ASSIGNMENT BRIEF:

Write an essay on the role of motivation and incentives in productivityimprovement. Elaborate in detail the
role of human factor in productivity improvement. Give the role of incentive schemes with reference to your
companys schemes.
Different Factors Affecting Labour Productivity from Previous Studies Productivity is the outcome of several
interrelated factors. Discussed below are various factors affecting labour productivity and are reviewed from
past studies.
i. Time: During construction projects, there are many tasks which causes a loss of productivity. Past study
shows productivity decreases with working overtime. The most frequently stated reasons are fatigue;
increased absenteeism; decreased morale; reduced supervision effectiveness; poor workmanship, resulting in
higher rework; increased accidents (Horner and Talhouni, 1995). Working overtime initially result in increased
output, but continuing overtime may lead to increased costs and reduced productivity (Hinze, 1999).
Time used by a construction laborer on productive activities averages about 30% of the total time available. An
employee in the field only works effectively for 3.5 hours of his 8-hour shift and spends 20% of his time on
direct value-adding activities (Alinaitwe et al., 2005).
ii. Schedule Compression: When there are early delays in a project, compressions of the overall time frame for
a later activity are often the way to compensate interruptions and to complete the assigned task on schedule.
From a professional scheduling perspective, schedule compression may be possible without accelerating
individual work activities by utilizing float in the projects overall schedule. However, on many projects,
schedules are not fully resource loaded. As a consequence, a properly updated schedule reflecting the delays
may show the project finishing on time without shortening individual activities. Schedule compression may
result to force extra labors for the desired task by the contractor because of shortening the overall duration,
allowing the contractor to complete the total remaining work. Schedule compression, when linked with
overtime, often results in major productivity losses due to shortages of material tools or equipment to support
the extra labors, resulting in 12 1 2difficult for planning and coordinating the task, and unavailability of
experienced labors (National Electrical Contractors Association, 1983).
iii. Type of Project: To accomplish substantial productivity, every member of a crew requires adequate space to
perform task without being affected with/by the other crew members. When more labors are allotted to
perform particular task, in a fixed amount of space, it is probable that interference may occur, thus decreasing
productivity. Additionally, when multiple trades are assigned to work in the same area, the probability of
interference rises and productivity may be reduced. Interference among the various crews and laborers is due
to mismanagement on construction sites. For example, a steel-fixture crew has to wait before fixing the
reinforcement rods if the carpenters framework is incomplete. The types of activities and construction
methods also influence labour productivity (Sanders and Thomas, 1991).
iv. Safety: Accidents have high impacts on labour productivity. Various accident types occur at the site, such as
an accident causing death and resulting in a total work stoppage for a number of days. An accident that causes
an injured person to be hospitalized results in a work decrease of the crew for which the injured employee
worked. Small accidents resulting from nails and steel wires can stop work and, thus, decrease productivity
(Sanders and Thomas, 1991). Even insufficient lighting shows decreased productivity because sufficient lighting
is required to work efficiently and because insufficient lighting has negative effects. Employing a safety officer
helps labors to recognize the required safety regulations and to follow them, which can reduce the number of
accidents, thus increasing productivity.

