Incentives are measure to stimulate human efforts; people are encouraged to give out their best by inducing them on to greater and more productive efforts.

Though the fear involved in negative incentives may be occasionally necessary for maintaining discipline, they are not long lasting, and are hence unsuitable for increasing production.

Positive incentives can be broadly classified into

1. Non-financial,
2. semi financial, and
3. financial incentives.

A strict classification is rather difficult, since some indirect monetary benefits may be there in any scheme.