TYPES OF INCENTIVE SCHEMES -
September 13th, 2010
TYPES OF INCENTIVE SCHEMES
Incentives, which are directly or indirectly associated with monetary benefits, are called monetary incentives.
They are also known as financial incentives. Monetary incentives fulfill not only physiological needs but also the need for social status and power, e.g.- wages and salaries, bonus profit-sharing, leave with pay, medical reimbursement, housing facility, pension etc.
Monetary incentives are financial benefits paid to workmen in recognition of their outstanding performance.
The primary advantage of incentives is the inducement and motivation for higher efficiency and greater output. But with fixed remuneration, it is difficult to motivate employees.
Increased earnings would enable the employees to improve their standard of living and help the organisation to improve their production capacity.
They also help in reduced supervision, better utilization of equipment, reduced scrap, educed lost time, reduced absenteeism and increased output.
Monetary Incentives can be classified into:
(i) Direct or Financial Incentives,
(ii) Indirect or Semi-financial Incentives.