An incentive plan has the following important features:

1. An incentive plan may consist of both monetary and non monetary elements mixed elements can provide the diversity needed to match the needs of individual employees.

2. Earning of employees would be enhanced due to the incentives. There are instances where an incentive earning exceeds two or more three time rated wages or salaries. Increased earnings would enable the employees to improve the standards of living.

3. There will be reduction in the total as well as unit cost of production, through incentives. Productivity would increase resulting in a greater number of units produced for given inputs. This would bring down the total and unit cost of production.

4. The other advantages of incentive payments are reduced supervision, better utilization of equipment, reduced scrap, reduced lost time, reduced absenteeism and turnover and increased output.

5. A part from the benefits cited above, incentive packages are a very attractive proposition for managements because they do not affect employer's contribution to the provident fund and other employee retirement benefits.