Incentive Pay

What is Incentive Pay?

Incentive pay is variable compensation designed to motivate and reward employees for achieving specific performance targets or behaviours. Unlike base pay, which is fixed, incentive pay fluctuates based on results. Common forms include individual performance bonuses, team incentives, profit sharing, gain sharing, and sales commissions. Effective incentive pay programmes have clearly defined metrics, achievable targets, timely payouts, and a transparent link between performance and reward. When well-designed, incentive pay drives productivity and aligns employee effort with organisational goals.