Question: What is the basis for designing incentives?

• Individual behavior
• Individual results
• Group based behavior
• Group based results

Incentives are a key factor influencing individual behavior. The incentive system of an organization is an expression of how individuals and their activities are evaluated and compensated.

Two basic principles affect the designing of an incentive system:

• Whether it is based on an individual or a group measure
• Whether it is based on behavior (procedural measure) or results (output measure)