Compensation Cafe: The Contradiction of Annual Incentives

RecognizeThis!

Incentives are only effective when they match the timeframes of employees’ motivation to perform. In light of a recent Willis Towers Watson report on the ineffectiveness of annual incentives, I wanted to take a closer look at how and why they motivate employee behavior.

Cafe Classic: Don't Blame Incentives

Compensation Cafe

Editor's Note: Incentives are a tool. Incentives are not the cause of bad reinforcement programs, any more than forests should be blamed for the existence of warfare. The instrument is not at fault if the application is misused. Incentives/Bonuses Pay for Performance

Using Multiple Incentives: 1+1=3?

Compensation Cafe

Before you read any further, take a moment and think about the pay incentives you offer to your workforce. Try to group them not in terms of short-term and long-term incentives, but whether they are based on individual performance, group performance, or organizational performance.

Do Your Incentive Plans Motivate Choking?

Compensation Cafe

Could it be that we are designing and communicating incentives for our highest performance all wrong? This study specifically looked at the impact of incentives on motor and neurological performance in high-pressure situations. Or, follow him on Twitter at @ DanFutureSense.

Everyone Gets a $100,000 bonus!

Compensation Cafe

When 1,380 employees got a $100,000 bonus each, the story should have made headlines everywhere. The brilliant bonus decision was a wonderful example of a corporation that cares deeply about its employees. Image courtesy of Feelart at FreeDigitalPhotos.net.

Incentive Pay is Like a Par 4 Golf Hole

Compensation Cafe

The foursome walked up to the tee box at the short but challenging par 4 hole. She didn't often play (anymore) but had grown up near the course. Joe has been at the company for decades. She was impressed that it went forward at all and smiled as she left the tee.

Cafe Classic: Does Your Incentive Plan Work?

Compensation Cafe

Editor's Note: Are your incentive plans rolling along on autopilot? When is the last time that you reviewed the effectiveness of your management incentive plan? For example, is one of the goals of your incentive program to change behavior? That's why it's called incentive.

How Do Team Bonuses Impact the Bottom Line in a Retail Setting?

Compensation Cafe

Some things are easy to measure: revenue per quarter, profit margin, average incentive pay received by employees per month, and so forth. Other things, like measuring the increase in revenue or the change in profit per dollar spent on incentive pay, are a bit more difficult.

An Unpopular Sales Incentive Plan Design Fiasco

Compensation Cafe

The new sales incentive plan was not well received. All the worldwide regional managers in the audience spoke up in loud protest when it was announced at the global sales conference. The vehement rejection of the new sales incentive program stunned all the officers on the dais.

Cafe Classic: The Key to the Successful Annual Bonus is Truth, Clarity & Alignment

Compensation Cafe

Editor's Note: With today's Classic, a call to walk the talk - or at least honestly talk the walk - when it comes to annual bonus awards. This gets them out of the admittedly difficult (particularly these days) task of pre-defining goals and bonus parameters.

Incentives Without Teeth

Compensation Cafe

The title of this post probably had you thinking about incentive plans that required real goals to be met before payment was earned. But what if there are no teeth at all? I am assuming that most of the people at the airline in question were competent.

‘I have some annoyance around the NO Christmas bonus.’

HR Digest

Dear Jane, I work in an industry where bonuses are common. My prior law firm handed two bonuses a year; one in June and the other in December. Last week, my boss took us to lunch at a bar and spent the entire time jabbing the “we can’t afford it” line with his fork. No Christmas bonus. I’ve killed it this past year and feel like I deserve a Christmas bonus. What should be the proposed course of action? Bonus plans are governed by a contractual framework.

Cafe Classic: Can Incentives Rise Above the Bad Rap?

Compensation Cafe

Editor's Note: I notice that people tend to gather at the two extremes of thought regarding financial incentives. Group 1 regards incentive compensation as the antidote to all ills, the solution to every problem that exists in human motivation and performance.

Incentive Plan Success? Think Big Picture, Act Small Picture!

Compensation Force

Incentives remain one of the most powerful, and yet also one of the most misapplied, management tools out there. While research has shown that group incentives can deliver significant return on investment ( CARS research showed a median plan ROI of 134% - or $2.34

Incentive Plan Success? Think Big Picture, Act Small Picture!

Compensation Force

Incentives remain one of the most powerful, and yet also one of the most misapplied, management tools out there. While research has shown that group incentives can deliver significant return on investment ( CARS research showed a median plan ROI of 134% - or $2.34

Excessively Successful Incentives

Compensation Cafe

The only thing worse than an incentive that doesn’t work is one that works all too well. Wells Fargo is just the latest company to be ethically embarrassed and financially distressed by a fiasco involving excessively motivational incentives.

Should You Scrap Your Long-Term Incentive Plans?

Compensation Cafe

If you're like most companies, you provide stock options, restricted stock grants, and other long-term-incentives to your senior executives. But do you know why you provide those incentive packages? But are those incentive packages working ?

Employee bonus programs: What’s right for your company?

Insperity

If you think your business is too small for an employee bonus program, consider these two questions: Have you noticed less productivity or a decline in employee morale? A meaty bonus program could do the trick. But, before you hit the ground running, take a moment to dive into what kinds of bonuses are out there, as well as what goes into creating a bonus program. Employee bonus program basics. First things first: How are employee bonuses defined?

Beware of Bonus Pitfalls: Overtime and Nonexempt Employees

HR Daily Advisor

I received a call recently from an employer that wanted to know if it could exclude a newly created job category from an annual bonus program. The employer told me it hadn’t thought about doing so because this bonus was paid only once, on an annual basis.

