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Incentives in Human Resource Management

“Incentives are nothing but the inducements provided to employees in order to motivate them” What motivates an employee to exceeding levels of performance? Performance is driven by motivation and motivation is driven by rewards or incentives. Incentives are the chief source of motivating people and is the key driver of employee behavior, effort and motivation. When we explore the Maslow theory we see that incentives also play a role in satisfying the social, psychological and security needs of an individual. Employee motivation, linked to both financial and non financial incentives, is essential to success in any organization and if you fail to get this right then there will be a big price to pay.

Get it right and the spin offs are huge, staff retention, company loyalty and a productive workforce, and that definitely has a positive effect on the bottom line. So how exactly do you keep your staff motivated? Answer is simple, incentivize them!

We can differentiate between two types of incentive; there are financial and non financial incentives.

These incentives appeal to either the extrinsic nature or the intrinsic nature of an individual. Intrinsic motivators come from within the individual and they are not concerned with money, their motivation stems from completing the task itself rather than the rewards of completing the task.

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Extrinsic motivators come from the outside and are external e.g. salaries, wages. These individuals do not get pleasure from doing the task itself but will be more motivated by the reward of completing the task. Financial Incentives appeal to the extrinsic nature of a person and are proven to be the most commonly used form of incentives, it is a form of monetary value, salaries, wages, bonuses, commissions, share plans etc are all examples of financial incentives.

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Incentives in Human Resource Management. (2016, Jun 07). Retrieved from

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