8 Pros and Cons of Incentives

Incentives are a great way to encourage focused results. People need to have some level of motivation in order to be productive. It may be a paycheck they can rely upon, the thanks of a supervisor, or even the satisfaction of a job well done. Rewards can come in many different forms and they can help employees work harder. If the incentives aren’t something that interests the individuals being motivated, however, the result tends to create the opposite result: demotivation. Here are some more of the key points to think about when looking at the pros and cons of incentives.

What Are the Pros of Incentives?

1. They provides extra value to the working relationship.
Having a good salary and benefits package is great, but having incentives for a job well done is even better. When workers have the chance to earn a promotion, a raise, or even an extra vacation day, then they feel appreciated. That appreciation translates into a desire to stay at the organization to earn even more rewards. This allows an organization to retain good workers while saving on their annual hiring or training costs.

2. It inspires a heightened sense of loyalty.
People are social creatures and they want to form relationships with others that matter to them. When an employer offers incentives for a job well done, this provides a sense of caring or kinship with the worker. This encourages each worker to form a closer relationship with that organization. As the relationship grows closer in the mind of the worker, it increases the amount of loyalty that worker will have. Many will consistently then go above their daily requirements because they’ve invested themselves into the welfare of the business.

3. It is a simple method of motivation.
People get bored at work. Everyone at some point looks out for their own best interests. Boredom is bad, so to cure that boredom, a worker might get onto Facebook, play games on the internet, or take a cup of coffee and talk for an hour with a friend at the other end of the office. Incentives can help to motivate workers to stay productive because there is a tangible reward they want at the end of the project.

4. They are easy to include in any industry or working environment.
Incentives can be added to any job or task. The only stipulation is that the rules which govern how the incentives can be earned must be clear and precise. Invite workers to ask questions about items they don’t understand.

What Are the Cons of Incentives?

1. It is an easy way to create conflict within the working environment.
People who don’t receive incentives are naturally going to be jealous of those who do receive them. It doesn’t even matter if the worker didn’t work hard enough to reach the threshold of the incentive. Because one worker received an incentive, the attitude is that everyone should also receive them. Those who receive incentives might also be upset if they worked harder than others to get the same thing and stop working as hard. This conflict will always limit productivity.


2. The focus of work becomes competitive instead of being focused on quality.
Workers who are striving for incentives are only going to provide a high enough quality of work to beat the other workers who want the same incentives. People will typically work to the expectation levels that are set for them. If those expectation levels aren’t set consistently high, then the standards that are produced aren’t going to be consistently high either.

3. It eliminates productivity from low-level performers.
Incentives will typically go to the top performers only. There are certain employees who are consistent with their performance, but their natural skills and talents may not be as well-defined as others and this puts them at the lower third of the pack when incentives are being handed out. When that consistency isn’t rewarded, these consistent workers lost confidence in themselves, grow frustrated, and eventually just quit because they feel under-appreciated.

4. Incentives can become quite costly.
Incentives must continue to rise on a scale of cost in order to be effective. Eventually a thank you note from the supervisor isn’t enough. A piece of candy might be wanted. Then an extra vacation day. Then a vacation day with a raise. When you give a mouse a cookie, as Ayn Rand once famous commented, then he’s going to ask for a glass of milk. If you run out of milk, you might run out of top performers.

The pros and cons of incentives show that they can be very motivational, but if incorporated improperly, can also destroy the morale of an entire team. Use them judiciously, set limits on what can be awarded, and find ways to provide incentives to all tiers of a team so that everyone can feel appreciated to avoid the destructive aspects that may try to appear.

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