Understanding the Pros and Cons of Employee Incentive Programmes

Sometime back, I met a friend of mine, who is also a HR Manager. It was really an interesting conversation as he shared about the challenges he faced when he decided to give incentives to his employees. 

He mentioned that problems arise among his employees when the Employee Of The Month  was chosen and the management gives him an incentive for his achievement. The co-workers  express their dissatisfaction as they fell like there is 'favoring factor' involved when selecting the Employee Of The Month ( some how, the same person was nominated for 3 months in a row).  They felt that since the workload is been shared equally, the incentive should be given to all to make it fair.

So, the management decided to introduce Group Incentives instead. Yet, another problem crop up. Team members feel that not all the members should be entitled for the incentives as there are some 'lazy' ones in the team who does not contribute to the team's success.

This is just one scenario out of thousands of challenges faced by the HR Department. Discussing about the pros and cons about employee recognition problems draws the question whether these system are outdated. 

Since the modern day job descriptions outline in details the employers's expectation and employees are briefed about the disciplinary action for workers failing to perform, is it really necessary for employee reward programs? Is there really a need if it only causes dissatisfaction and ill feelings? The short answer is- YES!

Recognizing efforts and superior accomplishments serve to motivate the employees. Employee recognition programmes provide the formal 'pat on the back' for job well done.

Lets look into the pros and cons of employee recognition progammes.

The Pros of Employee Incentives Programmes would be :

• Employee recognition programmes reward employees who achieve the business goals. This opens door to rewards for hard work, creativity, loss prevention and initiative by employees at all levels.
• Increases employee loyalty and retains good employees.
• Promotes good relationship between the management and the employees.
• Motivate employees to perform to their potential, for the higher and better their performance, the higher their rewards. It helps in establishing a competitive performance oriented work culture and an environment of continuous learning, improvement, and innovation where employees take responsibility for the outcome of their work

The cons of Employee Incentives Programmes :

• Management selection of employees leads to allegations (or actual cases) of favoritism.
• Limiting recognition of an employee to only one occurrence per calendar year supress the continued willingness of the employees to excel.
• Unrealistic incentives will de-motivate employees- for example an employee who just invented a way to prevent some computer virus which can save thousands of ringgit,should get more than merely a computer-generated certificate and a mug with the corporate logo.

However it is, at the end of the day, the overall success or failure of a recognition programmes is determined by the way it is structured and administered.

The discussion over the pros and cons of employees recognition programs should never been an issue at all as its clearly the way to move forward to have a strong corporate culture and happy employees.