The Neoclassical Theory Of Economy Of Incentives


The theories brought forward by Barnard are influential in most organizations as they influence styles of management of employees. He believes that the two methods are beneficial in ensuring that workers cooperate for the success of their organizations. This is through the use of persuasion and providing incentives. He came up with the theory on incentives, which mostly focuses on two methods. According to him, Incentives of an economic nature are better than persuasion methods. Individuals are often motivated by motives which are ego statistical. They include; self-satisfaction and self-preservation.

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Motivation is an essential aspect in ensuring that workers cooperate. If workers are not given incentives, they will not be motivated to work, and thus may lead to the failure of the organization. Examples of such incentives include; Increasing power, as well as tools for employees, and lessening hours of work. Also, wages of employees should be increased as well as making the conditions for work favorable. This means that more should be done to ensure that onerous of work occurs. Incentives can either be intangible or tangible, which is in the form of money or work conditions Incentives are either general or specific. In terms of incentives, which are specific, they are in categories such as:

Specific incentives include:

  • Desirable physical conditions-It can either be unconscious or conscious, and are known to promote cooperation through inducing.
  • Material Inducements-An example is money and is given for reasons such as compensation, accepting employment, among others. Money is affected by material good productions and also economies, which mainly focus on money.
  • Personal non-material opportunities-This incentive brings about cooperation and takes the form of personal power, prestige, among others. It ensures that everyone in an organization is catered for.
  • Ideal benefactions- It is neglected despite it being the most powerful incentive. It occurs in the form of altruistic, future and non-material relations. It ensures that ideals of a personal nature are satisfied. Other times it can take the form of patriotism and loyalty.

General incentives include:

  • Associational attractiveness- This incentive promotes social compatibility, which in turn ensures that cooperation exists. Workers should have an environment, which motivates them socially. Thus, it is vital that elements such as social status, religion and race do not exist at the work place.
  • The opportunity of enlarged participation- It is essential that people are meant to feel important despite their job titles. Employees want to be associated with organizations, which are famous, and are known to treat workers fairly.
  • Adaptation of conditions to habitual attitudes and methods- a culture should exist in the organization, which promotes productivity.
  • The condition of the communion- This incentive ensures that workers are united. This means that their solidarity brings about the needs to prosper economically.

It is vital that persuasion also is used in motivating employees. This means that their minds are influenced to become positive. Bernard believes that this approach is most suited for religious and patriotic organizations. The attitudes of the workers should be changed to enhance their productivity. Persuasion is often used when it becomes expensive to use incentives. It often occurs in three forms and they include; Motive inculcation, Creation of conditions, which are coercive, and Opportunity rationalization.

Barnard believes in the ‘Economy of Incentives’ whereby, income is vital in matters related to net effects. Also, it deals with matters concerning how persuasion as well as incentives relates to production. Organizations should ensure that they can afford the incentives, which are intended to be used. If not, problems are bound to affect the organization. The method of persuasion and incentive to be used depends on the existing organization. In order to ensure that organizations have cooperation, incentives such as material inducements and ideal benefactions have to be used. The persuasion method, which is most influential, is opportunity rationalization. According to me, the most vital incentive is money, because one needs it for survival. One can gain prestige, but if they do not have money they are not deemed as being successful. In terms of persuasion methods, I prefer opportunity rationalization, which is specific. The two methods are effective in ensuring that I work towards achieving cooperation as well as working hard. The reason why Bernard is a ‘neoclassic theorist’ is because he is associated with matters related to modern times. His theories are relevant in organizations, which exist today.

‘Aristocracy of Manufacturers ‘Democracy in America according to Alexis De Tocqueville

The theory of Labor division was introduced by Adam Smith, who advocated for its benefits. According to him, it brought about efficiency as well as increased production levels. Tocqueville believes that as a result of labor division, problems are bound to occur. Also, in order for manufacturers to grow, democracy must exist. It is true that due to specialization, it becomes easy to produce products. The problem, which exists, is that the goods become cheaper and this is not desirable for manufacturers. Also, credit is lost, despite the fact that a lot was used during production. Focus is often lost when workmen are involved in only one task . The person easily becomes less industrious as well as adroit. The example of pinhead making is used. In a way, the workman becomes a slave to his work. It becomes difficult to engage in other trades since their bodies are assimilated to their previous work. Workmen’s efforts are often not recognized and they tend to become lower in terms of class. The masters, in turn, become elevated to better classes.  Due to labor division, exploitation of poor people occurs and cannot do anything for themselves. These are the reasons why Tocqueville is not in favor of the ‘division of labor’.

As a result of labor division, there is an inequality increase as well as the rise of the aristocracy.  Independence is created among people when equality exists. Also, the scientific method by Taylor Frederick emphasizes on ensuring that in every society there is organization.This means that people follow their will, which in turn becomes a habit. In turn, authority is not appreciated as it is viewed as depriving them of their dependency. Political freedom is most times sought after. This is the reason why people elect leaders they believe will cater to their needs. In most countries, which are democratic, anarchy seems to exist.  Earlier on, Plato had advocated for there to be justice in society. Through democracy, justice occurs and thus Tocqueville and Plato concur on this vital issue. People do not have control over others. It should be known that through democracy problems exist. Something should be done to ensure that anarchy does not dictate people.





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