The submission should provide a summary of major theories related to the course and apply said theories to real world business applications in the modern workplaces of employment (it can be where you work or other workplaces).

Running head: MONETARY-BASED INCENTIVES 1

MONETARY-BASED INCENTIVES 6

Sustainability of Monetary-Based Incentives to Enhance Employee Performance

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Sustainability of Monetary-Based Incentives to Enhance Employee Performance

Introduction

The performance of employees in any organization depends significantly on the level of motivation that they have. The motivation may either be intrinsic or extrinsic. In intrinsic motivation, employees behave and act in ways that offer them internal rewards. For example, the attainment of self-actualization is one of the intrinsic motivations for individuals. On the other side, there is an extrinsic motivation that also determines the manner in which also determines the actions of individuals. Extrinsic motivation is a situation where the actions and behavior of employees are determined by external factors. One of the forms of extrinsic motivation is the issuance of incentives. Incentives refer to the promise of a reward that employees will be given when they achieve a level of performance in an organization. The incentives may come in different forms. Employees may be promised promotions when they achieve specific levels of financial performance. Additionally, employees may be promised monetary rewards when they achieve a level of performance. When employees are offered money in return for some performance, it is said that the organization applies monetary-based incentives. The primary purpose of this paper is to analyze the sustainability of monetary-based incentives to enhance the performance of employees. This paper holds that the use of monetary-based incentives to enhance the performance of employees has inherent challenges that make it unsustainable in the long term.

Sustainability of Monetary-Based Incentives to Enhance Employee Performance

There is no doubt that monetary-based incentives have been used by many organizations to enhance the performance of employees. In instances where organizations use this approach to enhance the performance, the impact is that the employees will work for their sights not on the interests of the organization but on the potential gains that they will have from their endeavors. Thus, in the event where these financial benefits would not be forthcoming, the employees would not be showing the high levels of performance that they would be showing in the event where the promise of financial benefits.

The most immediate benefit of monetary-based incentives is that it will motivate employees to focus on their jobs and deliver to the organization. Employees who are working under monetary-incentives are always looking at the most effective ways in which they may improve their productivity. In this line, these kinds of incentives are always capable of making employees demonstrate a high level of creativity in their activities. Besides, it is notable that the implementation of this strategy is likely to lead to a win-win situation between an organization and its employees. The organization will meet its financial expectation while at the same time; the employees will also get the money that they really need to meet their financial obligations. Thus, the use of the monetary-based incentive will create an environment that will allow an organization together with its employees to make sure there is a focus on financial performance. And that is where the problem begins. There are far-reaching ramifications that are likely to have tremendous impacts on any organization that practices it.

Ramifications of the application of monetary-based incentives

As stated above, while appreciating the potential positive benefits of the monetary-based incentives, it is also necessary to note that there are many challenges that arise from it, putting its sustainability into question. One of the issues or problems with this approach is that it makes the pursuit of money as the sole goal of an organization and its employees. While appreciating the fact that the main goal of any business organization is to make profits, it does not take away the fact that there are other very important roles that business organizations perform beside the pursuit of profits (Cainarca et al., 2019). For example, business organizations have missions to pursue, and they need to put as much effort as possible in pursuing such missions. However, when an organization focuses only on the pursuit of money, the chances are high that it will lift its eyes on the mission and vision.

The utilization of monetary-based incentives is capable of altering an organization's culture. It is important to note that every business has a culture that determines how it approaches its activities besides determining its relationship with its stakeholders. For example, an organization may have its culture built on fairness and respect for the rights of all its stakeholders. In such an environment that promotes the rights of stakeholders, there are values other than money that drive the employees to behave in particular ways (Cognet et al., 2015). These values, such as respect and fairness, thus form some of the most critical parts of an organization's culture. In such an environment, the organization does not pursue narrow and selfish interests, but it seeks to promote the good of the whole community. The introduction of money as the sole pursuit of the organization is likely to shift how it relates to its employees, and in the long run, it will lead to a negative culture change.

Monetary-based incentives are capable of leading to the development of illegal and unethical practices in and organization. When employees seek to drive an organization to make profits, it is possible that they may resort to illegal, unethical, or unfair practices. For example, there are employees who have been in the past been tempted to manipulate their books of accounts so that they may adjust revenues upwards so that they may achieve some profitability levels. The increase in the number of cases of falsification of books of accounts has been contributed to by the adoption of monetary-based incentives. It is also important to note that there are instances where business organizations have resorted to increasing the prices so that they may achieve their revenues targets. An organization's chief executives may be promised a 10% pay rise when they manage to post a 30% growth in the profits of the organization. The chief executives will want to do whatever it takes to achieve the desired levels of profitability.

Conclusion

The paper has demonstrated adequately that the use of monetary-based incentives to enhance the performance of employees has inherent challenges that make it unsustainable in the long term. The most immediate benefit of monetary-based incentives is that it will motivate employees to focus on their jobs and deliver to the organization. Employees who are working under monetary-incentives are always looking at the most effective ways in which they may improve their productivity. However, among other reasons, this paper has found that while appreciating the fact that the main goal of any business organization is to make profits, it does not take away the fact that there are other very important roles that business organizations perform beside the pursuit of profits. Thus, in the long run, the use of monetary-based incentives is not sustainable.

References

Cainarca, G. C., Delfino, F., & Ponta, L. (2019). The Effect of Monetary Incentives on Individual and Organizational Performance in an Italian Public Institution. Administrative Sciences, 9(3), 72.

Corgnet, B., Gómez-Miñambres, J., & Hernán-Gonzalez, R. (2015). Goal setting and monetary incentives: When large stakes are not enough. Management Science, 61(12), 2926-2944.