Incentive Systems in New Zealand Small Business
Incentive compensation literature suggests that appropriate incentives provide motivation for employees to increase their effort, consequently improving both their performance and organisational performance (Drake et al 1999; Bonner and Sprinkle 2002; Knox et al 2004). However, there is limited research on the use of incentives in small businesses, for which incentives may have unique implications. Of the 104 respondents to a survey of 300 New Zealand small businesses, 46% either use incentives or are in the process of developing an incentive scheme. Furthermore, different business sizes and industry types have different rates of adoption and use different types of incentives. There are many conflicting opinions regarding incentives, and evidence that many small business managers are misinformed about the potential uses and benefits of incentives. However, the overarching theme amongst both users and nonusers is the importance of intrinsic motivators such as task attractiveness, flexibility and employee relationships.