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Management incentive plans best work with a balanced approach combining extrinsic and intrinsic motivators. Despite the arguments that extrinsic rewards are deleterious for performance, there is a growing consensus that both extrinsic and intrinsic rewards are important for optimal performance.
Management Incentive Plan (MIP) is a term most commonly used to refer to the scheme over which the ?sweet equity? pool is allocated to senior management in a privately owned business. The company using a MIP will often be owned by a private equity house.
Incentive management is the practice of offering incentives like pay, extra time off, or a gift to employees that meet certain benchmarks or perform specific behaviors. A classic example of an incentive program is a system where a sales rep gets extra pay for closing a certain number of deals in a quarter.