Offering people money as a way of encouraging them to perform to a higher standard is one of the classic methods of incentive compensation motivation. Handing out financial benefits is a good way of getting a basic response from employees, and sometimes that's all employers want to keep people on track or get them back on the road to success. In such instances, considering a basic monetary method is still a popular incentive guide for many organizations.
Working for the money
According to the Mayo Clinic, financial incentives are even strong enough to make people lose weight. A weight loss study of 100 obese participants rewarded individuals for losing four pounds per week by paying them each $20 per month. Those who failed to meet the goal agreed to pay $20 into the study's payment pool, which was then used to reward others who showed success. The results showed that almost two-thirds of all participants were able to stick with their weight loss goals. Meanwhile, a non-incentive group was given the same diet goals, and only one-fourth of those individuals were able to enjoy the same outcomes.
"The take-home message is that...financial incentives can improve results, and improve compliance and adherence," said study author Steven Driver. He also stated that those in the penalty group, forced to pay into the pool, were more likely to stick with the plan and get back in the game with the opportunity to earn their money back. Those in the non-incentive group were more likely to give up.
Offering more financial assistance
Incentive compensation management in this realm is also helping encourage more businesses to make their payment methods more fair. Reuters wrote that Raymond James Financial is streamlining its monetary rewards system for its top advisors, or those who have more than $100 million in discretionary client assets under their control. These personnel will be allowed to keep more of their commissions and pay lower fees to the organization, meaning more take-home pay for better work. The firm is also doing away with controversial fees and expenses that have taken a toll on engagement and paychecks in the past.
Business leaders need to understand that financial incentives aren't the only method for increasing loyalty and performance, but they can provide an essential boost in output from time to time. Using these resources judiciously can help create a more productive, happy workforce.