Random House will tell you that both are real words, On the former:
The earliest example I could find is in a 1981 edition of Chemical Week: "... we have to get the American industrial engine running again...If you set realistic performance targets with enough stretch in them, then you're trying to incent the participants on things that are within their control." And here's a very recent example from The Charleston Gazette: "The way these business owners and managers see it, incentive compensation programs are likely to be used more and more...Unemployment is at all-time lows....Companies have to find ways to incent their employees in a highly competitive environment."However, Roy Jacobsen calls both "nasty neologisms" that "deserve to be throttled, wrapped up in black plastic, and dropped into the deepest crevices of the Marianas Trench," and then tells us what he really thinks:
Though incent has been widely used over the past twenty years, every so often I see evidence that people are hearing or seeing it for the first time. Our citation files hold this example from a 1997 article in The Los Angeles Times: "State Senate President Pro Tem Bill Lockyer's clunky new welfare reform verb-'to incent', meaning to motivate-is sure to incense grammarians." As for its acceptability,incent isn't even mentioned by grammarians who criticize other back formations such as enthuse and burgle. But because it's in the same category as these words,incent would probably be frowned upon as bureaucratic jargon.
These so-called words are common among businesspeople, many of whom have an almost obsessive compulsion to sound smart by showing off their big vocabulary. At some point in the 70s, one such businessperson was looking for an impressive-sounding way to say encourage. They looked at the word incentive and decided that its root must be incent. They were wrong. There is (or was, at any rate) no such word as incent.And Otto Mezzo of Lexicide would rather you avoid both.
Incentivize is a victim of our tendency to think that we can stick the suffix -ize (that’s -ise for those of you in the United Kingdom) on the end of any word to create a verb. Yes, that works in many cases—authorize, legalize, and deputize, for example. But in most cases—especially when you look at some of the examples coming from business jargon—it’s ugly and unnecessary.
1) Encourage, motivate, drive, urge, lead and spur are still more universal, positive and readable.So, what to do, and yes it's our standard battle lines: live in the now amid an evolving language, or be sensitive to the ears of those who find these terms wretched?
2) The first time I heard incent, I mistook it for incense and wondered why we wanted to enrage our customers. This could happen to you.
3) To incent or incentivize, you must offer an incentive. If you don’t have one, use another damn word. If your “incentive” is the spectre of firing or other penalty, you should try the word threaten or browbeat.
Poll results: 56% say neither is a real word; 39% approve of "incentivize" and 7% approve of "incent." (4% liked both.)