Utilising Incentives Has Advantages and Disadvantages

Many managers engaging in business coaching for their staff members will be aware of the value, and the potential pitfalls, of using incentives and bonuses to motivate them. These can be financial, but can also be of a non-financial nature and include rewards such as job enrichment, extra time off or a team away day for example. When utilised correctly, incentives can increase the productivity and/or quality of their work, but there are potential dangers too with issuing bonuses and rewards, particularly financial ones (See Article: Money Can Actually Decrease Motivation).

When using monetary or non-financial incentive schemes, either in conjunction with providing business coaching or in isolation, it is important that managers convey to employees clear targets, goals and objectives that are required in order to earn the reward in question. This will allow them to have a clear idea of what they need to do in order to obtain the reward and set about doing it, which is the intention of providing the incentive scheme in the first place. Conveying an indistinct and ambiguous target such as "increased production" or "better quality finished product" is too vague and can lead to unhappiness and de-motivation amongst workers if they feel they have achieved this objective whereas management, who had a different definition of success in mind, do not. Setting a clear, preferably quantifiable target at the outset can eliminate confusion and make it clear to everyone as to what is desired and what will trigger the incentive. It will also allow employees to track and measure how far their efforts are going in terms of satisfying the target, which can also increase their motivation to succeed, particularly towards the end of a specified time period for completion.