√ Definition of Incentives, Types, Forms, Objectives, Principles, Incentive Indicators

August 06, 2023
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Definition of Incentives, Types, Forms, Objectives, Principles, Incentive Indicators – In this discussion we will explain about incentives. An explanation that includes the meaning of incentives, types of incentives, forms of incentives, incentive objectives, incentive principles and incentive indicators which are discussed in full and easy to understand.

Definition of Incentives, Types, Forms, Objectives, Principles, Incentive Indicators

For more details, see the review below carefully.

Definition of Incentives

In the Big Indonesian Dictionary, incentives are additional income (money, goods, etc.) given to increase work enthusiasm, or also known as stimulus money.

In general, incentives are something in the form of money or goods whose purpose is to encourage an activity. Or something that is given to employees because their performance exceeds the specified standards.

Types / Types of Incentives

According to Siagian (2007: 268) the types of incentives are as follows:

Piece work (wages per output)
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Is a technique used to encourage employee work performance based on the results of the work done and expressed in the number of production units.
Production bonuses (production bonus)
Is a type of incentive given to employees who work in such a way that standard production is exceeded.
Commissions (commission)
Is a bonus received for doing a job and is often set by salespeople.
Executive incentives (executive incentive)
Is a type of incentive that is given to employees at the level of managers or employees with high positions within the company.
Maturity curves (maturity curve)
Namely the incentives given to employees or workforce, due to the length of service and the rank and salary group can no longer reach a higher rank and income.
Group incentive plan
It is a fact that in many organizations, performance is not an individual success, but due to the success of work groups who can work in a team. Other types of incentives are material incentives and non-material incentives.
- Material incentives: Is a type of incentive that provides in the form of bonuses, commissions, profit sharing, deferred compensation and old age assistance.
- Non-material incentives: Is a type of incentive that is given in the form of social security, awarding certificates, promotion, giving praise or writing. Meanwhile, if differentiated based on the recipient, incentives are divided into:
- Individual Incentives
  That is, the incentives given are aimed at employees for the effort and work performance of each employee.
- Group Incentives
  Is a type of incentive that is given to employees based on the standards of each group.
- Plant Wide Incentives
  Is a type of incentive that is given to all employees based on payment criteria set by the company.

Incentive form

Incentives can take several forms, such as money, a good work environment and participation. According to Koontz (1986: 648) the forms of incentives are as follows:

Money

Money is a form of incentive that is given as a stimulus because by giving money it means giving tools can realize the lives of employees so that employees are stimulated to always improve performance it works. Increased employee performance will support increased revenue.

Good Work Environment

Creating a good work environment can be interpreted as a form of incentives. This can also be given in the form of awards to employees who produce high work performance. In this case, a good manager's war to encourage his subordinates to work harder is needed to create a good work environment. A good work situation can increase the desire to carry out the task as well as possible.

Participation

One form of incentive is to increase awareness of doing the task by giving attention, the opportunity to communicate with superiors. Participation will lead to recognition that the participant is an inseparable part of creating a productive work environment well and this really needs support and a sense of unity so that employees will feel they are taking part and have the desire to participate.

Incentive Goals

According to Sutrisno (2011: 188-189) the objectives of incentives are as follows:

Appreciate a work achievement
Justice guaranteed
Employees can be retained
Quality employees will be obtained
Cost control
Meet the rules

For Companies
The purpose of providing incentives is:

In order for a skilled and capable workforce to have high loyalty to the company can be maintained.
Maintaining and increasing employee morale which is shown to decrease labor turnover and absenteeism
The company's productivity has increased, which means that production results have increased for each unit per unit time and sales have increased.

For Employees
The objectives of incentives for employees are:

In order for the standard of living to increase by receiving payments outside of the basic salary
So that the morale of employees is encouraged, so that they are enthusiastic to perform better.

Incentive Principle

Basically, it provides incentives if it is associated with remuneration for work performance that exceeds the standards that have been set and mutually agreed upon. Incentives provide a reward in the form of extra income for the extra effort generated. Incentive arrangements must be determined carefully and precisely and must be closely linked to the objectives of the company concerned.

The amount of incentives given to employees must be related to what has been achieved during a certain period, which is in accordance with the distribution formula that is clearly known to all parties. The formula in the distribution of incentives is determined fairly so that it can encourage more improvements work output and increase the desire to achieve additional income and benefit all party.

Incentive Indicator

According to Sarwoto (2010: 156) incentive indicators can be divided into two groups, namely:

Material Incentives

Incentives in the Form of Money

Bonuses are given as remuneration for the work that has been carried out. Usually the gifts are selective and special to employees who are entitled to receive and are given one time without any ties in the future.
Commission is a type of bonus that is paid to those who produce good sales, usually paid to the sales department and received by the sales staff.
Profit share is one of the oldest types of incentives. The payment system is in the form of a portion of the net profit that is deposited into a fund and then entered into the participant's loyal income list.
Compensation compensation program that includes payment at a later date.

Incentives in the form of social security: these incentives are often given collectively, without a competitive element and every employee can get them equally and automatically. The forms include:

Construction of official residence
Treatment for free
Subscribe to the newsletter for free
Moving costs
Sick leave that still gets paid wages
Giving learning assignments to develop employee knowledge

Non-Material Incentives

Non-material incentives can be given in the following forms:

Granting the title (title) officially
Awarding of awards or medals
Awarding of certificates of appreciation
Formal or formal/informal thanks
Give praise verbally or in writing formally or individually

Thus has been explained about Definition of Incentives, Types, Forms, Objectives, Principles, Incentive Indicators, hopefully can add to your insight and knowledge. Thank you for visiting.

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