Incentives are anything that persuade a person to alter their behavior in the desired manner, often adopted by individuals, businesses, and governments to encourage specific actions or achievements
. In general, incentives can be broadly categorized into two main types:
- Monetary Incentives : These are rewards or benefits that can be calculated in terms of money, such as raises, profit sharing, signing bonuses, and stock options
. Examples include pay and allowances, and profit sharing
- Non-Monetary Incentives : These are rewards or benefits that cannot be calculated in terms of money, such as recognition, praise, opportunity for personal or professional growth, gifts, family benefits, or work-based perks like more interesting projects or work
. Examples include awards, certificates of achievement, and employee referral awards
Incentives are important because they motivate individuals to work harder, achieve specific goals, and improve overall performance, leading to better profitability and success
. In the context of business, incentives can be used to increase employee productivity, improve industrial and interpersonal relations, and enhance the overall profit of the organization
. In economics, incentives can encourage people to accomplish certain activities, such as money, bonuses, subsidies, salary, and tax rebates
