Advantages and Disadvantages of Individual Incentives

Advantages and Disadvantages of Individual Incentives

Incentives are variable rewards granted to employees as per the variations in their performance. To succeed, an organization must attract and retain productive employees.

Individual incentives refer to incentives given to individual employees for their additional contribution towards organizational objectives. Under it, incentives are calculated on the basis of individual performance that can be measurable in quantitative terms. This is a most popular form of incentive in the industry under which employees are rewarded individually for their additional contributions.

Advantages of Individual Incentives:

  1. Employees are individually motivated for a higher level of performance in the organization.
  2. Organizational ability will increase due to individual’s satisfaction at work.
  3. Individual incentives will result in greater job satisfaction and organizational productivity.
  4. Individual incentive reduces organizational expenses.
  5. Individual incentives can be easily administered and applied.

Disadvantages of Individual Incentives

  1. Since the individual incentive is provided with an additional output, employees tend to increase their output as far as possible and they give less importance to the quality.
  2. Goal conflict occurs between individual goals and organizational goals.
  3. The quality of work life is reduced.
  4. The living standard of employees will be uncertain.
  5. Individual incentive does not promote teamwork,
  6. Bonuses are nor directly linked to employees performance.

Individual incentive plans can create a sense of healthy competition within an organization, as employees push themselves to excel to keep pace with or surpass top-performing colleagues. There’s no blame game with individualized incentive plans. Employees succeed or fail based on their own merit, with staffers understanding that they are in control of their own earning potential.


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