An incentive is a motivator that can be both extrinsic and intrinsic in nature. Some basic examples are grades in school and bonuses at the workplace. The incentive is an external element that is introduced to someone to induce the behavior towards a goal.
According to study.com, incentives are what motivate you to behave in a certain way, while preferences are your needs, wants and desires. Economic incentives provide you the motivation to pursue your preferences.
Incentives are very helpful to ensure a higher level of morale among employees. There are various kinds of incentives used for this purpose. Let us have a look at those-
Types of Incentives
Monetary Incentive
This is the most common way of providing incentives, mostly in form of bonuses. Money is an important factor for any individual. This serves the purpose of recognition as well as provides some funds to the individual as a reward. This way, it caters to the initial three needs of Maslow’s need hierarchy. This is extrinsic in nature.
Non-monetary Incentive
This is an intrinsic incentive that is used to satisfy one’s ego, boost esteem and elevate self-respect. All the aforementioned changes translate to increased ownership of the tasks and improved participation in the organization. This may be in the form of praise, recognition, promotion, transfer to the desired location, posting to the desired department, etc. Even food can be an incentive and it is much appreciated among employees.
Positive Incentive
These are mostly positive in nature and given as a reward for good work. This includes praise, recognition, promotion, transfer to the desired location, posting to the desired department, perks, allowances, etc.
Negative Incentive
It is corrective in nature and serves the purpose of correcting or rectifying the mistakes of the employees. It involves fines, penalties, unwanted transfers, demotions, etc.