HOW IMPORTANT ARE MONETARY INCENTIVES WHEN MOTIVATING A SALES FORCE?

How Important are Monetary Incentives when Motivating a Sales Force

Abstract

Motivated employees are the cornerstone of any successful organization. The objectives of this research are to explore the motivational factors and the effectiveness of these incentive programs pertaining to work motivation.

The thesis consists of two main components: theoretical and research. The first part is the theoretical framework, which examines the various motivation theories and the different categories of incentives. Information for the theoretical background was collected from publications, books and internet sources. For the empirical study, a mixed-method research approach was chosen to gather the data. The study was carried out using a questionnaire administered online and the research population consisted of 378 white-collar workers in Singapore.

The results from the study showed that incentives do have a very strong motivational potential to influence the employees' willingness to work harder. The three most motivating factors valued by employees are interpersonal relationship, workplace environment and interesting work, all of which have the potential to motivate employees at higher levels. For long-term motivation, job related factors such as meaningful work, flexible working hours and friendly social gestures were found to be effective motivators while, on the other hand, it was discovered that monetary, social gatherings, tangible items such as award, certificates and gifts are the most effective motivators for the short-term.

Table of Contents

Introduction5

Research Questions6

Methodology7

Time Series Analysis7

Testing for Stationarity8

Cointegration Tests9

Secondary Research11

Literature Review13

Defining Motivation13

Motivation and Monetary Monetary incentives14

Tangible Non-Monetary Incentives33

Intangible Non-Monetary Incentives37

Findings and Discussion44

Surveys46

Monetary Reward System Evidence47

Monetary Reward System as a Motivator48

Success of Monetary Reward System50

Conclusion58

References65

Appendix71

Questionnaire71

How Important are Monetary Incentives when Motivating a Sales Force

Introduction

The purpose of this paper is to highlight the effect and the importance of monetary incentives provided by the firm or the organization in order to encourage the employee, to share the profit percentage with its employees or any other reason. But the sole idea behind these monetary incentives is the motivation and the encouragement. “You are an asset for the company”, “You have been brilliant” or “We are fortunate to have this person as part of us”; they are although mere sentences but they are the highly driving force. It is the human psychology that he would like to hear good comments about himself. The monetary incentives provide him his psychological satisfaction. The monetary incentives may or may not be of the monetary nature, but they are the best way to motivate and encourage the employees. (Adams, 2007, 27)

The use of monetary incentives paid to workers whose production surpasses some predetermined standard was popularized by Frederick Taylor in the late 1800s. As a supervisory worker of the Midvale Steel Company, he had become anxious of what he called "systematic soldiering". (Adair, 1998, 197). Unlike incentive programs that drive employees to achieve improbable goals, the key to this type of system is that it rewards employees when their performance is average. However the impact the incentive programs cast on the firm is not easy to ignore. This is the reason that today many organizations ...