Right now, believe it or not, is a good time to evaluate your incentive plan and re-do it if necessary. The reason is simple. The economy is in turmoil, with plenty of companies facing unprecedented challenges. Now more than ever, you need to attract and keep good people and get everyone focused on business results. An effective incentive plan helps you accomplish both objectives.
Trouble is, most incentive plans don’t do the work they should. Some aren’t transparent, meaning that employees cross their fingers for a bonus but don’t see how to generate one. Some aren’t tied to business performance, so owners wind up rewarding employees without seeing improved financial results. We’ve evaluated hundreds of such plans, and we’ve seen the same mistakes crop up again and again.
Mistake #1 is offering a bonus for business as usual. That’s an appropriate role for annual profit sharing–it’s always good to give