UBS

Incentive Pay

What is an Incentive Pay?

Incentive pay is defined as the variable compensation awarded to an employee when they have completed a specific set of performance objectives. Call it “performance-based pay,” a “bonus,” or a “reward,” Incentive pay is an amount already specified to be paid at the beginning of a pay period. It is meant to inspire and motivate above and beyond. This will lead to a better performance of the employee and thereby help them to achieve the potential payout.

What are the different types of Incentives?

There are two different types of Incentives:

  • Casual incentives: These are the employee rewards and employee recognition offered to an employee on a smaller scale. It may include a non-monetary gift or a small cash bonus for reaching a goal. They can be granted at any time by a senior individual or an HR, and are usually a less formal type of incentive payout.
  • Structured incentives:  They are well outlined as part of pay incentive programs and typically include a monetary award. It is paid at a percentage rate of an achieved sales or production target by an employee.

Also, See: Employee Appreciation

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