What is Incentive? How to retain quality staff with Incentive

Completing assigned tasks is the responsibility of every employee. But sometimes leaders also need words of encouragement and actions to encourage their working spirit. In English, this is called Incentive. So what is Incentive? If you are a human resource manager, what do you need to do to retain talent? Let's find out with Faro Vietnam in the article below.

Incentive, also known as "encouragement," is an important factor in human resource management. This is a combination of measures, policies and rewards to motivate employees to complete their work enthusiastically and effectively. Let's learn more about the concept of Incentive and how you can implement Incentive to retain talent at your company.

1.  What is Incentive?

Incentive, in English, is a phrase used to refer to incentives and motivations to promote a person's actions. In the business and human resource management world, the concept of Incentive is used quite widely. Incentives can include material rewards such as bonuses or gifts, but can also be non-material rewards such as recognition, promotion opportunities, or learning opportunities. The important thing is that Incentive is applied to stimulate and motivate employees or participants in a specific project, to achieve better goals or performance.
 

The Incentive Theory of Motivation

2.  What is the concept of Incentive salary?

Incentive salary, often called incentive pay, is a form of salary paid to employees based on their performance or achievements. This is considered a useful way to motivate and encourage employees to work hard, contribute positively to the business goals and success of the organization.

Incentive pay is usually determined based on specific indicators or criteria, and this salary is not a mandatory part like a fixed salary. Incentive forms can include bonuses, commissions, profit sharing, company shares or other benefits, depending on the organization's policy.

2.1 Popular forms of Incentive

Incentives come in many different forms, and choosing the most suitable form of reward for the business and employees is an important task for managers and business owners. So, what are the specific forms of Incentive? We can give some common forms such as:

2.2.1 Cash

Cash is a popular form of reward and has high economic value, often used to increase employee salaries. In the case of paying commissions to sales staff, this is considered a quite popular and effective form. This not only encourages employees to improve their performance but can also prevent customers from being stolen from competitors if the business staff is not enthusiastic.

In some cases, the commission that sales staff receive can be higher than their fixed salary. However, using Incentive pay requires careful calculation and consideration, especially when cooperation and teamwork are needed to contribute to increasing sales.

For manufacturing companies, paying Incentive pay based on products is a smart choice. This encourages cooperation between employees in the production line and promotes more productivity. However, businesses also need to have careful management to ensure product quality and prevent dishonest work to receive bonuses.
 

What is a Sales Incentive Program (SPIFF)?

For employees who are not evaluated based on sales or output, incentive pay can be based on progress over time, complexity of tasks, speed of work, and many other factors. This progress assessment needs to be done fairly and transparently to ensure that employees are not disadvantaged and to motivate workers to do their jobs well.

2.2.2 Stocks
Incentive pay in the form of stocks is also popular, although it is more complicated than paying cash. This is also a way to encourage employees to invest their spirit and passion in their work.

Employees are granted the right to buy company stocks at a discount to the market price, which is also a way for them to feel a stronger connection to the company. If the stock price increases, employees can reap large profits from this in the future.

2.2.3 Other forms of Incentive
In addition to cash and shares, companies can also pay Incentive pay in many other forms, such as providing public transportation, health care services at international standard hospitals, free exercise vouchers at gyms or yoga clubs for a specific period of time, and many other forms. Choosing the appropriate form of Incentive pay often depends on the employee's personal preferences and conditions.

Hopefully, the knowledge shared by Faro Vietnam in this article has helped you better understand “What is Incentive”, Incentive money and the importance of Incentive in human resource management. For businesses, Incentive is not only a tool to motivate employees but also a way to attract and retain talent. However, the application of Incentive requires feasibility, transparency and fairness. This ensures that the incentive program will promote employee performance in a sustainable way and bring benefits to both businesses and employees.

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