The debate between if the financial incentives help or harm the production of the employee and of the company is one of the most controversial debates in the Human Resources department. As we saw last class, there are many ways to motivate an employee so he/she can do a better job. The recognition of the employee’s labor is a very important action that makes the employee feel part of “the family” and may lead to a positive effect on their performance. Also, making them feel comfortable in the environment in which they work with free food, videogames or any other type of anti-stress activities is a really good way to improve their performance at work. Finally, basing us in one of the fundamental economics laws: “the human being, is always trying to maximize their profit”, it can be said that by the use of financial incentives the employee will feel motivated to perform a better job and will always try to get more and more.

On one hand, Leena Thampan talks about the financial incentives as a threat to the company’s production. She argues that employees work better with non-financial incentives such as recognition, reward, opportunities and flexibility. On the other hand, Berkeley’s blog argues that a new generation of employees is coming and that the types of recognitions and incentives are changing too. According to 2014 Canadian Incentive Trends Survey, “prepaid credit cards are growing in popularity and preferred 2x more than retail gift cards”.

In my opinion and basing my arguments on Maslow’s hierarchy of needs, there is not a single “best incentive” for the employee. As it can be seen in the pyramid below, the first floor that has to be filled is the physiological one. In this floor, breathing, sleeping and other fundamental activities that the human being needs for their well-being are mentioned. Some of these activities include food and water, which would not be possible to acquire without an economical payment from the employer to the employee. This is when the financial incentives may be fundamental for the good performance and well-being of the employee. Not all people have the opportunity to receive a good salary, and without financial incentives it would not be possible to improve the employee’s performance and productivity since the base of the pyramid wouldn’t be complete. The next four floors show the psychological and self-fulfillment needs, which can be fulfilled by the recognition and rewards that the company gives the employee. It is very important to have all of these steps complete if the company wants to maximize their production and profits.

Therefore, I don’t agree with either Thampan’s blog or Berkeley’s blog completely. First of all, I think that the incentives must be based on the context that the employees are facing, such as their personal/financial life, the economy of the country, etc. For example, a father may prefer some extra days of vacations so that he can spend time his family over a financial reward, and a young adult may value more a financial incentive with which she/he can buy clothes, electronics, etc. than more days of vacations. Also, I think that the best way to keep employees happy is mixing the financial and non-financial incentives. Every human being needs to feel part of something, as they also need to feel valued and important for someone. Therefore, it is very important to a company’s performance to keep their employees happy, making them feel part of “the family”, recognizing them in front of everyone when necessary, and also, giving them financial incentives when they deserve it.

Sources:

– http://berkeleypayment.com/blog/picking-employee-rewards-and-incentives-for-the-multi-generational-workplace

– http://wagepoint.com/blog/non-financial-incentives-for-employees