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Recognition of performance is a major trend in reward, and leading organisations have implemented variable pay to differentiate and recognise top performers in the organisation, in the form of incentives. Some organisations have also used incentives as a successful retention vehicle.
Incentives should: · Support organisational objectives · Be objective · Be measurable · Have the “buy-in” of participants · Be communicated · Be consistent – have rules · Have payouts which are meaningful · Be defined up front
21st Century has specialist skills to facilitate the review and design of both short-term and long-term incentives. A short-term incentive measures performance for up to 1 year, and typically includes profit share, gainshare, commission and bonus schemes. A short-term incentive scheme has the following purposes: · Attract · Retain · Motivate · Drive company strategy · Engender an entrepreneurial spirit · Change the focus from process to outputs · Align employee behavior with shareholder expectations A long-term incentive scheme measures performance for over 1 year, and typically includes share schemes, EVA, and rolling cash-based schemes. Strategic advantages of a long-term incentive scheme: · Aligning executives interests with those of the shareholders · Encouraging executives to maximise long-term shareholder value (if the design of equity vehicles is appropriate) inter alia by facilitating share ownership for executives · Acting as an attraction and retention vehicle for top skills · Necessity to provide market related compensation
21st Century has assisted leading organisations in both the review and design of incentives, whether short-term or long-term. In the process, we incorporate best practice, market trends, and your own unique drivers for the implementation of a scheme. We have designed schemes for all levels in an organisation, and across a huge range of industries and organisation types. Each scheme is unique to the specific purposes and context of each organisation. |