What are the key advantages and disadvantages of Incentive plans?

Principles of Management
OER 2019th Edition
ISBN:9780998625768
Author:OpenStax
Publisher:OpenStax
Chapter17: Organizational Planning And Controlling
Section17.6: Employees' Responses To Planning
Problem 3CC: How is goal setting tied to job satisfaction and performance?
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What are the key advantages and disadvantages of Incentive plans?

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Advantages of an incentive pay system: -

 

1. With the help of an incentive system, an employee can differentiate between good and bad performance at a workplace and thus can improve their own performance.

2. Employees can compete with each other for the incentive pay.

3. It can help to retain the employees for a longer period.

4. Employees can clearly identify their personal goals.

5. Organizations can squeeze out the best performance of the employees through this scheme.

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