Make It Count
Are you getting the most out of your compensation programs? Are the behaviors you are trying to change and improve within your workforce getting you the business results you need and expect. Maybe you are just thinking about implementing one now, or you are wondering what are some long-term options to retain your key talent. If you aren’t sure, it might be a good time to think about your incentive compensation practices, or creating one!
What is incentive compensation?
Simply put: A form of compensation, usually variable or at-risk, that connects a desired action, outcome, or behavior with an intended result.
What does it look like?
Incentive compensation can take on many forms and often times, it's beneficial to have different offerings with specific purpose. Sometimes these are annual cash bonuses tied to individual performance, other times they take the shape of profit sharing or company stock. They can be formula driven commission based sales plans or they can be management compensation that is self-funding through improved financial results on your income statement. Knowing what plan or plans to consider is not always easy, so starting with the basic question of: "What are problem do we need to solve?" should always be step one.
How do I know what’s right for our company?
There is a lot to consider based on what you are wanting to achieve. For example, if you are looking to find a way to compete with other companies who offer stock or other company ownership instruments and you are looking to retain your talent beyond 3 years, you may want to consider creating a long-term incentive plan and there are many different options for you to think about. Here are 3 examples that a private or small company could consider and the differences between them to consider.
What else should I be thinking about?
Incentive compensation can be challenging without clearly defined roles and objectives. Making sure you know "what good looks like" and what outcomes you are looking to achieve is important to ensure you are getting an optimal return for your compensation investment.
Not sure what is right for you or how to get started? We can help. We can collaborate on assessing your current plans or help you think about how to implement a new one. Not sure if your current incentive compensation is effective? We can help measure the return on value. Reach out at info@game7hcc.com or head to our contacts page and let's connect!