Home HR Glossary Incentive Pay
Compensation

Incentive Pay

Additional compensation tied to performance targets or company results.

Full Definition

Incentive pay is variable compensation awarded to employees for achieving or exceeding specific performance targets. Types include sales commissions, performance bonuses, profit sharing, stock options, and gain sharing. Incentive pay aligns employee behaviour with business objectives and rewards high performance. Well-designed incentive programmes motivate employees, drive results, and improve retention. HR software automates incentive calculations and integrates them seamlessly into the payroll cycle.

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