Incentive Compensation

Most companies analyze a myriad of incentive compensation plans before selecting one. Months or even quarters of time are then spent implementing the plan only to discover another six months later that the plan does not impact business performance. Learn how HRBP can help you create and automate your incentive compensation process and make your plans easy to implement, cost effective, and extremely flexible for the long term.

The fundamental basis for establishing any incentive compensation program is simple: It should equitably and consistently recognize and compensate employees for superior performance. Otherwise, employees may treat bonuses merely as an entitlement, rightfully expecting their bonuses to be paid simply because they show up to work each day. If the bonus program ultimately treats unequal employees equally, the ability to use the bonus as a motivational tool is severely compromised. Giving ample rewards and recognition to star performers has the benefit of providing a role model for other employees. As a result, standards of performance are elevated and morale is strengthened.

A secondary premise of a well-crafted incentive compensation program is that it must direct individual behavior toward achieving common company goals. To many people, money is a motivator, pure and simple. To others, it is simply a form of recognition for a job well done. Regardless, it can and should be used to induce desired behavior toward carefully crafted corporate objectives.

There are many objectives of the company that an incentive compensation plan can meet. There is no such thing as "cookie cutter" approach to designing an incentive compensation program. Every company is different in some respect, be it in the market in which it competes, its organizational culture, or its own unique blend of employees. Consult with HRBP on how best to design your program.