There are two dimesions:
1) Incentive: Mainly direct contribution given by the copmany to employee for his performance, This is a share in the business made, example: Sales Incentive
2) Performance Bonus: It is a recongnization given by an employee where employee is aligned towards the common goals and his individual goals.
Now the philospphies should be implemended depedning upon the organization, sector and products.
Sales Incentives are common in FMCG industries for sales people where direct and short term resluts are expected to gain or maintain the marjet share.
In production department workers are given the incentive for busting the short term production,
However Incentives has some disadvantages.
Performance Bonus is onging bonus paid yearly (or queterly and even half yearly) which is a part of CTC and is a variable pay based on the overall business growth and KRAs.
Both schemes are good, but needs to be evaluated on its own merits and demerits.
Please wait my next article on this on my blog....with different dimesions and with my pracxtical experiences.
Monetary allowances as incentives based on performance will certainly play a major roll in motivating the employees. But a clear, transparent and a comprehensive scheme need to be formulated and implemented after getting due feedback from the concerned.
Whether it is paid based on individual or company’s performance, only those employees whose performance are measured will get substantial benefits; whereas others whose jobs can easily not be measured will get a relatively lesser share, despite putting sincere efforts. These things need to be carefully analyzed before implementing a scheme.
Dear friends, from HR perspective and from an employee's perspective I would like to hear your feedback regarding the above said situation.