Incentives for Professional employees

Professional employees are those whose work involves the applications of learned knowledge to the solutions of the employer’s problems. They include lawyers, doctors, economists and engineers.

Making incentive pay decisions for professional employees can be challenging. For one thing firms usually pay professionals well anyway. For another they’re already driven – by the desire to produce high caliber work and receive recognition from colleagues. In some cases offering financial rewards to people like these may actually diminish their intrinsic motivation – not add to it.

However, it would be unrealistic to assume that people like the systems analysts and programs at Microsoft and Google work only for professional gratification. A survey of 300 IT departments found that 77% were paying bonuses and incentives, including stock options and profit sharing, to IT professionals. Texas Instruments began offering stock option grants to about a third of its discovered it was losing about 15% of them to the competition. Several firms, including IBM and Motorola award bonuses to employees whose work wins parents for the firms.

Recognition based awards

Recognition is one of several types of non financial incentives. The term recognition program usually refers to formal programs, such as employee of the month program. Social recognition program refers to more informal manger employee exchanges such as praise, approval or expressions of appreciation for a job well done. Performance feedback is similar to social recognition but means providing quantitative or qualitative information on task performance for the purpose of changing or maintaining performance and specific ways.

Recognition (ranging from good job to more material awards) has a positive impact on performance either alone or in conjunction with financial rewards. For example, in one study, combining financial rewards with non financial ones (like recognition) produced a 30% performance improvement in service firms, almost twice the effect of suing each reward alone. The Minnesota Department of Natural Resources conducted one study of recognition. Respondents said they highly valued day to day recognition from supervisors, peers, and team members. More than two thirds said it was important to believe that others appreciated their works.

Employers are therefore increasingly using performance based recognition programs today. Texas Instruments for instance offer bonuses as well as non financial recognition including personalized plaques, parties, movie tickets golf lessons, and team shorts and jackets. In one year over 80,000 Texas Instruments employees were so rewarded. Managers at American Skandia which provides insurance and financial planning products and services regularly evaluate their consumer service reps based on specific standards. Those who exceed those standards receive a plaque, a $500 check their photo and story on the firm’s internal Web site and a dinner for them and their teams.

Non-financial rewards for performance and loyalty are popular in India. Long service or loyalty awards for employees who complete many years (in traditional sectors he duration is usually 15, 20 or 25) in one organization is a common practice. The reward includes a token gift and public recognition in a specialty organized function. In sectors with high turnover like IT and financial services, even a five year stay makes the employee eligible for a loyalty bonus. To recognize performance many Indian companies encourage spot awards that are given by employee’s immediate managers. These awards are usually in the from of certificates or gifts, like dinner coupons, movie tickets for a box office hit, or shopping vouchers . Titles like best employee or the best boss are awarded frequently and the event is converted into celebration. For instance the Gujarat Gas Company Limited (GGCL) of Ahmedabad encourages employees to non-financially reward each other for good performance or help by writing a colorful Sabash card. Employees who receive such cards proudly display it at their workplaces. Also, many Indians firms involve the families of the employees in such award functions an convert such reward ceremonies into family gatherings.

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