Question

It has been said that incentive plans work only for a relatively short time. Do you agree or disagree with this statement? Why or why not?

Answer 1

The correct answer is that it depends on the specifics of the incentive plan. A general incentive plan that is not linked directly to productivity will typically become old news to staff within a few years. What was once an incentive will become familiar and may be viewed as an entitlement as staff start looking for the eternal "what's next?". An incentive directly linked to some kind of productivity (e.g. hours worked) will have a far longer shelf life (though this will, of course, vary by employee). In this scenario the ongoing incentive remains year over year (e.g. the hours of overtime worked in the previous year will have no bearing on the current year so if you want a similar result you will need to maintain your effort whereas if you want a better result you will have to increase your effort). All incentive plans, however, are subject to the rules of diminishing marginal utility to the employees and will diminish over time as the employee either becomes comfortable at a certain productivity level or becomes disenchanted by other factors. In summation: an incentive plan, if designed properly, can work for a relatively long period of years though results may vary by employee as everyone is motivated by different things (though providing an alternative incentive to money may somewhat mitigate this additional potential problem).