be an effective tool for stimulating the performance of individuals.
The incentive motivation need not be an expensive tool. It can be a simple piece of paper which states that, if an individual performs a certain task, they will receive a reward. The incentive motivation is a contractual arrangement between business and an individual which requires the individual to act in a particular way in exchange for a benefit.
(b) The use of incentive motivation to improve individual performance is the most effective method of improving productivity.
Incentive motivation may be used to motivate individuals. It may be used to motivate individuals to engage in certain activity which will result in benefits accruing to the organisation. This may lead to a reduction in the cost of production for the organisation.
(c) An incentive contract may be used by organisations to meet certain objectives.
For example, a company may wish to increase revenue by 20% in a specific quarter. If the company has an incentive contract with its sales staff, it would specify the objectives of the contract. The sales staff would agree to achieve the objectives in exchange for a bonus.
(d) Incentive contracts are designed to motivate individuals who have a problem which needs to be fixed.
The incentive contract identifies the problem, provides a measure of how well the individual is performing the task, identifies who the individual is and why he or she is to be paid, describes the method by which the individual will be paid, and specifies the objectives for the individual. The contract is written, signed, and communicated to the individual. The contract is usually short and should
(e) If people do not understand the contract, they will not be committed to perform the tasks required.
If people do not understand the contract, they will not perform to the agreed standard. The incentive contract should be written to be understandable. It should be written in a language such that the individual could understand and remember the terms of the contract.
Why it is Important For Companies to Adopt Incentive Motivation
Companies should adopt incentive motivation because it is an effective tool for encouraging employees to perform at their best. Incentive motivation may be used to motivate and encourage organisations to engage in certain activity which will result in benefits accruing to the organisation.