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The Good and the Bad Cash Incentives Essay

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Abstract

We are over here to discuss on a topic which relates to incentives, now in the first instant we should try to comprehend this particular word in a more meaningful manner then perhaps the understanding of the term might get easier. The word incentive actually means your action or anybody’s action urged and pushed forward which may result in an action, which you may realize had an element of a motivating force or some sort of encouragement which compelled you take action which could have been bypassed. When we talk of commercial gimmicks this is precisely where you may get hooked up by taking an action beyond you personal discretion. Theoretically, a skillfully planned marketing onslaught is where the real money lies.

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The Good and Bad Cash Incentives

Major challenges are covered by the company regarding cash incentives to motivate all the employees in this economy. According to experts, these challenges are motivating many employers to look at non-cash rewards that include merchandise and boosting of employee performance during these hard times. Many experts who’ve probably never had any revenue incentives thrown their way argue that people cannot be motivated by money which is not absolutely true in anyway. However the quality of life can also be the key factor to job satisfaction. The two most former cash based incentives are development opportunities and work environment, benefits and learning are also major types of compensation.

Employee empowerment provides them with the information that how the organization is doing as a whole unit and that thing is important as well too for the progression of the company as well as the employee.

There is a vintage saying by most of those old veteran businessmen “an expert salesman is a person who could motivate a desert Bedouin to invest his money in a hot water geyser for his dwelling where the ambient temperature is no less than 122oF.

 A skillful salesperson can come up with such incentives that he can even motivate an Eskimo to put his money on a deep freezer though he may realize he will have to use it inside an igloo which is no less then a deep freezer itself. Please don’t get amused by this statement, this is something most businessmen take it as a viable commercial reality, and who knows the very next victim might be your own good self. So, the point to ponder here is, we are all exposed to commercial gimmicks offering once in a life time deal, well that is what you think, the fact of the matter is all these commercial episodes are very carefully formulated and are pre-determined and has an inset incentive to make them lucrative.

Let us analyze this incentive from both the aspect, which are the good aspect and the bad. You will find that there are innumerable programs out there. The most common and naïve amongst them are the free gift offering schemes, like free wall clocks or a Small water kilter’s with a huge company’s logo which you will even remember in your dreams. You may sometime get lured away with your most favorite option known as frequent buyers program, that is, the more you buy the more points you make and in the end of the day you will be awarded with an extra similar product which you are already using but as a bonus, do you notice, the company is giving you bonus not from any other external source or cash but is offering you its own product.

Hence, the more the customer will spend the more courser will be the discount or the point which you have gain. Almost similar technique is practiced in the on-line business also like setting customers loyalty program on your site. The trick works wonders for customer’s relation with the vendor. It is such an effective technique that according to a recent survey conducted by few market pundits has revealed that 53 out of 100 customers have inclined that they would go back to the same site if they are offered incentives by the vendor.

An online businessman is never shy in saying that they really appreciate their business. He further says that it has helped them develop customer loyalty. We also recompense the customer to come back to site too. In this way they reward us in returning and purchasing more products as well. Before making an attempt or starting a new business one has to keep few marketing strategies in mind so that he may know all the needs and requirements that are needed to know the customer demands and the kind of loyalty programs that are needed to know the customer interest as well. One think more to remember is that incentive programs are not for everyone. (Campanelli, 2001)

We should also take few realities into account that all incentives are not harmonized that they will not yield a similar output. Many of them will usually do far more good for the seller than they do to the buyers. This particular technique is being practiced since decades.
Its appearance goes back to the late seventies when we had a similar kind of a gasoline crunch and an economic turndown scenario quite comparable with the contemporary economic turndown.
In today’s era this technique still remains quite active formulated more as a sales strategy to get rid of inventories off distributor’s lot, rather than to create customer’s relations with buyers. Regretfully, it will not always be in the interest of the buyers to take advantage of the incentives. Few of these incentives can do more harm than any discernible advantage and some do nothing at all, that is the buyers aggregate as an advantage will always manifest negative or devoid of any extra figure as remnant.
In most of the cases, incentives are a sort of signal that we are out for some fantastic offer! We are having a sale! It’s a sort of signal for prospective buyers transmitting their bargain through commercial media, inviting them to their showrooms to take advantage on their offer. Though the contemporary era in which we are trying to strive in this extraordinary time which requires extraordinary planning for both buyers and sellers this might be true but eventually you will see that the same old rule still apply.

There are many commodities, having a market as well as a market share remains slow selling, these are the products which are the prime targets for incentives, but for those commodities which sells like hot cake are never in the clutches of incentives. Just few years’ back incentives were like integral part of various automobile models, at that time customers, literally didn’t even ask the showroom sales person if that model which he sells is not offering incentive.

For a short tenure just before when this event had a ceiling of $144.00 per barrel which led to a global sales collapse. Most of the car manufacturers had kept their price tag at quite a reasonable as well as competitive level creating an atmosphere where incentives are usually not required or at least not taken as a weapon for sale.

