incentive-based compensation

Incentive-based compensation is a pay system where employees or executives earn additional rewards, like bonuses or commissions, based on their performance or the achievements they reach. This structure motivates individuals to work harder or more effectively, aligning their goals with the company’s success. For example, a salesperson might earn extra commissions if they meet sales targets, or a manager might receive bonuses for improving team productivity. This approach encourages better performance, growth, and innovation by directly linking earnings to results.