What is Incentive pay?

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Incentive pay

As a manager, one of the things you may want to consider is creating an incentive pay package. There's no question that incentive pay can be a powerful driver of motivation. But it's not easy to set up, it's complex, and there's a significant downside to it. Let me start by just saying a few words about what I mean by incentive pay. I mean some kind of system that pays people for small pieces of performance. Not a six month period, not even a one week period.

An example would be a sales person who gets a certain percent of every sale that they make. That's a classic incentive pay system, and can be installed in very small organizations. It can be installed in very large organizations. And it can be fit to sales positions, production positions, marketing jobs, a really quite wide range of work. The challenge is to be able to clearly identify what it is you're incenting, that is, be able to measure and specify what constitutes a productive piece of performance.

And then to decide how much money you're going to attach to that.

Source: https://www.linkedin.com/learning/human-resources-pay-strategy/incentive-pay