Compensation (Incentive)

The incentive part of “total” compensation (which includes the base) is considered a variable cost in that it will depend on the performance of the individual and/or the company. It is called “incentive” because it is meant to motivate the employee to focus on particular elements of her job. The most obvious type of incentive is sales commission. While incentives are usually positive forces, different incentive plans geared toward different positions can actually work against each other and be counter-productive.

Designing effective incentive plans that both motivate the right employee behavior AND are not a financial burden is complicated and is best managed by a human resources or compensation professional working with accounting and finance, and operations professionals.

See also Compensation (General).

  1. Basics on choosing an incentive plan (
  2. Designing an incentive compensation plan for employees (
  3. Establishing an incentive compensation plan (
This entry was posted in Manage the Individual and Team and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s