An organization’s success requires an effective strategy that is attained by achieving the underlying goals and objectives. Managers and HR departments can use incentives as tools to motivate employees to attain organizational goals and objectives because these are compensation approaches that reward specified outcomes. Incentive systems link compensation and performance by rewarding performance instead of seniority or hours worked. Although incentives may be given to a group, they often reward individual behavior.
Employee incentives supplement the more traditional wage and salary approaches, which account for the majority of compensation costs. Incentives are the fastest-growing trends in compensation management. Though companies still give traditional annual merit increases for good overall performance, rewards increasingly are being tied directly to performance in the form of one time bonuses.
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