Some employers reward members of staff for their exceptional contribution to the company by giving them extra money. This practice can act as an incentive for some but may also have a negative impact on others.

To what extent is this style of management effective?

Are there better ways of encouraging employees to work hard?

Today many employees are motivated by appealing fiscal incentive policy adopted by managers in company. The policy may work well. But it is also normal to hear complaint from some employees who are not rewarded. So this essay will examine the pros and cons of this managerial style.

First of all, this incentive policy can be working well on those who perform with less competences within their scope. These “lazy” people, compared with others, would perform better in order to get rewards. Second, the method of giving extra money is easy to implement and straight forward to obtain more attentions. Unlike issuing bonous shares or similar policies that will affect a company’s structure, cash seems to be easier to understand.

However, adopting this management may rage some others who are not rewarded yet. One of the main cons arised by this is that it will create a bad relationship among colleagues. In other words, working within a stressful atmosphere where strong competition exists in between is a clog for a healthy feature as to the growth of company. Another issue that is brought about is how to define an “exceptional contribution”? The management must have used several measurements on this term such as sales commissions, profit figures or the number of customers you have served. The employees, in order to be exceptional, may cheat. There may be collusion between accounting staff and employee, manipulating the profit figure. Furthermore, although it might be extreme, the manager may be threatened by staff who are furious about not getting rewards as some people do.

Based on analysis above, we conclude that adopting this fiscal management style is not wrong but the management should, in the mean time, have a sound awareness of how employees are responding to the incentive policy to avoid unnecessary side-effect of it.