Employee Incentive
Employee Incentive
Employee Incentives are extra rewards given to employees to appreciate and inspire outstanding performance, apart from their basic salary or wages. Incentives are usually employed to motivate productivity, enhance morale, and align an individual's work with organizational objectives.
When an organization seeks to generate greater efficiency or reward great contributions, a good method is to reward employees through a performance-based incentive. In an easy manner, Frappe HR offers the creation and administration of Employee Incentives for individual employees or departments, so that these incentives are reflected in payroll processing appropriately.
1. Prerequisites
Prior to designing an Employee Incentive, it is recommended to design or have the following records in the system:
- Employee:
The employee should already be designed in the system with correct details like Company, Department, Designation, and Date of Joining. Incentives are always associated with individual employee records.
- Salary Component:
Design a specific Salary Component (for instance, "Performance Incentive" or "Sales Incentive") to class the payment accordingly.
The component should be of type Earning.
It should be labeled as Allow on Additional Salary so that it can be payable through payroll.
Make it taxable or non-taxable based on your company's compensation policy.
2. How to define an Employee Incentive
Navigate to Employee Incentive list, and click on New.
Choose the Employee on whom you would like to provide the incentive.
Input the Incentive Amount to be payable.
Select the Payroll Date when the incentive will be paid or distributed.
Select the Salary Component under which this incentive must fall.
(Optional) Enter a note or explanation for the incentive, e.g., achievement of target, project performance, or special contribution.
Save the document.
review, Submit the record.
Upon submission, an Additional Salary document is created automatically for the chosen Salary Component and Employee. This Additional Salary entry is pulled into the respective Payroll Entry during payroll processing for that period so that the incentive is included in the employee's salary payment