Incentive schemes are an important tool for ensuring
that employees and leadership are working towards the same objectives and
goals. Thus, it is important to establish a direct relationship between the
company's strategy and the target setting process that drives the motivation of
The right data
Occasionally it is necessary to go beyond the immediate
process (define goals and issue target letters etc.) as the data for the
targets, the leader wants to incorporate, are not available, or are available,
however the information or data is not reliable and accurate enough to be
applied for target calculation in the incentive schemes. Here is a need for
reviewing the corporate reporting processes, so the direct link between the employee's
remuneration and company's achievement of the strategic and financial goals can
The right targets
Even when the company has reliable and secure data and information available to evaluate the target achievements, it is important that the leadership regularly reviews whether each individual has the right targets and incentive models to support their strategic and operational direction.
The right frequency
Depending on the industry of the company the response time of the market may differ, and it may be worth considering whether the target period is correct, e.g. should be monthly, quarterly or annually? The pay-out frequency can be monthly, quarterly or yearly independent of the target period, which may give desired behaviours that the leadership wants to incentivise.
For companies that do not have or can offer stock option programs, an incentive program with a target period of 2 to 3 years may be a good alternative to ensure implementation of long-term strategic goals as well as retention of key talents.
How can we support you?
SOLUTION CATALYST offers your company to analyse your current incentive models and their alignment to your current short-term targets and long-term strategies, and where gaps are found provide you with alternative proposals for new incentive goals and models. We can also help your company to test the reliability of the incentive targets and implement the necessary changes to your data collection and reporting structures to increase their reliability and accuracy as an incentive objective