TCS : Services : Incentive Compensation Planning

Services

Incentive Compensation Planning

When effectively applied, incentive planning provides a strong link between organization goals and strategies and compensation. It can be an effective tool for motivating employees to increase both individual and organizational performance and recent market trends reveal that incentive planning can be effective in a not-for-profit environment as well as a for-profit environment.

The process for establishing an incentive compensation plan is as follows:

Develop organization business strategy
Link business strategy to overall goals and objectives
Identify prospective plan participants
Establish individual goals and objectives
Evaluate market practices and determine target awards
Assign performance objectives to award levels
Communicate plan elements to staff.

Over the past decade, incentive planning and the concept of variable pay have gained widespread attention. Employers recognize that this a method of motivating employees to perform at higher levels. Employees recognize that they can affect the value of their own total cash compensation package by accomplishing the performance objectives set forth in a formal incentive plan.

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