Advantages and Disadvantages of Organizational Incentives

Advantages and Disadvantages of Organizational Incentives

Advantages and Disadvantages of Organizational Incentives

Incentives are variable rewards granted to employees as per the variations in their performance. To succeed, an organization must attract and retain productive employees. Therefore, a business establishes competitive incentive plans to accomplish these objectives. Incentives are provided beside wages and salaries so that the level of motivation and job satisfaction can be enhanced. Incentive payments are quite substantial and paid regularly as wages and salaries.

When the incentives are provided to all employees of the organization, it is called organizational incentives. This kind of incentive is used to motivate all employees at work for organizational effectiveness. The primary goal of organizational incentive is to direct the efforts of all employees toward achieving organization’s overall mission, vision, objectives. This incentive plan produces a reward for all employees working in a particular organization.

Advantages of Organizational Incentives

  1. Organizational incentive enhances organizational effectiveness.
  2. Organizational incentive helps to enhance teamwork.
  3. Organizational incentive encourages employee participation at work.
  4. Organizational incentive adds a new dimension in organizational productivity and job satisfaction.
  5. Organizational incentive ensures employee relations among the employees as well as between the employees and management

Disadvantages of Organizational Incentives

  1. Since the incentive depends on organizational performance, employees may not be motivated at the individual level.
  2. It will be complex to determine the amount of incentive among different levels of employees
  3. 3 .Organizational incentive plan does not provide an instant incentive to employees.
  4. Organizational incentive does not depend on individual performance.


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