Forms of Incentives

Forms of Incentives

Incentives are variable rewards granted to employees as per the variations in their performance. To succeed, an organization must attract and retain productive employees. Therefore, a business establishes competitive incentive plans to accomplish these objectives. Incentives are provided beside wages and salaries so that the level of motivation and job satisfaction can be enhanced. Incentive payments are quite substantial and paid regularly as wages and salaries.

Forms of Incentives

The incentive plan can be designed for individual, group or organization wise performance:

Individual Incentives

Individual incentives refer to incentives given to individual employees for their additional contribution towards organizational objectives. Under it, incentives are calculated on the basis of individual performance that can be measurable in quantitative terms. This is a most popular form of incentive in the industry under which employees are rewarded individually for their additional contributions. The foundation of such incentives is the worth of individual performance. It can be of following types:

  • Piecework plan
  • Commission
  • Bonus

Group Incentives

The individual incentive plan will be ineffective when the output of the individual employees is not measurable, in such situation a group incentive is applied. It means, when two or more employees are involved in a particular performance, incentives are provided to the group collectively, it is called a group incentive. Group incentives make a strong sense where employee’s tasks are interdependent and thus require a collective effort for the completion of such tasks. Especially, this system of incentive is useful in project teams where one worker’s contribution is almost impossible to reflect in measurable units. Under this plan, a productive plan is set as standard performance for the group of employees and the reward is provided by assessing the performance of the whole team. If the employees in the group perform better, all members of the team are rewarded collectively.

Organizational Incentives

When the incentives are provided to all employees of the organization, it is called organizational incentives. This kind of incentive is used to motivate all employees at work for organizational effectiveness. The primary goal of organizational incentive is to direct the efforts of all employees toward achieving organization’s overall mission, vision, objectives. This incentive plan produces a reward for all employees working in a particular organization. The reward is provided in terms of productivity, gain-sharing, profit sharing, share ownership and so on.


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