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Incentive Compensation Plans that Work

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
A carefully designed, well executed incentive compensation program will enable a company to attract, motivate and reward top-notch employees. It will also sustain a creative, performance-driven work environment, as well as support behaviors that align with the organization’s business objectives, marketing goals and overall strategies.

The article reviews the characteristics of a successful incentive compensation program including the requirement that the plan be integrated into overall business objectives, business processes, and financial/accounting practices.

Areas discussed include setting up a compensation program, aligning it with multiple strategies, determining quantifiable results, and linking it to a clear payout formula and timeline.

Taking the guesswork out of the incentive compensation plan reduces ambiguity and frustration, provides clear marching orders to employees, and makes the accounting/payroll process smooth and efficient. It also lets incented employees track their commissions and see the link between their performance and the company’s overall success.

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