Incentive Pay

Examples Of Incentive Pay To Motivate Your Employees

June 3, 2022
min read

Incentive pay is a great way to motivate and reward employees for their dedication and commitment at work, especially if it results in smashed targets. Either way, employees are integral to your company’s success and deserve to be rewarded for exceptional performance. 

But, how do you know what type of paid incentives will work best to inspire your team?

There are different types of incentive pay, and they are usually performance-based. To give you some ideas, we’ve listed several great incentive pay examples below. 

Browse through the examples to get a feel of what would best suit your organization and its goals. 

Monetary vs. Non-Monetary Incentives

One way to incentivize and reward a job well done is with monetary incentives. Depending on the work environment and type of organization, companies may use a variety of financial incentives. How much you pay usually depends on the company and the incentive pay program it has in place.

But, not all companies have the budget to offer monetary incentives to their employees. In these cases, organizations may use non-monetary incentives to encourage excellence. 

Either way, organizations use these incentives to inspire employees to go above and beyond expectations or participate in projects outside their usual remit. 

Furthermore, rewarding employees this way shows recognition for hard-working and dedicated individuals. Recognition works to foster good employee-company relationships. 

Ten Incentive Pay Examples To Use As Ideas For Your Program

1. Spot Rewards

Spot rewards are a great way to recognize employees who have achieved goals above and beyond their everyday scope of work. These rewards usually come in the form of a small cash prize, which can be taken from the company's discretionary or incentive pay funds. 

Spot rewards are also an excellent way to acknowledge exceptional performance, project achievements, and employee initiative.

By paying an immediate one-off cash bonus, you create a rewards system based on positive reinforcement. This helps foster employee morale

2. Profit-Sharing

Profit-sharing, also known as a deferred profit-sharing plan, is a type of retirement program that allows employees to share in a company's annual earnings. 

Profit-sharing can help employees save and invest in preparation for retirement. It ensures a promising future for your employees and can help them feel more connected to the company. This can increase loyalty to the business. 

It can also foster a vested interest in your company's success, which will increase individual employee productivity. 

3. Performance Bonuses

Performance bonuses are another example of cash rewards. They are used to recognize the continued success of employees. These bonuses are usually scheduled and only awarded to the top performers. 

This can serve as a motivational tool for other employees who have not met their performance targets. 

A good example of how to use this type of incentive is awarding commission bonuses to a salesperson who is making more sales than their target. 

A great way to reward employees who aren’t involved in sales is to pay out a quarterly or annual bonus based on their overall performance. 

4. Retention Bonuses

Retention bonuses are often worth up to 15% of an employee's salary and are awarded to employees who stay with a company for a specified length of time. 

This type of incentive is also offered if an employee stays with a company during critical times, like certain production and acquisition periods.  

Although retention bonuses aren't as prevalent as spot awards, they have proven effective in retaining top talent under challenging circumstances. 

To put this incentive pay example in place, you will need to determine how many years of service makes a person eligible to receive the incentive. From there, you should decide on the increments in which it will be paid. For example, some companies will award this bonus every five years. 

5. Stock Shares

Another widely used incentive pay example is allowing employees to purchase a percentage of the company’s shares. Shares are usually offered to eligible employees at a discounted rate and are a fantastic way to ensure loyalty to the company. 

When people feel like they have a stake in a company's future success, they are more inclined to stay with the company as loyal and driven employees. 

These employees will generally show an overall increase in their productivity levels and may begin to show more initiative in their teams. 

Related: How To Use Rewards As Incentive Pay

6. Referral Bonuses

Referral bonus programs are monetary incentives that encourage staff to find prospective employees for their companies. When their company hires referred applicants, the employee who originally referred them is paid out. 

Referral bonus systems are helpful as organizations can depend on their staff to match them with candidates who become valuable employees. 

7. Recognition Programs

An excellent way to recognize an employee’s continued efforts is to set up a recognition program within the company. For example, several companies have systems for appointing an employee of the month.

These programs can help make an employee feel that their hard work is being acknowledged. It can encourage other employees to work harder to earn this recognition for exceptional dedication. 

8. Flexible Work Arrangements

There’s been a surge in remote work and work-from-home opportunities available to employees. Given this, a great way to motivate your employees is to offer them more flexible work arrangements. 

This can be done in several ways. Employees can work remotely on specific days, alter their working hours, or negotiate for their position to become fully remote. 

Employees will still be required to meet their deadlines, work on projects, come into the office for work meetings if necessary, and work a certain number of hours. But, when vital employees can choose a schedule that best suits their needs, they often become much more productive. 

Flexible work arrangements are advantageous to specific groups of employees, particularly working parents, caregivers, and workers with disabilities. 

9. Paid Time Off Or Vacations

What could be more motivational than getting some much-needed personal time off from work or jetting off on a company-sponsored holiday

These rewards are often granted to exceptional employees who’ve achieved performance goals outside the scope of their usual tasks. It can be an effective way to motivate your employees to meet specific targets. 

10. Gifts 

Employees enjoy being able to reap the rewards of their hard work. A gift can be a thoughtful, personal way to recognize them. 

Gifts can also be personalized to suit your employee. If they are a foodie, you could consider paying for a fine dining experience. Or, if they’re the adventurous type, you could reward them with tickets for a once-in-a-lifetime experience such as skydiving or shark cage diving. 

These incentive pay examples don’t always have to be extravagant, though. They can be as simple as a gift voucher or membership to a health or recreational club


The best way to keep your employees motivated is to foster a positive work environment. This includes boosting morale through reward-based initiatives like incentive pay. Incentive pay doesn’t have to be a monetary reward. You can find other interesting non-monetary prizes to keep your employees incentivized. 

By offering your employees the opportunity to be rewarded for their hard work, you’ll be able to increase your overall office productivity and keep your employees happy.

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