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Base Pay vs. Incentive Pay

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Describe the major differences between Base Pay and Incentive Pay, and the advantages of each to the both the employee and the organization. For incentive pay use the simple definition of "a lump sum bonus paid annually and based on individual performance or performance goals". .

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Solution Summary

This solution determines the differences between incentive and base pay when incentive is a bonus. All references are included.

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Base pay is the amount agreed upon at hiring to pay an employee for the specified number of hours worked. This pay is set according to the hours and not based on any other requirements for the employee or organization. Most people have a rate of pay they earn per hour, day, or week. Incentive pay is like base pay in that it is a set rate for work, sometimes previously decided by the employee and organization.

However, there are differences. There is an expectation of work done when base pay is involved, but it is not required as a part of earning the rate per hour or day. Base ...

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