How Incentive Mechanism Effects Employees’ Loyalty

（西南財經大學，經貿外語學院，四川 成都 611130）

【Abstract】In modern society， employees’ loyalty is a fundamental concern for organizations. Also， the problem of how to retain employees is catching great attention through companies. Meanwhile， in order to obtain good performance and development， the most important key for enterprises is to mobilize the enthusiasm of employees through the effective incentive mechanism. Therefore， this paper will analyze the effect of different factors in incentive mechanism. Then some recommendations will be proposed as references for enterprises to improve their incentive mechanism.

【Key words】Incentive mechanism； Employees’ loyalty； Enterprise recommendations

These days， as the world has stepped into an era of knowledge economy， talents become the most valuable resources. The economic performance of firms is becoming ever more dependent on the participation， commitment， and more generally， loyalty of their employees （Boltanski and Chiapello， 1999）. An employee’s dedication to the job， his/her emotional investment， and the regularity of his/her commitment to the organization， are important for the longevity and the performance of organizations （Bakker and Schaufeli， 2008）. At present， companies always take strategic moves leading to increased revenue， reduced operating costs， higher profit margins， and improved productivity. The impact on employee morale and increased levels of employee turnover， however， are often ignored （Hill C and Jones G， 2004）. This can discourage employees’ enthusiasm and reduce their efficiency， which can accordingly hinder companies’ long-term development. Therefore， this paper aims to analyze the effect of company incentive mechanism on employees’ loyalty as well as to propose some valid recommendations for enterprises.

Salary and Welfare

As basic living guarantee， the salary and welfare， for most employees in current society， is just the basic requirement of choosing a job. Although better salary and welfare is a competitive advantage for enterprises when recruiting employees， and is one of the major measures to increase employees’ loyalty， it takes little effect in promoting their working efficiency. Only good salary and welfare is far from enough to retain staffs， especially those who have been working for several years， as salary and welfare is not the most important aspiration anymore.

Personal Development

To be specific， personal development means opportunities of training， career planning， and job promotion for employees， who pay more attention to their self-improvement and future development. Enterprises attaching importance to employees’ personal development and making appropriate strategies to help employees in the process of improvement tend to be more likely to gain higher employee loyalty. This is because employees will have a sense of belonging in the company when their spiritual needs are satisfied， and they will try harder to produce better work efficiency in return.

Working Environment

Good working environment is mostly created by positive corporate culture， which can be reflected in many aspects. For example， good corporate culture is closely related to harmonious employee relationship. Moreover， with a working environment where fair competitions， objective performance appraisal system， and equal promotion opportunities exist， employees will be willing to sacrifice more to their work. Therefore， they will show more trust and loyalty to companies they work for.

Generally speaking， employees now put much emphasis on the developing prospect and working environment of enterprises， and an effective incentive mechanism has much influence on employees’ loyalty In order to increase employees’ loyalty and reduce employee turnover， first of all， companies need to focus on both material and spiritual incentives， and reward employees whenever they accomplish certain targets. Also， companies need to provide training and promoting opportunities for employees， so that they can achieve self-fulfillment， and stay longer at their companies for further improvements. Furthermore， companies need to create working environment where employees feel pleasant and comfortable. When employees get respect and trust in the workplace， their confidence will be increased， and will in turn deliver better performance.

Reference

1.Boltanski， L. and Chiapello， E. （1999）， Le Nouvel Esprit du Capitalisme， Gallimard， Paris.

2.Bakker， A.B. and Schaufeli， W.B. （2008）， Positive organizational behavior： engaged employees in flourishing organizations， Journal of Organizational Behavior， Vol. 29 No. 2， pp. 147-154.

3.Hill C， Jones G. Strategic Management Theory. New York： Houghton Mifflin； 2004.