1.

1 INTRODUCTION

This study suggests that financial incentives can have a positive impact on
employee performance. But the effectiveness of these incentives depends on
various factors such as the type of incentive.The level of motivation of the
employees,and the work environment.Every employee wants some form of
incentives like financial incentives. It will motivate employees in a better way.
Employee performance is a very important thing in the company's efforts to
achieve goals. Forcompanies, incentives are expected to improve employee
performance, work productivity, loyalty, discipline, a sense of responsibility for
office and better quality of leadership for employees, with the incentives they get
the opportunity to increase salary
income. Incentives given by the company's management in recognition of the
performance of employees to the company. Financial incentives can also signal to
employees that their performance is valued by the organization, which can increase
their job satisfaction and commitment to the organization. The Employees occupy
a strategic role and position in any organization.They are responsible for
converting inputs to give productive outputs.Financial incentives can come in
many forms such as signing bonuses,performance – based bonuses, profit sharing
plans, and stock options.These incentives are often designed to attract and retain
talented employees, as well as to motivate employees to perform at their best.In the
contemporary corporate landscape, the relationship between financial incentives
and employee performance stands as a pivotal aspect of organizational dynamics.
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As businesses strive to enhance productivity and employee engagement, the role of

financial incentives in shaping workforce behavior becomes increasingly crucial.
This study aims to delve into the intricate interplay between financial incentives
and employee performance, shedding light on the multifaceted factors that
contribute to this complex relationship.

The global business environment is marked by dynamic shifts, and companies

continually seek strategies to optimize their human capital. Understanding how
financial incentives impact employee performance can provide valuable insights
for organizations aiming to design effective incentive systems. Consequently, this
research not only contributes to academic discourse but also offers practical
implications for businesses striving to foster a high-performance culture.

As we embark on this exploration, it is essential to consider various dimensions,

such as the psychological aspects of motivation, the design of incentive structures,
and the contextual factors influencing individual and collective performance. By
comprehensively examining these elements, we aim to contribute to a nuanced
understanding of the impact of financial incentives on employee performance,
thereby offering valuable guidance for organizational leaders and human resource
practitioners.

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1.2 STATEMENT OF PROBLEM

In the contemporary workplace, organizations are increasingly relying on financial
incentives as a means to enhance employee performance.However,the effectiveness
of these incentives in achieving sustained and improved performance remains a
subject of debate. This study seeks to investigate the impact of financial incentives
on employee performance,exploring whether these incentives truly serve as
effective motivators and contributors to overall organizational success. By
addressing this gap in the existing literature, the research aims to provide valuable
insights for both scholars and practitioners in the field of human resource
management.

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1.3 OBJECTIVE OF THE STUDY

● To examine the relationship between the financial incentives and
employeeperformance.
● To compare the effectiveness of different types of financial incentives.
● To investigate the effect of financial incentives on employees motivation and
job satisfaction.
● Evaluating the extent to which financial incentives impact employee
engagement and retention.

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1.4 RESEARCH METHODOLOGY

Research methodology is the systematic, theoretical analysis of the methods
applied to a field of study. It comprises the theoretical analysis of the body of
methods and principles associated with a branch of knowledge. Typically, it
encompasses concepts such as paradigm, theoretical model, phases and
quantitative or qualitative techniques.

1.4.1 Research design

● Quasi-experimental: Compare performance of two groups: one receiving
financial incentives and the other not. This allows for some control over
extraneous variables, but causal relationships may be difficult to establish.
● Correlational: Analyze the relationship between financial incentives and
performance across the whole employee population. This is easier to
implement but cannot establish causality.
● Case study: In-depth analysis of a specific company or team to understand
the nuances of incentive programs and their impact on performance. This
provides rich detail but lacks generalizability.

1.4.2 Data collection method

Data collection method through primary data collection and secondary data
collection method.
Primary data : Conduct surveys or interviews with employees to gather information
on perceived impact of incentives, job satisfaction, motivation, etc. Use validated
instruments or develop your own based on your research objectives.

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Secondary data : Analyze existing company data on performance metrics,

compensation, employee turnover, etc. Ensure data accuracy and relevance to your
research question.

1.4.3 Sample size

Data was collected from the sample size of 50 employees in various categories
from different organizations for the purpose of study and analysis.

1.4.4 Period of the study

The research study takes 21 days period

1.4.5 Sampling methods

A convenient sampling technique is adopted in the study.Data has been collected
using a questionnaire ,by distribution among students at Mother Arts & Science
College,peruvallur.

1.4.6 Tools used for data Analysis

The data is analyzed by using sample percentages.
Formula:-
Percentage = Number of respondents /Total number of respondents*100

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1.5 SCOPE OF THE STUDY

The scope of this study encompasses a comprehensive investigation into the

influence of financial incentives on employee performance within the
organizational context. The research will explore various forms of financial
incentives, such as bonuses, commissions, and profit-sharing, and assess their
impact on individual and collective employee productivity. The study will involve
a diverse range of industries to provide a broader understanding of how financial
incentives may differ across sectors. Additionally, factors like job satisfaction,
motivation, and overall job performance will be considered to present a nuanced
analysis. The findings aim to contribute valuable insights for both academia and
practitioners, offering recommendations for optimizing financial incentive
structures to enhance employee engagement and organizational success.

