Question

Mahamana Enterprises is not only giving salary to its employees but it also offers bonus to them over and above the salary. To further encourage the employees, it announced that it will provide a share in the profits of the company to them. These incentives are helpful in increasing the purchasing power of the employees.

State four other incentives of the type of incentive discussed in the above para.

Answer 1

Types of Financial Incentives:

1. Pay and allowances: For every employee/ worker, salary is the basic monetary incentive. Regular wage increases and the provision of allowances serve as effective motivators.
2. Productivity linked wage incentives: The payment of salaries is based on the items produced in this case. This is used to boost productivity.
3. Co-partnership/Stock option: Employees of the company are offered the option to purchase company shares at a specified price that is lower than the market price under these incentive plans.
4. Retirement Benefits: Retirement benefits are benefits received during or after retirement, such as provident fund, pension, and gratuity. These give employees with financial security after they retire.
5. Perquisites: Perquisites are extra payments, bonuses, or advantages in addition to regular income. Many employers provide benefits such as a car allowance, housing, medical assistance, and kid education, among other things.
6. Commission: It is a popular reward given to staff in the sales department. It is directly related to an employee's efforts and productivity.