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incentive

in-SEN-tiv /ɪnˈsɛntɪv/

nounB2GREGMATSATCAT

BusinessEconomics

A thing that motivates or encourages someone to do something.

Incentives can be positive (rewards) or negative (penalties), but in sales, they almost always refer to bonuses or perks for hitting targets.

The story behind the word. From 'incinere' (to blow a horn or set the tune). It originally referred to the music played to encourage soldiers or workers. It's the 'tune' that gets everyone moving in the same direction.

Word relationships

motivation: Motivation is the internal feeling; an incentive is the external thing that creates that feeling.
stimulus: A stimulus is something that causes a reaction; an incentive is specifically aimed at encouraging a desired behavior.

deterrent: A deterrent is something that discourages a behavior; an incentive encourages it.
disincentive: A disincentive is a factor that makes someone less likely to do something.

Commonly confused with

reward: A reward is given after an action; an incentive is promised before to encourage the action.

Word family

incentivize (verb): To provide someone with an incentive for doing something.

Collocations

financial incentive
performance incentive
tax incentive
strong incentive

Example sentences

"Show me the incentive and I will show you the outcome." A famous economic principle.
"The company offered a trip to Hawaii as an incentive for the top-performing salesperson of the year." Using a perk to drive sales behavior.

Memory hook

Think of 'In-cent-ive'. It gives you more 'cents' (money) to work harder. Set the tune for success.

When not to use

Do not use 'incentive' for a basic requirement of the job; it must be something extra that encourages higher performance.

Fun facts

The word 'incentive' didn't become common in a business sense until the early 20th century, coinciding with the rise of industrial management.