v. Quality: Inefficiency of equipment and poor quality of the raw material are factors which cause low
productivity. The productivity rate of inefficient equipment is low. Old equipment1313 is subject to a great
number of breakdowns, and it takes a long time for the laborers to complete the work, thus reducing
productivity. Poor-quality material used for work is the other factor because poor materials generally lead to
unsatisfactory work and can be rejected by supervisors, thus reducing the productivity.
vi. Managerial Factors: Managers skill and attitudes have a crucial bearing on productivity. In many
organizations, productivity is low even though the latest technology and trained manpower are made
available. Low productivity is because of inefficient and indifferent management. Experienced and committed
managers can obtain surprising results from average people. Employees job performance depends on their
ability and willingness to work. Management is the catalyst to create both. Advanced technology requires
knowledgeable laborers who, in turn, work productively under professionally qualified managers. It is only
through sound management that optimum utilization of human and technical resources can be secured.
vii. Manpower Group: Literature shows that a lack of labour experience is the factor which negatively affects
labour productivity and proves that, to achieve good productivity, labour plays a significant role. Contractors
should have sufficiently skilled laborers employed to be productive. If skilled labour is unavailable and a
contractor is required to complete specific task with less-skilled labour, it is possible that productivity will be
affected. The absence of any crew member may impact the crews production rate because workers will,
typically, be unable to accomplish the same production rate with fewer resources and with a different crew
members. Misunderstanding among laborers creates disagreements about responsibilities and the work
bounds of each laborer, which leads to a lot of work mistakes and decreases labour productivity. Lack of
compensation and increased laborer age negatively affect labour 1414 productivity because labour speed,
agility, and strength decline over time and reduce productivity (Heizer and Render, 1990).
viii. Motivation: Motivation is one of the important factor affecting construction labour productivity.
Motivation can best be accomplished when labors personal ambitions are similar to those of the company.
Factors such as payment delays, a lack of a financial motivation system, non-provision of proper
transportation, and a lack of training sessions are grouped in this topic (DeCenzo and Holoviak, 1990).
ix. Supervision: Generally, projects come across some design, drawings and specification changes during
construction. If drawings or specifications are with errors and unclear productivity is expected to decrease
since laborers in the field are uncertain about what needs to be done. As a result, task may be delayed, or have
to be completely stopped and postpone it until clear instruction. There is a 30% loss of productivity when work
changes are being performed (Thomas et al., 1999). Work inspection by the supervisor is an essential process
to proceed. For example, the contractor cannot cast concrete before an inspection of the formwork and steel
work, thus affecting labour productivity (Zakeri et al., 1996). With noncompletion of the required work
according to the specifications and drawings, supervisors may ask for the rework of a specific task. Supervisors
absenteeism stops the work totally for activities that require their attendance, such as casting concrete and
backfilling, further delaying inspection of the completed work which, in turn, leads to delays in starting new
work.
x. Material/Tools: Material management is one of the most important factor in construction industry.
Productivity can be affected if required materials, tools, or construction equipment for the specific are not
available at the correct location and time. Selection of the appropriate type and size of construction
equipment often affects the required amount of time it is, therefore, essential for site managers to be familiar
with the characteristics of the major types of equipment most commonly used in construction. In order to
increase job-site productivity, it is beneficial to select equipment with the proper characteristics and a size
most suitable for the work conditions at a construction site. Laborers require a minimum number of tools and

equipment to work effectively to complete the assigned task. If the improper tools or equipment is provided,
productivity may be affected (Alum and Lim, 1995; Guhathakurta and Yates, 1993). The size of the construction
site and the material storage location has a significant impact on productivity because laborers require extra
time to move required materials from inappropriate storage locations, thus resulting in productivity loss
(Sanders and Thomas, 1991).
xi. Project Management Factors: Improper scheduling of work, shortage of critical construction equipment or
labour, may result in loss of productivity. Improper planning of project-initiation procedures generally lead to
lost labour productivity. Additionally, poor site layout can contribute to a loss of productivity. Laborers have to
walk or drive a long way to lunch rooms, rest areas, washrooms, entrances, and exits, affecting overall
productivity (Association for the Advancement of Cost Engineering (AACE) International Recommended
Practice No. 25R-03, 2004).
xii. Natural Factors: Various natural factors affecting labour productivity collected from previous study are
weather conditions of the job-site and geographical conditions. Others factors such as fuel, water, and
minerals also affect productivity to certain extent. Productivity is found to be highly affected if weather
recorded are too be extreme (too cold, heavy rainfall, too hot.
xiii. External Factors: Weather conditions are significant factor to consider for completion of any construction
project. Adverse winter weather, such as winds and rains, reduces productivity, particularly for external work
such as formwork, T-shape work, concrete casting, external plastering, external painting, and external tiling.
Adverse weather sometimes stops the work totally (Sanders and Thomas, 1991).
xiv. Political Factors: Law and order, stability of government, etc. are essential for high productivity in the
construction industry. The governments taxation policies influence willingness to work and expansion of
plants. (A. Kumar, as cited in Desai, 2004).

An incentive system is a business management tool that introduces a structured motivation system to
promote desired employee behaviors. Human resources (HR) professionals are tasked with using employee
and organizational objectives to identify and implement the best employee incentive programs.
How Incentives Improve Performance
To be effective, incentive systems must address employee skills and motivation, acknowledgement of
employee successes, a clearly-defined set of goals, and a means for assessing progress. These systems must
also be tailored to the needs of the organization. Incentive systems are often implemented to prevent and
overcome poor performance, failure to meet organizational goals, poor morale, increased turnover, and
the stress of increased demands on employees.

