Steps to Decision Making

Incentives other than profits can motivate owners to change the way they use their resources. Inside a company, incentives determine how managers use resources and how employees work to accomplish their goals. Successful managers must have a strong understanding of how incentives work within a company. For example, managers can create incentives to increase the efforts of individuals they manage.

When creating incentives within a company, managers need to differentiate between the existing state of the business and what they want to see in the future. Some managers have encountered complications because they failed to understand the significant role of incentives in controlling and monitoring others' decisions.