The New Thinking Of The Modern Enterprise Incentive

As Simon, the Nobel economics prizewinner, notes that problem of an organization is not about the organization itself, but with people concerned. The problem of people, to the end, is about their motivation which is linked to incentives. It is a key for business growth to establish an effective incentive system to arouse vigor and competition. The topic of this essay is about how to build an effective incentive system. Content, usage and implications of incentive are discussed; Common incentive technique adopted by both foreign and domestic businesses and principles in building incentive system are introduced with the intend to contribute to business reform and development in developing China to some extend.This essay is divided into four parts.Part I, General Issues about incentives. This part introduces basic meaning and usage of incentives and incentives in businesses. The necessity of establishing an effective incentive system is illustrated by the consequences of inappropriate incentive systems.Part II, Contents of Incentives in Business. Though incentives take various forms, they may be categorized as material and spiritual. An integrated incentive system shall include both of them. Spiritual incentives are imbedded in material media while material incentives have spiritual implications. Methods and operation of spiritual and material incentives are discussed in this part.Part III, Core Methodology of Business Incentives. An incentive system can not be a simple combination of various techniques, but a well integrated system. Business managers have to use various techniques and methods as incentives because people are different in what they after, need, experience and expectation towards incentive. This part discusses effective ways for managers to establish incentive system.Part IV, Principles in Establishing Incentive System. What principles managers should follow when establishing an incentive system, and how various techniques and methods should be integrated according to the principles, will be discussed in this part.