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The manager is using an autocratic or authoritarian style. He is rigid, does not like to be contradicted, and this creates stress and fear among employees. In this style, the manager gives orders and expects obedience, with one-way communication and very little initiative from subordinates.

The incentive highlighted is perquisites. It is a financial incentive because it is provided in monetary/quantifiable form over and above salary. Two other incentives of the same category are bonus and profit sharing. Other financial incentives mentioned in the chapter include pay and allowances, productivity-linked wage incentives, co-partnership/stock options, and retirement benefits.

Maslow's Need Hierarchy Theory states that human needs exist in a hierarchy and a person is motivated by the next higher unmet need after a lower need is satisfied.

Five levels of needs

1. Basic physiological needs: hunger, thirst, shelter, sleep, sex. In organisations, basic salary satisfies these needs.
2. Safety/security needs: job security, stable income, pension, protection from harm.
3. Affiliation/belonging needs: affection, friendship, acceptance, sense of belonging.
4. Esteem needs: self-respect, autonomy, status, recognition, attention.
5. Self-actualisation needs: the need to become what one is capable of becoming; growth, self-fulfilment, achievement.

Assumptions of the theory

• Behaviour is based on needs.
• Needs are in a hierarchical order from lower to higher.
• A satisfied need cannot motivate anymore.
• A person moves to a higher level only when the lower level is satisfied.

Significance

The theory helps managers identify the need level of employees and provide suitable motivation.

The common barriers to effective communication are:

• Semantic barriers: problems of meaning, faulty translations, unclear words, technical jargon, wrong interpretation.
• Psychological barriers: premature evaluation, lack of attention, poor retention, distrust, emotional state.
• Organisational barriers: restrictive policy, rigid rules, status differences, complex structure, lack of facilities.
• Personal barriers: fear of authority challenge, lack of confidence, unwillingness to communicate, lack of incentives.

Measures to overcome them

• Clarify ideas before communication.
• Communicate according to the receiver’s needs and understanding.
• Consult others before communicating.
• Use proper language, tone and content.
• Convey useful and relevant things to listeners.
• Ensure proper feedback.
• Communicate for present as well as future needs.
• Follow up communications.
• Be a good listener.

These measures reduce misunderstanding and improve communication effectiveness.

To motivate employees, a company uses financial and non-financial incentives.

Financial incentives

These are incentives in monetary form or measurable in money:

• Pay and allowances: salary, dearness allowance, yearly increments.
• Productivity-linked wage incentives: wages linked to output.
• Bonus: extra payment over salary.
• Profit sharing: employees get a share in profits.
• Co-partnership/stock options: shares offered at a lower price to create ownership feeling.
• Retirement benefits: provident fund, pension, gratuity.
• Perquisites: car allowance, housing, medical aid, education of children, etc.

Non-financial incentives

These satisfy psychological, social and emotional needs:

• Status: position, authority, prestige.
• Organisational climate: supportive work environment.
• Career advancement opportunity: chances for promotion and growth.
• Job enrichment: richer, more meaningful work with autonomy and responsibility.
• Employee recognition programmes: praise, certificates, awards, mementos.
• Job security: stability of income and work.
• Employee participation: involvement in decisions.
• Employee empowerment: giving more autonomy and power.

Both kinds of incentives help improve performance and commitment.

The manager should adopt formal communication. Since informal communication is causing inefficiency and leakage of confidential information, communication should flow through official channels designed in the organisation chart. Formal communication is recorded, controlled and suitable for important and confidential matters.