But the most worst part which an incentive can do for two manufacturer by taking up incentives the manufacturer’s spirit is deeply moved and reputation shaken and as a result its resale value will be badly affected.

The Good:

If you co-relate the application of incentive in the present scenario where almost every commodities are not behaving as projected incentive on cars seize to apply, if somehow you find any thing pertaining to incentives, all probabilities would be some sort of a gimmick.

The game shell (bad):

Low to zero interest rates have been in business since quite many years now, this is more a gimmick than saving, no money lender will ever cut your rates for the pleasure of lending you money. In almost all cases the reduced costing on the interest is covered by some mark-up in the vehicle.  You must have also noticed these days that most of incentives offer money back or low rates, but you will never notice both at the same time, especially on a reliable manufacturer whose products have a good resale value. Putting it this way if any one is counting on the price tag, he might me missing something elsewhere.

  Cash Back: (Rebate)

There is costing which are obscured in such offers. While you are calculating your interest rates, you find a bill board which says thousand dollars off on this model. This actually corners you for any righteous attempt to negotiate in which you may strike a price which you can payback easily.

Training Incentives:

Incentives for an employee training can assist a manufacturer to pay back its cost hence, increasing the overall efficiency of its skilled staff; consequently this would also help in building a state’s intellectual capital. Therefore, the states financial support will make the state a better and a stable place to live and as a result will get into a better position to attract other companies. Many countries in this world are beginning to acknowledge that training programs must address the needs of the employer as well as the employee.

Most of the developed countries try various ways to encourage training. For these skilled assets there is special authoritative funding for the training incentives. There are few companies who are trying to induct other ways to finance training like putting levies in its employee’s payroll enabling them to get tax credit. By doing so they are helping the state to build a solid foundation of intellectual capital.

Employer Cash Incentives for Hybrids Are Taxable:
Many companies are offering cash incentives to offset the purchase price of these vehicles just to support their employees to purchase it. These cash incentives are likely to be the taxable compensation. They are also said to be income tax. These codes include all the incentives for the purchase. (Internal Revenue Services, 2006)
Study Finds Cash Incentives Effective in Smoking Cessation:

Researches have found out those offering cash incentives to smokers to quit cigarette significantly increases cessation rates. The financial incentive group was told that they would be receiving $100 for the smoking-cessation program to quit smoking; it is found 14.7 percent of the incentive group quit smoking in one year (Johnson, 2009).

Good incentives make people quit smoking:

Giving many people enough dollars to quit smoking provides evidence that this experiments works well. People were being paid $750 dollars to stay away from cigarette and the success rate in doing that was very good as compared to those groups that got no such bonuses. It also showed that those who were being paid to stay away from cigarette for twelve months about 15 percent of them left smoking as compare to 5 percent of the unpaid group. (Johnson, 2009)

It is long that the government has been paying to the poor people, all the payment was dependant on the need, income and number of children of the people. But now the government has decided that they are going to pay the people only if the work, sending their children to school and going to the doctor as well. The main objective of the government for this purpose is to reduce the poverty level and to improve economic progression. A poor person deserves this thing that they should do in anyway that taking care of their children, going to a doctor etc. (Luci, 2007)

Steve Kerr, former chief learning officer for GE and Goldman Sachs and author of Reward Systems says that incentives are not that rewards that are not known by the people before. He further says that people are always interested in all the ways that attract tempt people without going to the cash that they don’t have. It is more concluded that the non-cash incentives holds in good times and the bad but sometimes it really takes losing the options of using cash for these truths to be valued. Kerr says that it is the same like when people feel good there may be a possibility that they move from their required track that are really important to them. People wants rewards that are favorable to them that are financial rewards are unlimited and they mostly create their own supply. (Incentive Cash Concerns, 2008)

References

Campanelli.M (2001) “Good Incentive” retrieved on 24/02/09 from http://findarticles.com/p/articles/mi_m0DTI/is_8_29/ai_79756003?tag=content;col1

Palmer.A (2008)”Incentive Cash Concerns” Retrieved on 24/02/09 from http://www.managesmarter.com/msg/content_display/incentive/e3i37a9fcdcbb453b4af18a9bceaf7aa45b
Internal Revenue Service (2006). “Employer Cash Incentives for Hybrids Are Taxable” retrieved on 24/02/09 from http://www.irs.gov/newsroom/article/0,,id=160030,00.html
Johnson.L (2009). “A study finds cash is a good incentive to quit smoking” retrieved on 24/02/09 from http://www.fayobserver.com/article?id=318331
Join Together (2009) “Study Finds Cash Incentives Effective in Smoking Cessation” retrieved on 24/02/09 from http://www.jointogether.org/news/research/summaries/2009/study-finds-cash-incentives.html
Luci.B (2007) “Cash Incentives for the Poor” retrieved on 24/02/09 from http://www.gothamgazette.com/article/socialservices/20070828/15/2271
Massey.J (2008) “Training Incentives — the Good, the Bad, and the Ugly” retrieved on 24/02/09 from http://www.areadevelopment.com/taxesIncentives/feb08/trainingIncentives.shtml

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