To a large extent, the debate on the importance of monetary incentives and other, non-monetary tools of management in motivating workers continues (Dur, Non & Roelfsema 2010). Monetary incentives are often not considered the most important motivator, neither by workers nor managers (Dur et al. 2010). Many workers consider task enjoyment and moral concerns to be stronger motivators than monetary incentives (Dur et al. 2010). For the development of a learning organisation, it is necessary to develop and establish the appropriate climate as an integral part of the organisational culture (Kurtić 2009). Insufficient research has been conducted on the influence of incentives and the factors of organisational climate on the productivity of employees in Croatia. The consequence of this is that there is a lack of knowledge about the effect of incentives and corporate climate on the motivation of employees.

Based on this problem, a case study was conducted to identify the incentives and factors of organisational climate and to examine their relevance and importance to employees with a company in Croatia. The purpose of this research is to illuminate the fact that employee incentive systems are of fundamental importance to the development of skills, leading to better performance. A manufacturing company in Croatia proved to be an example of this. The emphasis is on the organisational climate factors such as awareness, the freedom to express opinions, a relationship of trust and creative thinking that affect productivity, efficiency and the motivation of employees. The aim of this study is to determine which incentives are important to employees, whether different incentive systems are sufficiently present or not and whether currently present organisational climate factors promote organisational learning.

This study was conducted in two phases. The objective of the first phase was to create a conceptual model based on current research. This conceptual model introduces the second phase, which consists of empirical research of employees’ incentives. The objective of the second phase was to create an integrated model of incentive systems (MIS).

Based on the discussions above, a conceptual model of an employee incentive system was created. The foundation of this model is Maslow’s theory of the hierarchy of needs (1943) that proposes that need is basic to behaviour (see Figure 1).

The components of the conceptual model in Figure 1 are explained in Box 1.

The conceptual model of an incentive system for employees (Figure 1) shows the relationships between these related entities: A affects B, C, D and E; B affects A, C, D and E; C affects A, B, D and E; D affects A, B, C and E; E affects A, B, C and D.

The aim of this section is to test the hypothesis using the manufacturing company. Table 1 presents the difference between the importance of financial and non-financial incentives to employees in middle and lower management levels using the t-test for paired samples.

It can be seen from Table 1 that the p-value for middle-level management is 0.44, indicating that this difference is not statistically significant. Because the p-value is greater than 0.05, the null hypothesis cannot be rejected. The table also shows that the level of significance (p-value) for lower-level management is 0.85. Because the p-value of 0.85 is greater than 0.05 the results are not statistically significant and Hypothesis 1 cannot be rejected.

Table 2 presents the difference between the level of presence of financial incentives and the importance of financial incentives for middle- and lower-level management using a t-test for paired samples.

Table 2 shows the results for Hypothesis 2. The middle-level management’s t-test is 5.042 and the p-value is 0.000. This leads to the conclusion that the results are statistically significant, that is, the null hypothesis is rejected because the p-value is less than 0.05. The lower-level management’s t-test is 4.703 and the p-value is 0.000. Because the p-value is less than 0.05, the results are statistically significant and Hypothesis 2 is rejected.

Table 3 shows the difference between the level of presence of non-financial incentives and the importance of non-financial incentives for middle- and lower-level management using a t-test for paired samples.

Table 3 shows the results for Hypothesis 3: the middle-level management’s t-test is 5.670 and the p-value is 0.000. Because the p-value is less than 0.05, the results are statistically significant and the null hypothesis is rejected. The lower-level management’s t-test is 8.791 and the p-value is 0.000. Because the p-value is less than 0.05, the results are statistically significant and Hypothesis 3 is rejected.

Table 4 shows the difference between the importance of organisational climate factors and the presence of organisational climate factors for middle- and lower-level management using a t-test for paired samples.

Table 4 shows Hypothesis 4 for middle-level management; the p-value is 0.008. As the p-value is less than 0.05, the results are statistically significant and the null hypothesis is rejected. For lower-level management the p-value is 0.000. Because the p-value is less than 0.05, the results are statistically significant and Hypothesis 4 is rejected.

Table 5 shows the importance of financial incentives, as indicated by employees on a scale from 1 (unimportant) to 7 (very important). The ranking of the importance of financial incentives shows that the average personal attitude of employees to the importance of financial incentives ranged from 4.33 for allowance for overtime to 2.57 for profit sharing.

Table 6 shows the presence of financial incentives in the research enterprise. Employees had to rate the presence of each of the financial incentives from 1 (under-represented) to 7 (well represented). The results show that the average presence of financial incentives ranged from 3.809 for travel expenses to 1.88 for profit sharing and shares in the company.

Table 7 shows the value the staff attaches to non-financial incentives. These incentives were rated on a scale from 1 (unimportant) to 8 (very important). The averages ranged from 4.64 for job security to 3.095 for flexible working hours.

