Rewards and Incentives Management uses material (financial bonuses, profit-sharing) and non-material (recognition, participation) rewards beyond basic pay to motivate employees towards higher productivity, morale, and organisational goals, addressing the gap between actual (50% of potential) and optimal performance.

Motivation and Incentives

• Incentives bridge the motivation gap by linking extra effort to rewards, fostering calculative (financial, lower needs) and commitment-based (non-financial, higher needs like esteem/self-actualisation) involvement per Maslow.
• Financial incentives guarantee base pay while rewarding above-standard output; non-financial build psychological commitment via praise, autonomy, and growth opportunities.
• Economic theory assumes direct money-performance correlation, but non-financials sustain long-term morale; ARC (1968) recommends mixing both for efficiency.

Justification of Incentives

• Justification: Workers restrict effort to cost-benefit balance; incentives align personal/organisational goals; essential for competitive edge amid cost pressures.
• Contingency approach: Balance based on job type, worker needs, environment; judicious mix optimal (e.g., money for base, recognition for excellence).

Incentive Plans

Individual Plans

• Piece Rate/Differential: Extra pay per unit above standard (Taylor, Halsey, Rowan); guarantees minimum wage.
• Merit Pay/Bonus: Performance-linked increases; suggestion schemes for innovations.
• Gantt/Emerson: Bonus for efficiency thresholds.

Group/Team Plan

• Profit-Sharing: Pool of pre-tax profits distributed (weighted by salary); annual cash/deferred; fosters teamwork/profit focus.
• Gain-Sharing: Shares efficiency gains (e.g., hours saved); no extra cost unless achieved.
• Bonus (India): Payment of Bonus Act 1965; 8.33-20% of salary (up to ₹3500/month); mandatory for 20+ employees.

Other Modern Plans

• Guidelines: Direct effort-reward link; attainable standards (50% success chance); simple/equitable; employee involvement; no rate cuts.

Social Security Benefits

• ILO Convention 102 components: Medical care, sickness/unemployment/old-age/invalidity benefits, maternity/family/employment injury coverage
• India: Provident Fund, ESI, gratuity; supplements wages (~50% total compensation).
• Fringe Benefits: Paid leave/holidays, medical/sick leave, insurance, education aid, travel/meals; mandatory (bonus, PF) + voluntary.

Shortcomings and Mitigation

• Problems: Quantity over quality; safety disregard; health strain; jealousy/divisiveness; union resistance.
• Solutions:
  • Employee involvement in design.
  • Simple/intelligible/equitable plans.
  • Substantial rewards; feedback audits.
  • Monitor quality/safety metrics.

Conclusion

Incentives optimise manpower utilisation (cheapest productivity booster per NCL 1968); material for immediate drive, non-material for sustained commitment. Effective plans require standards, participation, and balance to avoid pitfalls while enhancing morale/efficiency.

Questions asked

Topic: Wages, Salary, Compensation, Principles of Remuneration and Employee Benefits

1. Describe the different methods of ascertaining merit. (2010)
2. Highlight the important factors that determine the salary scales of employees in civil services. (2011)
3. Explain various types of employee benefits. (2011)
4. Highlight the important principles of remuneration. (2012)
5. Describe important material incentive plans. (2012)
6. Bring out the requirements and objectives of Performance Appraisal. (2014)
7. Examine the meaning and importance of Performance Appraisal. (2015)
8. Write a note on various types of incentive plans. (2015)
9. Discuss the principles of remuneration. (2016)
10. Bring out the purpose and outcome of Job Analysis. (2017)
11. Write a note on the principle of remuneration. (2013)
12. Define compensation and explain various Principles of Remuneration. (2014)
13. What are the different types of employee benefits? (2019)
14. Write a note on wages and salary. (2016)
15. Explain the principles of Remuneration. (2023)
16. What are the different types of employee benefits? (2017)
17. Describe the characteristic features of Management by Objectives. (2024)
18. Examine the methods of determining salary structure. (2018)
19. Examine the factors that are taken into consideration for determination of salary scales of services. (2021)
20. 'The salary structure can be determined through several means.' Comment. (2024)
21. Write a note on principles of remuneration. (2021)
22. Elaborate the different principles of remuneration. (2022)

Topic: Performance Appraisal Methods and Strategies

1. Highlight few traditional methods of performance appraisal. (2012)
2. Examine various methods to ascertain merit. (2013)
3. 'Training Principles can be studied through learning and Teaching.' Discuss. (2012)
4. Examine the relevance and objectives of performance appraisal. (2021)
5. 'Merit is ascertained through various methods.' Discuss. (2014)
6. Write short notes on Traditional Methods of Performance Appraisal. (2013)
7. Elucidate the methods of performance appraisal. (2022)
8. 'Performance Management is a result-oriented exercise.' Elaborate. (2023)
9. Write a note on Performance Appraisal of public servant in India. (2018)
10. Examine the various methods of Performance Appraisal. Which do you prefer and why? (2015)