Money is not everything while it is true to some extent but when it comes to employees working in the company money assumes a vital role in deciding whether an employee will work for the company or not and that is where the role of financial incentives cannot be undermined. Financial incentives in simple words refer to those incentives which can be measured in monetary terms and are given to motivate the employees working in the company, given below are some of the various types of financial incentives given to employees by the company –
Financial Incentives Types
Allowances
In the case of all employees apart from basic salary company pays various allowances like conveyance allowance, newspaper allowance, electricity payment, gym allowance, house rent allowance and so on. Every year a company tends to increase these allowances which in turn results in a higher salary for the employees even if the company is not able to increase the basic salary.
Bonus
Companies also give bonuses to employees if the company has made an extraordinary profit during a particular year which may be equivalent to the salary of one of the employees. In simple words unlike allowance which are payable monthly bonuses are paid yearly beside there is no guarantee that bonus will be paid every year which is not the case with allowances which are part of the normal salary paid to the employees of the company.
Profit-Sharing
Some companies also offer their employees a fixed percentage of profit as a share to the employees in the form of incentive so that employees work hard and ensure that companies make profits every year. Profit-sharing is different from stock options as in case of stock options they are dependent on the stock market while profit sharing is an internal thing.
Stock Options
Companies which are listed in stock market also offer stock options or equity shares of the company at discount to current market price which in turn help the company as it creates a sense of ownership in the minds of the employee who in turn strive to work hard so that company’s performance improves which eventually will result in the rise of stock price of the company and thus benefiting the employees of the company.
Retrial Benefits
All companies provide retirement benefits to the employees of the company which can be in the form of provident funds or leave encashment or pension or providing annuities to the employees of the company so that employees can live happily even after retiring from the company. Higher the retirement benefits higher will be the satisfaction level of employees as they will be assured that the company is taking care of their future also along with their present.
As one can see from the above that financial incentive are an integral part for both companies as well as employees of the company and that is the reason why the company should focus on having a good financial incentive system in place so that employees remain happy and continue to do good work for the company.