Incentive pay is a type of variable pay offered to the employees as a reward for accomplishing the set performance objectives or going beyond them. It is widely used by companies and is specified at the beginning of the pay period to inspire, motivate and enhance the employee’s performance. Mostly, the incentive pay is based on the X and Y axis, which are business performance and employee performance.
As per the company, the incentives given can be different. Some of them are:
There are multiple benefits of providing incentives. Some of them are:
When incentives are provided without prior planning, it can increase the costs to the company. Also, it can be a demotivating factor for employees who don't receive any incentive. Additionally, even though incentives are provided, some employees can choose to leave the company when offered greater pay.
As per different surveys, employees mostly prefer monetary incentives. Most of the time, employees want some financial gains, whether direct or indirect.