HomeProductsHRM/PayrollIncentive Is: Purpose and Benefits For Employees

Incentive Is: Purpose and Benefits For Employees

As a worker or employee, you should know what incentive is. There is no worker or employee who does not like incentives. Usually, an exemplary and outstanding employee or worker will get incentives from the company. Besides being able to increase employee morale, incentives or bonuses can also motivate other employees to give their best performance to the company which can make the company profit. However, giving bonuses to employees needs to be done by the company fully with careful consideration because it must also adjust to the company’s conditions.

Definition of Incentive

According to the KBBI, incentive is additional income in the form of money, goods, or so on given to increase work enthusiasm. KBBI also interprets this as encouragement money. Giving this bonus is different from giving the basic salary which is already the right of the employee to get. The purpose of giving this is so that employees can work more optimally because they feel the results are more appreciated. With employees working more enthusiastically and motivated, the company will also get greater benefits. In addition, the company’s productivity will also increase.

Therefore, the benefits of incentives are beneficial for both employees and the company. However, the provision of salaries and bonuses must still be different because even though they are in the form of remuneration for services, they both have clearly different functions and roles. Salary is the basic right of employees who are already working in one company. Meanwhile, incentives are more motivating or stimulating for employees to increase their performance. The bonus amount is usually not fixed and requires careful consideration based on the achievements and wages of employees. This provision usually also occurs at one time and can be disbursed outside the regular schedule of salary payments.

Types of Company Employee Incentives

The following are the types of company employee incentives based on their form:

Financial incentive

This type of reward is in the form of money in addition to the basic salary that employees receive. Usually, the calculation of this type of incentive is based on company profits and matters related to employee welfare such as old-age insurance, recreation, health, and so on.

In addition, you can manage your company’s finances with the Accounting System from HashMicro.

Non-financial incentive

As the name suggests, this type of reward is not in the form of money. Generally, this type can be promotion, a positive and constructive work environment, and a good working relationship with superiors. In addition, there are also other bonuses commonly social incentives that relate to better co-workers. Therefore, the bonus is not always in the form of money, but it can also be in other forms.

Objectives and Benefits

The provision of incentives has many purposes and benefits for both employees and companies. The main goal is to increase the performance or productivity of employees and the company. With this goal, employees and the company will get mutually beneficial benefits such as:

Benefits for employees

  • Motivation

Getting more profits is one of the advantages for companies when their employees have good performance and productivity. Therefore, the provision of incentives can also have an impact on increasing employee motivation because they feel their performance is appreciated by the company. However, the provision of incentives is not only financial. In terms of work ethic, this can also build employee morale to work harder by providing the best for company.

  • Retribution

Employee achievements and efforts can be assessed qualitatively and quantitatively. For this reason, incentives can be evidenced as a sign of remuneration for the hard work that employees do in the form of certain bonuses. This can make employees work harder and improve their abilities to get the bonus. So, bonuses do not only function as encouragement or motivation for employees. However, it can also serve as a token of remuneration to help the company achieve its goals more quickly and precisely.

Benefits for the company

  • Employees will work harder

With increased employee motivation, they will work harder to get bonuses from the company. When the company routinely gives bonuses to the best employees, the employees will compete to work with enthusiasm in providing their best performance. This will also make the company profit because the company’s productivity will also increase.

You can also automate various aspects of your company or business with ERP System.

  • Employees are more disciplined

When employees already have a good work ethic, the competition in getting incentives is to improve performance, be more disciplined and creative. This will make the company have resources that can compete and be able to increase the company’s productivity significantly.

How to Provide Incentive Effectively

To reduce the company’s potential losses due to providing excessive incentives, here are some ways or indicators that companies can consider before giving bonuses, namely:

  • Employee performance and achievements. This is the main consideration for the company before giving bonuses is the performance and achievements of the employee for the company.
  • Work efficiency. It is the responsibility of employees whether the work they do can be completed more quickly and effectively or not.
  • Fairness and worthiness. Companies also need to pay close attention to the fairness or eligibility of employees in receiving bonuses. If the company ignores it, this will actually cause losses for the company.
  • Position or seniority. The company should also calculate the nominal amount of the bonus based on the position or seniority or the employee’s service period to the company. The needs and needs of employees in improving the quality of life can also be a consideration for companies in providing bonuses.


Companies need not worry about potential losses in providing incentives. If the company manages and does it well, there will be many impacts and benefits for employees and also the company. Giving bonuses or incentives can take many forms such as money, promotions, goods, recreation, and so on that can increase motivation or work passion. However, companies also still need to be careful and do a lot of consideration before giving bonuses to their employees. Because if you are not careful, the company and employees will suffer losses from providing excessive incentives.
In addition, you can also use the HR System from HashMicro which can manage all the activities of your employees. This system allows you to manage payroll, attendance lists, as well as other operational activities. In addition, with HRM – Advanced you will also be able to manage recruitment, KPI, training, employee evaluation, employee loans with just one application.

Interest in getting savvy tips for improving your business efficiency?

Muhammad Syahrian
Content Writer Intern at HashMicro. Passionate and hardworking person to develop my marketing skill.


Please enter your comment!
Please enter your name here

Looking for software system to improve your business efficiency?

Get a free consultation with our business expert by filling in this form!


Rachel Panjaitan
Typically replies within an hour

Rachel Panjaitan
Looking for a Free Demo?

Contact us via WhatsApp and let us know the software you are looking for.

Claim up to 80% Productivity Solution Grant for various HashMicro Software!
Book a Demo by WhatsApp