Discretionary Performance Incentive Letter
[Date]
[Employee’s Full Name]
Employee ID:[Employee ID]
[Job Title]
Dear [Employee Name]
We are pleased to inform you that, in addition to your salary, you are eligible for a Discretionary Performance Incentive w.e.f. [Month Name] [Day], [Year]. Your incentive will be computed on Net Revenue* generated by you in excess of your gross monthly salary as per the below mentioned criteria:
Multiple of Gross Salary =>Incentive on Excess Revenue (%)
Between 3 to 4 => 10%
Between 4 to 5 => 15%
Above 5=> 20%
*Net Revenue to exclude consumables, materials, cost of outsourced services, outside referrals for services if any.
Kindly note that the Organization reserves the right to withdraw this scheme at any time. Also, the Discretionary Performance Incentive is not included in calculation of end of service benefits i.e. Gratuity. Other terms and conditions will remain same as per the employment contract.
Kindly sign and submit a copy of this letter as a token of acceptance.
Yours sincerely,
Discretionary Performance Incentive – Formal Recognition Letter
Dear [Employee Name],
We are pleased to inform you that based on your exceptional performance and dedication over the past quarter, you have been awarded a discretionary performance incentive. Your contributions have significantly impacted the success of our team and company goals.
This incentive reflects our appreciation for your hard work, commitment, and the high-quality results you consistently deliver. We encourage you to continue setting high standards and contributing to our shared success.
Congratulations on this well-deserved recognition.
Sincerely,
[Manager Name]
[Title]
[Company Name]
Casual Appreciation Message for Team Effort
Hi [Employee Name],
Just wanted to give you a quick shout-out! Your efforts in the last project were outstanding, and we’re happy to award you a discretionary performance incentive for your dedication.
Keep up the great work and let’s aim even higher next quarter!
Cheers,
[Team Lead Name]
Provisional Discretionary Incentive Notification Email
Subject: Provisional Performance Incentive Notification
Dear [Employee Name],
We are pleased to inform you that you have been provisionally selected to receive a discretionary performance incentive for this period. This award is pending final approval by the management team.
We wanted to share this good news ahead of formal confirmation. Thank you for your continued dedication and excellent performance.
Best regards,
[Manager Name]
Heartfelt Thank You and Incentive Letter
Dear [Employee Name],
Your unwavering dedication and the passion you bring to your role have not gone unnoticed. In recognition of your extraordinary performance, we are delighted to grant you a discretionary performance incentive.
Your commitment inspires your colleagues and contributes greatly to the success of our team. Please accept this award as a token of our sincere appreciation.
Warm regards,
[Supervisor Name]
Quick Notification for Discretionary Incentive
Hi [Employee Name],
Good news! You’ve been awarded a discretionary performance incentive for your exceptional contributions this month. Keep up the fantastic work!
Best,
[Manager Name]
What is a Discretionary Performance Incentive Letter and Why is it Important
A discretionary performance incentive letter is a formal or informal communication issued to an employee to acknowledge exceptional work and award a performance-based incentive.
It serves multiple purposes:
- Motivates the employee by recognizing their efforts.
- Reinforces positive behaviors that align with company goals.
- Provides a documented acknowledgment of performance-based rewards.
- Encourages retention and loyalty among high-performing staff.
Who Should Send a Discretionary Performance Incentive Letter
- Direct supervisors or managers of the employee.
- HR representatives when formal documentation is required.
- Senior leadership in cases of exceptional achievement or company-wide recognition programs.
Whom Should Receive This Letter
- Individual employees demonstrating exceptional performance.
- Teams or departments if the incentive is team-based.
- Contractors or temporary staff in rare cases where performance significantly exceeded expectations.
When to Send a Discretionary Performance Incentive Letter
- At the conclusion of a major project or quarter.
- Following an annual performance review.
- After achieving key company milestones.
- To recognize extraordinary efforts outside of scheduled reviews.
How to Write and Send a Discretionary Performance Incentive Letter
- Review the employee’s performance and achievements thoroughly.
- Choose the appropriate tone (formal, casual, heartfelt) based on company culture.
- Clearly state the incentive awarded and reason for recognition.
- Use professional language but personalize the message to reflect genuine appreciation.
- Decide on delivery: email for quick notifications, printed letter for formal acknowledgment.
How Much Incentive or How Many Can Be Granted
- Amounts may vary based on company policy, department budgets, and level of achievement.
- Discretionary incentives are usually flexible and not fixed; they can be monetary, gift vouchers, extra leave, or other rewards.
- Teams can receive group incentives; individual incentives depend on personal contribution and performance metrics.
Requirements and Prerequisites Before Sending
- Verified performance records.
- Approval from management or HR if required.
- Clear understanding of the company’s incentive program rules.
- Alignment with company budgets and policies for discretionary awards.
Formatting Guidelines for Discretionary Incentive Letters
- Length: Generally one page or less.
- Tone: Should match the purpose—formal for official recognition, casual for quick messages.
- Style: Professional, appreciative, and clear. Avoid ambiguous language.
- Wording: Include specific achievements and quantify impact if possible.
- Mode: Email for fast notifications; printed letter for formal acknowledgment.
After Sending: Follow-up Actions
- Ensure the recipient acknowledges receipt of the letter.
- Record the incentive in company performance and payroll systems.
- Monitor employee morale and engagement following recognition.
- Optional: Announce recognition in team meetings if culturally appropriate.
Common Mistakes to Avoid
- Being vague about why the incentive is awarded.
- Sending the letter without proper approval.
- Using impersonal, generic wording.
- Delaying communication, which can reduce motivational impact.
- Overpromising future rewards in a discretionary incentive letter.
Elements and Structure of the Letter
- Opening: Greeting and immediate mention of recognition.
- Body: Specific achievements, reasons for incentive, and value of contribution.
- Incentive Details: Amount, type, or reward being granted.
- Closing: Encouragement, congratulations, and signature.
- Optional Attachments: Performance metrics or reports justifying the award.
Tricks and Tips for Maximum Impact
- Personalize each letter to highlight specific achievements.
- Use the employee’s name multiple times for a personal touch.
- Include a short anecdote of their contribution to reinforce authenticity.
- Send the letter promptly after the achievement for immediate recognition.
- Consider pairing the letter with a small public acknowledgment for added morale boost.
Compare and Contrast with Other Recognition Methods
- Unlike standard performance reviews, this letter provides immediate recognition.
- Compared to verbal praise, a written letter has lasting documentation and impact.
- Offers more flexibility than structured bonus programs since it is discretionary.
- Can complement other recognition methods such as public awards, certificates, or team celebrations.