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1.6 LIMITATIONS OF THE STUDY

● Time is the main limitation for conducting the study because the study was
conducted within a short period of 21 days.
● Respondent’s opinion may not be free from base
● The sample size was limited to 50.
● The geographical area of this study was limited in our locality

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REVIEW OF LITERATURE
● Mohammad Bilal Tayeb (2021), aimed at investigating the impact on
relationship between financial incentives and employees productivity. This
incentive motivates employees to work in a productive way. Employees are
responsible for converting inputs to productive outputs.
● Dr.khaled Abdalla Moh’d Al – Tamimi (2018), aimed at investigating the
impact on financial and nonfinancial incentives on employees performance.
This gives the relationship between job performance and financial
incentives.the existence of a statistically significant in employee
performance due to age, gender,marital status and experience
● R. Rina Novianty (2018), aimed at investigating the impact on relationship
between financial incentives and employees motivation. Employees are
motivated due to a lot of rewards given by the organization. Work
motivation is the driving force for employees to create excitement in their
work.
● Johnny Joseph (2016), aimed at investigating the impact on relationship
between financial incentives and employees performance. Financial
incentives are given due to encouragement of employees to perform well in
their work.
● Steffen Hetzel (2010), aimed at investigating the relationship between
financial incentives and individual performance and also investigating the
psychological and economical approach to analyze the financial incentives.
They are given rewards based on their efforts in the organization.

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THEORETICAL FRAMEWORK
The theoretical framework for a study on the impact of financial incentives on
employee performance could draw from motivational theories such as Maslow's
Hierarchy of Needs, Herzberg's Two-Factor Theory, or Vroom's Expectancy
Theory. Additionally, considering the role of financial rewards in reinforcing
positive behaviors, reinforcement theory and behavioral economics may provide
valuable insights. Exploring how perceived fairness and equity influence employee
motivation can be incorporated using equity theory. This framework can help
establish a foundation for understanding the psychological and behavioral
mechanisms underlying the relationship between financial incentives and employee
performance.Bernardin et al (1995) believes that performance should be defined as
the outcomes of work
because they provide the strongest linkage to the strategic goals of the
organization, customer
satisfaction, and economic contributions.
Performance is often defined simply in output terms – the achievement of
quantified the basis of
performance management objectives. But performance is a matter not only of what
people
achieve but how they achieve it (Armstrong, 2006). Performance means both
behaviors and
results. Behaviors emanate from the performer and transform performance from
abstraction to
action. Not just the instruments for results, behaviors are also outcomes in their
own right – the

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product of mental and physical effort applied to tasks – and can be judged apart
from results
(Brumbrach, 1988), cited in Armstrong (2006). For performance to be improved, it
has to be measured (Armstrong, 1996).All services and productive organizations
interested in performance because it measures the
efficiency and effectiveness of the organization as well as individuals and groups
(Salah andMusa, 2015). Performance could be regarded as behavior – the way in
which organizations, teams and individuals get work done (Campbell, 1990).
Employee’s Performance
According to Al-Rabayah (2003), employee‟s performance can be defined as
doing different activities and duties that their work consists of. Campbell (1990)
sees performance as behavior demonstrated or something done by the employee for
organizational performance and is assessed through operational performance
outcome, turnover, sales volume, income and declared shareholders dividend, and
the quality as well as quantity of service. Employee performance refers to the
outcome, accomplishment of work as well as the results achieved, which is linked
to the strategic goals of the organization, customer satisfaction and economic
contributions
(Armstrong, 2010).
Employee performance is the fundamental element of any organization and the
most important
factor for the success of the organization and its performance. It is true that most of
the organizations are dependent on its employees, but one or two employee cannot
change the organization‟s future. The organization‟s performance is the shared and
combined effort of all of
its employees. Performance is the key multi character factor intended to attain
outcomes which has a major connection with planned objectives of the

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organization Sabir (2012) as cited in Saddat. Kenney et al., (1992) stated that
employee's performance is measured against the performance standards set by the
organization. Good performance means how well employees performed on the
assigned tasks.
Organizations need highly performance of its employees so that organization can
meet their goals and can able to achieve the competitive advantage (Frese, 2002) as
cited in (Iqbal, Ahmad,Haider, Batool, and Ain, 2013)
Performance Management
According to Armstrong (2006) performance management can be defined as a
strategic and
integrated approach to delivering sustained success to organizations by improving
the
performance of the people who work in them and by developing the capabilities of
teams and
individual contributors and aims to provide the means through which better result
can be
obtained from the organization, teams and individuals by understanding and
managing
performance within agreed framework of planned goals, standards and competence
requirement.

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