FINANCIAL INCENTIVES: THE IMPACT ON EMPLOYEE MOTIVATION.

Author:Novianty, R. Rina
 
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INTRODUCTION

Individuals will do an action because of the encouragement from both inside and outside themselves to fulfil their needs. The role of employees who have high motivation and supported skills and knowledge in doing the work is needed. This can mean that one of the determinants of an increase in company performance is the motivation of its employees. This is supported by Weiner's (2014) assertion in his book which states that work motivation is the driving force that creates the excitement of one's work so that they will cooperate, work effectively and integrate with all their efforts to achieve satisfaction. "Several factors can affect employees' motivation. In recent research, the relationship between job satisfaction, motivation and low burnout level between the employees have been verified (Papasotiriou et al., 2018)". Also mentoring can positively contribute to career development and motivation, especially in the case of new employees (Ktena et al., 2018)

Incentives in the form of finance are expected to increase employee motivation because the incentives in the form of financial employees can be allocated to the needs he wants. Dessler added, Giving this incentive requires a fair and decent employee perspective. Fair has the meaning of financial incentives given the company in accordance with or commensurates with the work and achievements achieved by employees. While feasible means financial incentives given to employees can meet the needs of these employees, the feasibility can also be seen by comparing the provision of incentives made by other companies (Dessler, 2014). Distributor Company in Bandung which is divided into 3 parts, namely field employees (sales associates), administrative employees, and employees have 43 employees in one working day, and employees can work at least 10 hours of work with the possibility of additional work. In connection with the above problems, then the impact that will appear on the employee is a labour turn-over.

Several factors are related to the problems that have been stated before, and the research was conducted on distributor companies in Bandung, this is because only a number of distributor companies have decreased sales targets of companies such as consumers, production and other things due to the low motivation of employees so that the impact on incentives. This research was conducted because of the ineffectiveness of company incentives to employees, the low and work motivation of employees.

LITERATURE REVIEW

Variable of Financial Incentive

Financial Incentive is another form of direct compensation beyond salary which in other words is called a performance-based compensation system. According to Dessler (2014), "Financial incentives are rewards or replies in the form of the financial form given to employees whose level of production exceeds predefined standards'". Meanwhile, according to Werther & Davis (1989) also added that the incentive system connects employee compensation and work performance by paying according to the results of their work and not because of seniority or length of work. Meanwhile, according to Hasibuan (2013) argues that as a means of incentive motivation aims to direct and drive the power and potential of employees to want to work hard and enthusiastic in achieving optimal work, in order to realize the goals that have been determined. The existence of incentives that provide pay based on work performance will enhance employee motivation in the effort to achieve the goals set.

The research by Lee (2015) proves that financial incentives have a significant effect on the performance of medical personnel, which is undoubtedly the result of an increase in motivation based on given financial incentives. The research, Basu & Kiernan (2016), adds that financial incentives affect healthy lifestyle changes. The discussion raised almost identical to the subject of this study regarding motivation. Therefore, the research is also capable of being the trigger for doing this research. It can be concluded that Financial Incentive is the result of remuneration received by employees in the form of financial based on contributions and work performance that exceeds the average standard of other employees. Financial Incentive is done as a measure of investment by the company to its employees. Besides, incentives aim to motivate employees to do their work which leads to the achievement of company goals.

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