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Incentive plans are crucial for motivating employees to perform at their best, significantly impacting both individual and organizational success. Managers often encounter challenges with employee performance, as some may not exert effort proportional to their abilities. To address this, managers must determine the appropriate actions or outcomes upon which to base incentives, the types of incentives to implement, and whether to emphasize individual, team, or organizational performance. The primary goal of these incentives is to encourage employees to achieve specific objectives by rewarding desired behaviors, thereby enhancing overall productivity.
