Benefits, Compensation

As Year-End Approaches, Are You Asking Any of These Questions?

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Year-end creeps up earlier these days, it seems. At one time, I considered year-end to be approaching when the leaves turned color and the air turned cooler.

These days, in the middle of a warm green August, I know year-end is on its way because people are reviewing their incentive plans and trying to nail down any changes to be made for next year. And I know this because of the calls and the questions I am getting.

Questions like:

  • Should we extend our incentive plan lower in the organization? And if we do, do we need to make changes to the plan?
  • Are our current payouts appropriate? Should we make them higher … or lower?
  • Should we go from annual to quarterly awards  – or from quarterly to annual awards?
  • Should we add revenues as an incentive plan measure?
  • Should we add a personal performance measure to our plan?

Questions you should be asking

Unfortunately, I can’t answer these questions, and neither can they, until somebody steps back to do a little information gathering and analysis. And that happens by asking (and seeking the answers to) more questions.

Questions like:

  • Why do we have this plan in the first place?
  • For what purpose was the plan created? What objectives is it designed to achieve?
  • Are the original purpose and objectives still relevant given where the function/business unit/organization is today? Or is there another purpose and another set of objectives that is more pressing and important today?
  • Is the plan working?
  • Is the plan accomplishing its purpose and objectives? How do you know?
  • What feedback have you received from managers and employees?
  • What is working well and what is not? According to whom?
  • Do managers and employees understand the plan’s purpose and how it is supposed to work?
  • Are the costs of the plan in appropriate balance with the benefits it delivers?

Without answers to questions like the ones posed above, you are in no position to ask or attempt to answer plan design questions.

Do your homework, people.

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems. Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University. Contact her at abares@alturaconsultinggroup.com.