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Incentive to produce more and sell more at a lower cost, and thereby increase the take-home pay of the employees, can lead to significant positive impacts on the overall culture and profitability of a firm. However, for incentives to be effective, both management and labor must agree to the incentives, and they must encourage effective work that results in pride, loyalty and a sense of achievement. Inequitable incentives can be worse than no incentives at all.
Incentives can be designed to increase sales, improve planning, ensure the movement of goods, or raise the quality of supervision, but it is imperative that they take into consideration the probability of attainment. An effective way reach attainment is through the implementation of a Productivity Incentives program, the results of which are: