An Incentive Plan Checkup

If you answer no to any of the following questions, your company’s incentive plan may be in need of a tuneup or a complete overhaul.

• Do line managers support the plan and use it to manage and guide employees?
• Does everyone on the executive team understand and agree on what the plan is designed to accomplish?
• Is the plan rewarding the right behaviors?
• Do employees understand what the plan is measuring? Can they clearly impact those measures in their daily work?
• Does the plan fit where the business is going and the strategic plan?
• Is the plan providing an appropriate mix of group and individual performance measures?
• Is the company holding firm to the plan’s payout formula even when performance is down and payouts are low or nonexistent?
• Is management willing to wait two or three years for the incentive plan to begin influencing overall corporate performance?
• Is the executive team prepared to change or replace the plan on a regular basis (at least every three years)?

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