Incentives go a long way to increase productivity

LAHORE:  Quotas are a way to motivate and achieve certain outcomes both in the public and private sector. Because of different approaches to implement this measure, the system clicks in the private sector and usually fails in the public sector.

In the private sector, the executives generally communicate with their employees to ascertain up to which extent they could be stretched to achieve the objective. In the public sector, staff that actually is responsible for execution, is not consulted by the planners, and thus the targets fixed are not achieved.

It has been found globally that assigning specific and challenging goals leads to considerable increases in employee productivity. In fact, it is very important for a company to set targets and quotas for the employees.

Quotas are in vogue in the sales sector in Pakistan. Most of the reputable firms assign sales quotas to their employees on the basis of which they are entitled to bonuses and promotions. Some pay commission of sales that makes employees work harder. Achievement of targets enables managers to define exceptional performance and reward the deserving employees.

The administration has to be cautious and careful when it introduces a quota scheme. The scheme may not be fully owned by the managers and employees may have some reservations. A salesman for instance could ask the production units by overestimating his sales, but end up receiving fewer orders, creating inventory problems at the lower end. Similarly, a trader in order to qualify for bonus above certain sales may undercut the actual price of the product, creating problems for other dealers of the company; who may stop their normal purchases.

Some experts believe that fixing quota is a useless exercise and the same objective could be achieved by improving general efficiency of the company. But they miss a point; quotas are allocated to the employees to go an extra mile above the efficiency and standards in their field. It has been found that despite advances in technology, the human brain still can outdo the computer software.

In chess the champions often beat the most efficient computers. This is the reason that assigning quotas or targets serves a purpose. Quotas are successful in manufacturing and mechanical jobs and in sales when instituted on short term basis. But if an employee is involved in multiple tasks, it could become problematic as they focus on achieving quotas and neglect other tasks.

Quotas are effective because most people are motivated by goals, particularly ones that are hard to reach. However, the problem arises as once people achieve their goals or meet the quota; they tend to take it easy. This can be avoided if the managers have precise knowledge as to how much time and effort was devoted by the employees.

It must also be understood that when a goal is felt to be too hard and unachievable by the employees they give up from the start. In such cases, even the normal sales are adversely affected. This de-motivates employees, which is why it is important to assign realistic and achievable goals. It is important for the employers to set performance quota in light of historical performance of the employee.

It is difficult to avoid the negative effects of a quota or target. One way is that the companies find ways to motivate employees without financial incentives.  Jobs should be designed in a manner that employees find their work inherently motivating. This could be done by giving them wider autonomy and opportunity to use a wider array of skills. A company culture, where norms guide worker behaviour could be another way.