Carrot and stick

Incentive systems should use the carrot (reward) as opposed to the stick (punishment) to motivate employees.
Incentive systems are grounded in the idea that employee effort increases as workers perceive that they are
making progress towards reaching set goals. A successful system promotes full employee participation by
offering a wide array of rewards and keeping employees motivated to participate.
The Role of Human Resources
Incentive systems only work when they are closely tailored to the goals of the organization. The system's goals
must be challenging but attainable, or employees will not be motivated to participate. It's counter-intuitive,
but research has shown that monetary rewards are ineffective incentives. One incumbent risk of incentive
systems is the moral hazard of encouraging individuals to achieve their own goals and specific targets rather
than improving upon organizational performance as a whole.
Human resources departments must identify the core culture of the organization and create incentives that
match it. For example, a company built on innovation must inspire risk-taking without any guarantees of
success. This means performance incentives and metrics may be relatively useless (and most likely damaging)
to executing the core organizational goals. Instead, HR could provide incentives like telecommuting or the
freedom to devote a percentage of each work day to independent projects (Google does this).
At the other end of the spectrum, Walmart promotes rigidly controlled operational efficiency. To reduce
employee errors, an incentives system could reward efficiency. The most consistent truck drivers, for example,
could receive a reward for their clockwork performance.

Incentive is an act or promise for greater action. It is also called as a stimulus to greater action. Incentives are
something which are given in addition to wagers. It means additional remuneration or benefit to an employee
in recognition of achievement or better work. Incentives provide a spur or zeal in the employees for better
performance. It is a natural thing that nobody acts without a purpose behind. Therefore, a hope for a reward is
a powerful incentive to motivate employees. Besides monetary incentive, there are some other stimuli which
can drive a person to better. This will include job satisfaction, job security, job promotion, and pride for

accomplishment. Therefore, incentives really can sometimes work to accomplish the goals of a concern. The
need of incentives can be many:1.
2.
3.
4.
5.
6.
7.

To increase productivity,
To drive or arouse a stimulus work,
To enhance commitment in work performance,
To psychologically satisfy a person which leads to job satisfaction,
To shape the behavior or outlook of subordinate towards work,
To inculcate zeal and enthusiasm towards work,
To get the maximum of their capabilities so that they are exploited and utilized maximally.

Therefore, management has to offer the following two categories of incentives to motivate employees:
1.

2.

Monetary incentives- Those incentives which satisfy the subordinates by providing them rewards in
terms of rupees. Money has been recognized as a chief source of satisfying the needs of people.
Money is also helpful to satisfy the social needs by possessing various material items. Therefore,
money not only satisfies psychological needs but also the security and social needs. Therefore, in
many factories, various wage plans and bonus schemes are introduced to motivate and stimulate the
people to work.
Non-monetary incentives- Besides the monetary incentives, there are certain non-financial incentives
which can satisfy the ego and self- actualization needs of employees. The incentives which cannot be
measured in terms of money are under the category of Non- monetary incentives. Whenever a
manager has to satisfy the psychological needs of the subordinates, he makes use of non-financial
incentives. Non- financial incentives can be of the following types:a. Security of service- Job security is an incentive which provides great motivation to
employees. If his job is secured, he will put maximum efforts to achieve the objectives of the
enterprise. This also helps since he is very far off from mental tension and he can give his
best to the enterprise.
b. Praise or recognition- The praise or recognition is another non- financial incentive which
satisfies the ego needs of the employees. Sometimes praise becomes more effective than
any other incentive. The employees will respond more to praise and try to give the best of
their abilities to a concern.
c. Suggestion scheme- The organization should look forward to taking suggestions and inviting
suggestion schemes from the subordinates. This inculcates a spirit of participation in the
employees. This can be done by publishing various articles written by employees to improve
the work environment which can be published in various magazines of the company. This
also is helpful to motivate the employees to feel important and they can also be in search for
innovative methods which can be applied for better work methods. This ultimately helps in
growing a concern and adapting new methods of operations.
d. Job enrichment- Job enrichment is another non- monetary incentive in which the job of a
worker can be enriched. This can be done by increasing his responsibilities, giving him an
important designation, increasing the content and nature of the work. This way efficient
worker can get challenging jobs in which they can prove their worth. This also helps in the
greatest motivation of the efficient employees.
e. Promotion opportunities- Promotion is an effective tool to increase the spirit to work in a
concern. If the employees are provided opportunities for the advancement and growth, they
feel satisfied and contented and they become more committed to the organization.
The above non-financial tools can be framed effectively by giving due concentration to the role of
employees. A combination of financial and non- financial incentives help together in bringing
motivation and zeal to work in a concern.

