State Employee Incentive Programs

State Employee Incentive Programs

Industrial workers are paid compensation for their services in the form of wages. Wages are fixed as the time spent by the worker in the factory or per the production produced. Wage is a matter of great importance as most of the labor problems are related to wage payment. The efficiency of workers and their interest and development in their work depend on wages. Their attitude towards their employer is influenced by how fairly they thing they are being paid.

Wages are important to employers because their profit depends on total wages billed. An employer, in general, is interested in paying as low wages as possible. However, low wages are not necessarily economical. In fact, they may prove to be too costly to the employer. An employer has a moral and social responsibility to pay fair wages to the workers, as they are the partners in the productive process. The employer should introduce an incentive wage system that will benefit both employer and employee.

There are basically two types of incentives – financial and non-financial. Financial incentives help individuals meet their basic needs and non-financial incentives assist in meeting the higher order needs such as social, esteem and self-actualization needs. Non-financial incentives are based on sociological and psychological principles of higher behavior.

Some of the important objectives for which incentive programs are used are to increase production, productivity, yield, manpower utilization, and earnings of employees, sales and quality. Incentive programs also play a major role in improving quality, reduced cost of production, reduced inventory and reduced wastage.

Financial incentive schemes can be direct or indirect in nature. In direct financial incentive schemes, the payments are based on an employee’s performance or contribution to the job such as production incentive schemes, attendance bonus, etc. In the case of indirect financial incentives, the payments are not directly related to employee contribution. Leave encashment, gratuity schemes and leave travel concession fall in this category.