What is Incentive Pay ?
Incentive pay is a form of compensation provided to employees in addition to their regular salary or wages, designed to motivate and reward them for achieving specific performance goals or outcomes. These incentives are typically tied to individual, team, or company performance and are used to drive productivity, improve results, and align employee efforts with organizational objectives.
Examples of incentive pay include:
Performance bonuses: Rewards for meeting or exceeding targets.
Sales commissions: Earnings based on the sales generated by an employee.
Profit-sharing: Distributions based on the company's profitability.
Spot bonuses: Immediate rewards for exceptional work or contributions.
Retention bonuses: Payments to encourage employees to stay with the company during critical periods.
Incentive pay helps to boost employee morale, enhance engagement, and align efforts with business priorities.