Positive Incentives
Positive incentives are those incentives which provide a positive assurance for fulfilling the needs and wants.
Positive incentives generally have an optimistic attitude behind and they are generally given to satisfy the
psychological requirements of employees. For example-promotion, praise, recognition, perks and allowances,
etc. It is positive by nature.
Negative Incentives
Negative incentives are those whose purpose is to correct the mistakes or defaults of employees. The purpose
is to rectify mistakes in order to get effective results. Negative incentive is generally resorted to when positive
incentive does not works and a psychological set back has to be given to employees. It is negative by nature.
For example- demotion, transfer, fines, penalties.
1.1 Motivation and Incentives definitions Motivation refers to the initiation, direction, intensity and
persistence of behaviour. Incentives on the other hand are external measures that are designed and
established to influence motivation and behaviour of individuals, groups or organizations. Incentive systems or
structures are combinations of several more or less coherent incentives. Motivators include purposive
incentives in the above sense but also all other external factors, which impact upon peoples or organizations
motivation. The term motivational system (or structures) can be used to refer to the set of such motivators,
more or less persistent in nature, in place at any given time.
Motivation can be at different levels individual, organizational and societal. Individuals are driven by their
own desires and moral believes. Individual motivations may be internal or intrinsic motivation (activated
from the inside) such as hobbies, caring for children, or voluntary work in society; or they may external or
extrinsic(activated from the outside) motivation, which is nurtured from the outside.
Organizational motivation, distinguished from capacity, refers to the internal motivation of an organization.
Social motivations derive from the fact that people tend to identify with others and have a sense of belonging
to groups. Individuals depend on others and thus have a certain loyalty to the groups they belong to. Social
relations are governed by formal and informal rules. There are three dimensions of societal motivations the
first is a sense of fairness: People, groups and organizations want to feel that they are treated fairly compared
to peers or competitors. A second dimension is the existence of criteria and authority that stops unfair
dealings and that encourages fair behaviour. A third is the phenomenon of social pressure. It can be
appreciation or disapproval from superiors, peers or others that the person feels responsible for, for instance
children.
At any of these levels, there are always internal motivational factors (figure 1). But it should be recognized that
motivators for improving performance may also come from external sources. For example, for organizations,
motivators may reside externally in other organizations and the broader enabling environment. Furthermore,
there are interactions of motivations among these three levels e.g. individual motivations may enhance
motivation of an organization, but organizations also impact on people, such as their staff or clients. They
influence other organizations such as competing businesses or subordinate offices in the public administration.
Organization may in many cases also be the prime entry point for motivating larger societal changes, such as in
the case of a tax authority, a Ministry of Education that decides on curricula, or an anti-corruption agency that
permeates public and private business.
1.2. Performance, motivation and capacity analytical linkages Perceptions and concerns about development
performance usually provide the entry point for thinking about capacity issues. Yet, capacity does not
automatically translate into improved performance and better development results. To illustrate: a car engine
may have all the components to run smoothly, but it would still sit idle without fuel and a driver. By the same
token, capacities may be in place, but appropriate incentives need to be present to put them in high gear and
in motion toward the desired development destination.( Boesen,2004)

There are various ways of conceiving of motivation in relation to capacity. On the individual and organizational
levels, one can easily conceive of motivation being complementary to capacity. On the individual level,
capacity to perform is a combination of personal skills and motivation of people. It can be weakened or fuelled
from within (such as changing believes or health) or external incentives (measures in the environment that
impact on motivation). Learning, which is at the centre of individual capacity development, is fundamentally a
function of intrinsic voluntary motivation to acquire knowledge and the means to do so. The capacity of an
organization is also a function of the motivational abilities of its leadership as it is of external conditions such
as pay scales in public service or investment climate.
In larger systems or the enabling environment, the distinction becomes more blurred. Security, rule of law,
and land tenure are part and parcel of societal capacity to manage its affairs. What is capacity on one level
may work as incentives on another. In any case, it is possible to distinguish factors that have motivational
effects from other capacity elements. Some are internal, others are external to or in the environment of any
given system. The question of motivation is inextricably linked with capacity and needs to be analyzed and
addressed on all capacity levels: individual, organization and enabling environment.
II. Incentives Strategy in Application
2.1. Incentives for individual motivation:
Incentive measures, such as salaries, secondary benefits, and intangible rewards, recognition or sanctions have
traditionally been used to motivate employees to increase performance. Motivators may be positive and/or
negative. Reducing dis-incentives or perverse incentives that favour non-conducive behaviour, can often be
more important than inventing new incentives. Box 1 indicates a menu of options from which incentives can
be combined into packages.
Box 1: Incentives that impact on motivation of staff
Pay, Salaries, efficiency wages etc.
Direct financial benefits, such as Pension, illness/health/life insurance; allowances (clothing, housing, etc.),
subsidies, gain sharing,
Indirect financial benefits such as subsidized meals/clothing/ accommodation/ transport, scholarships, tax
breaks; etc., deferred compensation such as seniority pay,
Flexible schedules, part-time/ temporary work; sabbatical, study leave, holidays, vacation, etc.
Work environment/conditions, occupational health, safety, recreational facilities
Amenities, school access, infrastructure, transport, etc.
Job security; Career/ professional development/ training opportunities
Feedback, coaching, valued by organization
Solidarity, socializing, camaraderie, affection, passion
Status, prestige, recognition
Sense of duty, purpose, mission
Security, opportunities, stability, risk

