I wanted to know more about what incentive pay is and entails. Along with wages and salaries many organizations offer incentive pay which is pay specifically desgined to energize, direct, or control employees behavior. It is crazy that pay has that much control over our behavior but it is the whole reason why we work and have a job in the first place. Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes. These payments are in addition to wages and salaries. When people know they can earn extra money for closing sales or meeting department goals, the employees often try harder or get more creative than they might get without the incentive pay. If it motivates employees that much more you would think every company would offer incentive pay!
For incentive pay to motivate employees to contribute to the organizations success the pay plans must be well designed. Effective plans meet the following requirments:
- Performance measures are linked to the organizations goals
- Employees believe they can meet performance standards
- The organization gives employees the resources they need to meet their goals
- Employees values the rewards given
- Employees believe the reward system is fair
- The pay plan takes into account that employees may ignore any goals that are not standard
If I owned a business and or was in management I would offer incentive pay just for the simple fact it helps motivate employees.
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