incentive compensation plans set clear goals and objectives for employees, which holds them accountable for their performance and rewards them for their productivity.
Enables flexibility
incentive compensation can be customized to fit the unique needs and goals of the organization as a whole as well as individual employees, enabling companies to offer the right compensation packages for their specific staff.
Drawbacks of incentive compensation
while its benefits are significant, incentive compensation can present the following risks if designed or distributed poorly.
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Undermines teamwork
when incentive compensation plans over-emphasize individual performance, they risk creating a culture that doesn’t place enough value on teamwork and collaboration.
Incentivizes bad behaviors
poorly designed incentive plans can inadvertently motivate the wrong types of behavior. Without provisions like clawback clauses in place, employees cn leads might resort to unethical tactics or take a quantity-over-quality approach to selling. This improve your sales performance can negatively impact sales results, morale, and overall productivity.