Individual Incentive Plans: Pros and Cons of Individual Incentive Plans
Incentives are varying benefits given to employees based on how well they perform. An organization's success depends on its ability to attract and retain effective people. The goal of incentive schemes is to motivate employees to work toward the company's objectives. If your strategy does not do this, it is a waste of money rather than a benefit. Consider the financial or organizational goals you want to achieve before launching your strategy and adjust the incentive to those goals.
If a person's individually quantifiable performance captures the absolute majority of their contributions to the company's profitability, then their sales compensation plan should be solely focused on their individual success, according to the impact principle. If, however, an individual's individually measurable performance is difficult to record and their success is instead collectively quantified as part of a team, for example- participating in all sales in an area, a team-based incentive pay plan is the best option.
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