Advantages Of Incentive Pay

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incentive pay is compensation beyond base wages. Employees earn these dollars by meeting or exceeding set goals. In any type of business, reward systems offer employees the incentive to more effectively and efficiently perform. Whether the rewards are financial, material, recognition based, or just beneficial they are important in helping to motivate employees in performing better and going above and beyond the minimum requirements. Incentive pay rewards employees for achieving defined goals. Incentive pay plans can be based on the performance of the individual, team, business unit or company.
In the process of CHOKA designing such a reward system, some basic factors need to be considered in the design process. Factors that CHOKA enterprises must consider in the design of such a reward system to ensure its success are; plan concept and objective in mind,determine the type of incentives plan,defining the job design, desired results and expected behaviors,
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Risks associated with the reward system that employees must be prepared to accept in the package are reducing of income and allowances, tax implications that are potentially costly with the incentive pay and last but not least overstated availability of incentive pay during designing of reward system and earning less at the end of the reward period due to budget constraint.
Incentive pay should fully replace traditional pay. Incentive pay is awarded based on the unit or group to which an individual belongs in reaching a set goal. The reason why incentive pay should replace traditional pay is incentives pay utilizes the strategy in an attempt to increase teamwork and promote flexibility, while also boosting productivity and openly communicating shared vision, performance expectations and success.With reference to traditional pay itonly supports command and control management and traditional job hierarchies with highly structured design with little room for
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