Thus incentives can be financial, which come in some form of payment or cash transfers. Some of the financial
incentives are direct such as salary, pension, insurance, bonuses, etc. Others are indirect such as subsidized
meals, clothes or housing. It is important to make a distinction between a proper level of pay and special
incentive pay to reward performance. In the private sector financial incentives are generally associated with
better performance although perverse impacts can also be observed. Cash awards are shown to have a higher
value where remuneration is low. Conditions in the public sector differ significantly from those in the private
sector (see below).
Non-financial incentives come in many forms such as gifts, rewards, travel. Some are more tangible than
others since they are visible and/or can be compared to financial benefits. Less tangible incentives relate for
instance to work flexibility, independence of working, recognition of ones work, the possibility of
advancement. The value of non-financial material incentives seems to be perceived as a function of
psychological processes.
There is also a distinction to be made between formal incentives and informal ones. Formal ones are for
instance salary scales and staff entitlements. Informal ones may also be legitimate depending on the context
but can also represent channels reaping personal benefits through corrupt practices or patronage.
There are also a range of distinctions to be made for non-materialistic incentives. Like generally materialistic
incentives, non-materialistic incentives can be self-interested, such as psychological benefits related to the
status of power. On the other hand they can be of a genuinely altruistic nature, based on own desires and
moral believes.
For a long time, it was thought that intrinsic and extrinsic motivations were additive and could easily be
combined to produce optimal performance. Today it is recognized that there are trade offs. Motivations also
have a dynamic nature. As the context and trends change, people also adapt their views and preferences.
Different8 professional groups respond differently. There is an evolution over time where motivations change
with age. While the opportunity for travel, for instance, may be very attractive for young, single professionals,
it may become a burden for a family setting. Motivations and responsiveness to incentives also is a function of
gender.
2.2. Incentives for organizational motivations
Incentive systems are an important part of organizational motivation and are central to helping diagnosticians
understand the forces that drive the organization. Organizational incentives refer to both the reason for staff
to join an organization, and the way an organization rewards and punishes its staff. Incentive systems can
encourage or discourage employee and work group behaviour. Organizations must continually seek ways to
keep their employees and work groups engaged in their work, motivated, efficient and productive. An
organizations success can depend on its ability to create the conditions and systems (formal and informal)
that entice the best people to work there. Also, a good incentive system encourages employees to be
productive and creative, fosters loyalty among those who are most productive, and stimulates innovation.
Incentive systems reside within organizations, their structure, rules, human resource management,
opportunities, internal benefits, rewards and sanctions, etc. Whether based on perception or reality,
organizational incentive systems do have a significant influence on the performance of individuals and thus the
organization overall. A study of Ghanas public sector concludes that The significance of internal factors in
creating positive organizational cultures suggests that many of the changes needed to transform public
organizations could be initiated by the organizations themselves without substantial external support.
2.3. Incentives and societal motivation
Perhaps the most pervasive structural motivators and incentives are located at the societal level, such as
security, rule of law, investment climate, civil service pay or legislation conducive to civic engagement.
Whether or not an organisation, for instance, is able to achieve its purpose depends not just on only whether it
is adequately resourced but on the incentives generated by the way it is resourced under prevailing rules.

Many of these cannot easily be influenced from the perspective of individuals and organizations, although
these play a critical role as change agents.
The motivational direction and value of many of the above are directly rooted in the prevailing Governance
systems. This begins with inclusive democracy and a rights-based approach to development. Neither incentive
mechanisms nor external interventions for capacity development will bear results unless there is the rule of
law and a proper legal system. A free press and a vibrant civil society serve as watchdogs to deepen inclusive
democracy, bolster support for the protection of human rights and further check the misuse of incentive
mechanisms. Changing organizational culture takes time. Changing societal values, culture and rules of the
game depends on political processes, negotiation, and in many instances is an issue of generations.