Is “Annual Incentive” a Contradiction in Terms?

Compensation Cafe

In the best cases, these schemes are designed to differentiate among performance levels, rewarding effort and results with annual merit pay increases and other annual incentives. There is a design element to explaining the ineffectiveness of annual incentives.

The Tricky Business of Incentive Compensation

Compensation Cafe

One solution has been to implement incentive compensation or “pay for performance” plans. For adherents, incentives can motivate managers to engage in behaviors that are slightly outside the scope of their everyday role and tackle risks that are more directly aimed at improving performance.

The Elements of a Strong Incentive Plan

HRsoft

Designing, managing, and communicating incentive plans are some of the most challenging hurdles HR and compensation teams face today. At the same time, effective programs must also deliver pay that is in line with both effort and achievement.

17 Words About Incentive Pay

Compensation Cafe

The 17 words listed align incredibly well with common incentive plan designs. A quick review of incentive pay basics. This is another situation where many people would be very disappointed if they didn’t “get their bonus.” Or, follow him on Twitter at @Performensation.

Ensuring The Success Of Your Channel Incentive Program

Workstride

Organizations that go to market via indirect channels tend to understand the value in having a channel incentive program to motivate sales representatives, partners, or dealers. The objectives you set for your incentive program should focus on both quantitative and qualitative measures. Many companies rush to develop an incentive program because their competitors have one in place. Have you ever stood in line at Starbucks and watched everyone order the same coffee?

Promotions, Bonuses, Raises, Recognition - When They Work (and When They Don't)

Compensation Cafe

You can’t give all employees promotions, bonuses, or raises. In perhaps a worst-case scenario, promotions are little more than title changes in which the employee’s job duties change little if at all with no pay increase. Bonuses. Follow Derek on Twitter at @DerekIrvine.

Best of the Force: In a True Talent Partnership, Value Creation Should Drive Incentive Design

Compensation Force

I'm convinced that the only way to create smart, sustainable incentive compensation plans is to tie them directly to value creation. That doesn't mean, however, that incentive plans should necessarily be built entirely on financial performance metrics.

Best of the Force: In a True Talent Partnership, Value Creation Should Drive Incentive Design

Compensation Force

I'm convinced that the only way to create smart, sustainable incentive compensation plans is to tie them directly to value creation. That doesn't mean, however, that incentive plans should necessarily be built entirely on financial performance metrics.

Cafe Classic: Is it Safe to Incent Safety?

Compensation Cafe

Editor's Note: Continuing our end-of-summer Classic week here at the Café with the question "are incentives equally applicable to -- and appropriate for -- all areas of human endeavor?" . I recently came across an interesting article in Incentive Magazine about safety incentives.

Best of the Force: The Perils of Stretch Goals and High Incentive Hurdles

Compensation Force

Dan Markovitz's HBR blog post, The Folly of Stretch Goals , brings to mind a development in my own management incentive plan design work over recent years, as my clients and I address heightened concerns about risk and unintended consequences. What does this mean for incentive design?

Best of the Force: The Perils of Stretch Goals and High Incentive Hurdles

Compensation Force

Dan Markovitz's HBR blog post, The Folly of Stretch Goals , brings to mind a development in my own management incentive plan design work over recent years, as my clients and I address heightened concerns about risk and unintended consequences. What does this mean for incentive design?

Is Your Safety Incentive Program Illegal Under OSHA?

Workstride

What went wrong with the traditional safety incentive program? Many non-compliant safety incentive programs are based on lagging indicators; that is, success is built upon past activities and events that dictate that a company is headed in the right direction where safety is concerned.

Why signing bonuses won’t save transportation’s talent shortage

PI Worldwide

The current school of thought is to offer signing bonuses. With several of the biggest names in the game offering sign-on bonuses—and money being a strong motivator to start driving—this seems like a good solution. Signing bonuses aren’t a sustainable solution to the transportation talent shortage. Increasing bonuses for drivers will eventually cause freight prices to rise, which will cost these businesses their customers.

Go Team – And Me Too! Incentives for All

Symbolist

Over the past few years, there has been a lot of negative press about incentives. Specifically that incentives don’t work, they are a hangover from “motivation 1.0” Incentives do a great job of focusing attention, focusing behavior and signaling what we think is valuable.

Singing, Dancing and Posing: Aligning Incentives, Performance Metrics and Strategic Objectives

Compensation Cafe

Managers will receive bonuses tied directly to their survey scores. However, a substantial amount of research suggests that incentive pay has attention-directing effects that influence an employee's experience with performance measures. Graduate students at highly ranked U.S.

Cafe Classic: Re-Thinking Compensation At Professional Services Firms

Compensation Cafe

I started thinking about this question after reading an article by Mark Herrmann about compensation of partners at professional services firms. . However, there is a lack of incentives. This system also suffers from a lack of incentives, and can create resentment amongst partners.

59 Awesome Employee Engagement Ideas & Activities for 2018 (Plus 10 New Bonus Ideas)

SnackNation

59 Awesome Employee Engagement Ideas & Activities for 2018 (Plus 10 New Bonus Ideas). Have more fun at work. HR managers can agree that employee engagement and retention are at the top of their priority list. Free bonus: Download this entire list as a PDF.

Do you use the FLSA’s fluctuating workweek method? Do you pay bonuses too? You’ll want to read this.

The Employer Handbook

Plus, the employer can pay that employee for all overtime hours at half-time. If during the course of 4 weeks Eddie works 40, 37.5, For the first week ABC Company pays Eddie $600; for the second week $600.00; for the third week $660 ($600 plus 10 hours at $6.00 By U.S.