Incentive pay can be defined as the compensation given to an employee for achieving a particular set target in the course of performing his or her job. According to Daft and Marcic (2010) it is a very important form of remuneration in an organization because it has the effect of motivating employees to set and achieve higher goals in their jobs.
To encourage employees to perform better an organization may offer certain rewards like an additional payment for those who attain particular set objectives. Since this additional income is desirable by all employees, all of them will work hard in order to achieve the set targets with the main aim of receiving such rewards. This is one of the strategies that have been applied by organizations’ human resource management teams in order to improve the performance of employees and hence improve the performance of the whole organization.
In my current job I will be most motivated if I obtained incentives based on the performance of my group. This is because such an incentive would be indicating that our employers recognize our efforts as a group and would therefore do any thing to ensure that our capacity to perform better has been enhanced. Working in a group which is performing well is very desirable in the sense that each member has an opportunity to learn from others thus building each member’s knowledge and skills. If my group performs well and is rewarded by the company’s management; it would mean that the management is indeed concerned with the growth and development of all employees thus encouraging me as member to work even harder in ensuring that our group performs even better.
Such an incentive is also interpreted to mean that the company’s management is committed to developing careers of all employees and not only those individuals who are quick learners or who have some inherent talents that give them a competitive advantage over others.
Daft, R.L. & Marcic, D., (2010) Understanding Management London: Cengage Learning