The incentive plan can be designed on individual, group or organization wise performance:
1. Individual Incentives
Individual incentives refers to incentives given to individual employees for their additional contribution towards organizational objectives. Under it, incentives are calculated on the basis of individual performance that can be measurable in quantitative terms. This is a most popular form of incentive in the industry under which employees are rewarded individually for their additional contributions. The foundation of such incentives is the worth of individual performance. It can be of following types:
- Piece work plan
- Commission
- Bonus
2. Group Incentives
The individual incentive plan will be ineffective when the output of the individual employees is not measurable, in such situation a group incentive is applied. It means, when two or more employees are involved for a particular performance, incentives are provided to the group collectively, it is called a group incentive. Group incentives make a strong sense where employee's tasks are interdependent and thus require a collective effort for the completion of such tasks. Especially, this system of incentive is useful in project teams where one worker's contribution is almost impossible to reflect in measurable units. Under this plan, a productive plan is set as standard performance for group of employees and a the reward is provided by assessing the performance of the whole team. If the employees in the group perform better, all members of team are rewarded collectively.
3. Organizational Incentives
When the incentives are provided to all employees of the organization, it is called organizational incentives. This kind of incentive is useful to motivate all employees at work for organizational effectiveness. The primary goal of organizational incentive is to direct the efforts of all employees toward achieving organization's overall mission, vision, objectives. This incentive plan produces reward for all employees working in a particular organization. The reward is provided in terms of productivity, gain-sharing, profit sharing, share ownership. and so on.