Research Paper on Incentive Plans

Incentive Plans

Incentives are awards offered to employees when they successfully achieve pre-defined targets. Incentive plans comprise of a list of incentives that are planned to be given to those employees or group who will demonstrate exceptional behavior during a specified time period. To remain successful in the market, an organization needs to motivate and retain its employees to be productive and for this, companies adopt various competitive incentive plans that are designed for recruitment, motivation, and retention of employees. Additionally, incentive plans drive the employees to exceed expectations and encourage them to remain committed to their organization. However, an incentive plan must have achievable targets because if not, then employees’ morale will decrease and the plan will turn into ineffective  (AZASU, 2014).

Private companies are seen to implement incentive plans more than public companies because Private companies usually aimed to maximize their profits and shareholder value that is likely to be achieved with the help of incentive plans. While Public sector companies have numerous objectives making it difficult to employ incentive plans.

There are different Incentive plans for different levels of employees. The lower level workers that exist at the bottom of the organization’s hierarchy like, first-line supervisors are motivated through different incentive plans as compared to Middle management and Upper management employees. Yet all the incentive plans fall under three types that include: (1) Individual Incentive Plans, (2) Group Incentive Plans and (3) Organization Incentive Plans. (Amah, 2013). Following are the incentives that are offered to employees under the incentive plans:


Profit Sharing:

A Company gives a percentage of its annual profit to its permanent employees. This profit sharing can be in the form of quick monetary reward or could be added directly to the employee’s retirement programme, like a 401K.

Project Bonus:




Leave a Reply