Developing an incentive plan that links variable pay to measurable performance outcomes is one way to invest in the future success of an organization. When done well, and treated as a management tool, such a plan can powerfully motivate employees to increase productivity, quality of outcomes, and both short- and long-term results. Incentive plan principles can be applied at all levels in your organization, from the CEO to the lowest-paid staff. Remember that even an incremental increase in productivity, measured in terms of quantity, quality, and/or timeliness, can lead to improved financial and operating results.
Linking pay to performance can also: (1) improve employee morale; (2) enable clearer communication about performance expectations; (3) result in real and perceived pay equity (e.g., top performers earn more); and (4) provide an additional attraction to prospective new employees.
Bottom Line:
The right pay plan has tremendous potential to add value to your company.
– Shari Dunn, Managing Director
CompTalk 