Five financial incentives :
(i) Pay and Allowances
For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance, house rent allowance, etc. Some organisations provide pay hikes and increments for better performance.
(ii) Productivity Linked wage Incentives
In this incentive, rewards are given to employees as a percentage of sales achieved. Its advantage is that reward is directly related to performance.
It is a one time reward for high performance. Bonus may be paid in cash or kind over and above the salary, e.g. per-formance bonus, 100% attendance bonus, festive bonus etc. …
(iv) Profit Sharing '
It means to provide employees, a share in the profits of the enterprise. This is in addition to their wages/salaries, which motivates them to improve performance and profits in •future. It is a group incentive scheme used to improve productivity and profitability.
(v) Co-partnership/Stock Option
In this system, employees are offered shares of the company at a price lower than the market price. This gives a feeling of ownership to the employees, which motivates them to improve performance and profits of the company. „
(vi) Retirement Benefits
Several retirement benefits such as provident fund, pension, gratuity are provided to the employees as a financial security after retirement.
Apart from basic salary, some companies offer fringe benefits and perquisites to employees, e.g. perks like . rent free accommodation, education, of children, medical allowance, car allowance, etc to motivate their staff.