Table 8 shows the presence of non-financial incentives. The employees ranked these from 1 (under-represented) to 10 (well represented). The averages ranged from 3.76 for quality of interpersonal relationships in the firm to 2.11 for various benefits, such as free tickets to various locations, gift vouchers and free parking.

Table 9 shows the value employees attach to organisational climate factors, ranked on a scale from 1 (unimportant) to 6 (very important). The averages ranged from 3.928 for quickly noticing and rewarding good performance to 3.14 for encouraging creativity and innovation.

Table 10 shows the presence of factors in the organisational climate of the company, ranked on a scale from 1 (under-represented) to 8 (well represented). The averages ranged from 3.52 for an appropriate degree of independence to 2.26 for encouraging creativity and innovation. Based on these results and the conceptual model, the MIS is created and presented next.

The theoretical framework for incentive systems comprises a variety of issues that were discussed earlier on in this article and the MIS model was derived (see Figure 2). The quality of the work environment is important to organisations and it is necessary to generate a model that can be used for a successful incentive practice. Organisations use incentives, which are divided into financial or monetary and non-financial or non-monetary incentives, to motivate employees to increase their performance.

Employees claimed that the financial incentives that were best represented are payments for overtime, bonuses and travel expenses. Employees claimed that the non-financial incentives that were best represented are quality interpersonal relationships, job security, the opportunity for advancement and encouragement of creativity and innovation (as an answer to RQ1: Which incentives are used to stimulate employees to increase their performance?). These findings have been supported by other researchers (e.g. Jain 2005; Osa 2014; Singla 2009; Yavuz 2004).

Employees are considered the most valuable asset of the company, so the main task is monitoring employees’ motivation and rewarding them accordingly. The benefits of total rewards and total rewards strategies are crucial to empowering work environments (Hiles 2009; Kaplan 2005; Kwon et al. 2013). If management in organisations consistently signal that they treat employees fairly by giving them appropriate non-financial support and offering them suitable financial incentives, it is likely that it will lead to better performance.

According to employees, the financial incentive that was most important is payment for overtime and the most important non-financial incentive was job security. Specifically, the most common financial incentive in the studied company was travel expenses and the most common non-financial incentive was good interpersonal relationships. The company under investigation should contribute to building good interpersonal relationships and ensure job security in addition to providing payments for overtime and travel expenses (as an answer to RQ2: How do employee benefits affect the organisation’s ability to attract, retain and motivate employees?).

Exploring the factors of an organisational climate is a prerequisite for the development of an organisation and the increased level of satisfaction and productivity of its employees (Galić 2010; Holjavec 2004; Paajanen et al. 2004). Identifying the appropriate factors of organisational climate can lead to the creation of an organisational environment that is conducive to greater success and the advancement of human resources (Senge 2001; Yoo et al. 2012; Žugalj & Schatten 2005).

The subjects of our research offered organisational climate factors, of which the most important were quickly noticing and rewarding good business results and appreciating a job well done. The respondents also stated that an appropriate degree of independence was the most prevalent factor in the organisational climate and secondly knowing the specific duties of each employee (as an answer to RQ3: How do organisational climate factors influence satisfaction and employee productivity?).

The research on incentive systems for employees (e.g. Hales et al. 2009; Kamery 2004; Nawab et al. 2011) in a synergy with the three dimensions of stimulation (Jovanović et al. 2003) and the MIS model can enable employees to perform efficiently and sustainably (UN 2006). The integration of organisational learning that adapts to new technologies (Yoo et al. 2012) can positively influence employees’ behaviour and attitudes.

This study presents an innovative insight into an incentive system for middle- and lower-level management for a manufacturing company in Croatia. It also develops a conceptual model, refines it and creates an integrated MIS model. The discussions above strongly support the following general conclusions:

In summary, we contend that a model can provide a strategy to realise employees’ creative performance through an appropriate incentive system. From here, a shift to rethinking and restructuring the organisational incentive systems is necessary in organisational settings.

Contributions or originality and value-add: The theoretical outline and findings of this study provide a solid basis for an employee incentive system. The review of the literature represents an attempt to organise the scientific knowledge on the multiple aspects of incentive systems leading to the derivation of a model for incentive systems that is essential to developing organisational commitment and trust. Several critical aspects of incentive systems are described that could empower production, creativity and innovation in organisations.

Limitations: Conclusions from this study should be tentatively applied because a small sample of employees from middle and lower management levels were examined within one manufacturing company as a single case study. Although a theoretical rationale suggests that the model should be widely applicable, too few examples are given in this article to provide conclusive evidence of wide applicability. The authors believe that some practice-based research is necessary to complement the theoretical and practical perspective on the devised MIS.

In order to do further research, the MIS should be examined with regard to other demographic criteria such as gender, age and length of service. The model can be further examined in terms of its strategy, structure and functionalities. It would be fruitful to repeat similar research on a larger sample in order to gain more accurate results.