Incentive Compensation
Incentive compensation refers to additional pay or bonuses given to employees to motivate and reward them for achieving specific performance goals. Unlike regular salaries or wages, which provide steady income, incentive pay is based on individual or company performance outcomes, such as meeting sales targets or completing projects successfully. This system aims to align employees' efforts with the company’s objectives, encouraging them to work harder and contribute to overall success. Essentially, it’s a financial reward designed to recognize and encourage outstanding work and results.
Additional Insights
-
Incentive compensation refers to additional pay or rewards given to employees based on their performance or achievements. This can include bonuses, commissions, stock options, or other financial benefits that motivate employees to reach specific goals or improve productivity. For example, a salesperson might earn a commission for each sale they make, providing a direct financial incentive to perform well. The aim of incentive compensation is to align the interests of employees with those of the organization, fostering a results-driven work environment while rewarding exceptional contributions.