The Intent to Incent is Our Sun

Compensation Cafe

Incentive plans are one of the most complex aspects of pay and rewards. All of these simply orbit around the most important element of any effective incentive plan. The purpose of an incentive plan can only be absolutely clear if we avoid assumptions.

Compensation Air Traffic Control

Compensation Cafe

The swirl of tasks and requests can make a compensation professional feel more like they work in air traffic control. There is no rule book. Compensation can often seem pedestrian, but in times like this, your job may be similar.

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Incentives and The Rule of Three

Compensation Cafe

Designing an effective incentive plan is always a challenge. Over many years I have come to rely on what I call the Incentive Plan Rule of Three. No more than three metrics (KPI), no more than three defined goal levels, no more than three incentive plans for any one individual.

6 Ways Incentive Plans are Like COVID-19 Planning

Compensation Cafe

Comparing incentive plans to a pandemic response seems like a stretch, but great incentive plans are all about stretching. Stretching your compensation budget. Every good incentive plan project starts with a simple question.

Woulda, Coulda, Shoulda: An Incentive Compensation Story

Compensation Cafe

Inside that company, worked a compensation professional (“Yolanda”) who juggled many projects. Not the least of them was the creation, design and management of the company’s long-term incentive program. This year the two main incentive plans did not perform as expected.

Planning for an Equity Compensation Pandemic

Compensation Cafe

Your employees may not have the luxury of cashing out their equity compensation. It’s time to prepare for the next equity Compensation Pandemic. Four years ago I wrote about my Equity Compensation Triage Assessment process.

Compensation Dentistry (part 1)

Compensation Cafe

Compensation programs can often be the same. Annual and long-term incentive plans are often not as well cared for. It is the rare compensation professional who gets excited about these impending issues. Yes, incentive plans can be harder than base pay.

The Time is Now. Compensation Pros Must Rise to the Challenge.

Compensation Cafe

For at least a few decades, this has been the way of things in the world of compensation. Now is just such a time for compensation professionals. The current crisis has exposed the dusty corners of compensation practices. Change is hard.

5 Lessons from Glittery Smelly Incentive Plan Mistakes

Compensation Cafe

It turns out that incentive compensation doesn’t just work, it can work too well at motivating the wrong behaviors. Make sure you design your incentive plan to reduce the possibility and rewards for cheating. Incentive plans are difficult to get perfect.

8 Ways the Minneapolis Skyway is Like Incentive Compensation

Compensation Cafe

After using the Skyway to get from my hotel to the conference site, I realized that the system was exactly like incentive compensation. Simply replace the word “Skyway” with “Incentive Plan” and you’ll easily see the lesson learned.

When Incentive Pay Goes Rogue!

Compensation Cafe

A friend of mine likes to say: “It’s not that incentive pay doesn’t work well, it’s that it works TOO well. When this happens, compensation professionals usually cry foul. It usually does exactly what it is designed to do, even if that wasn’t your intent.”.

The Real Cost of Mismanaged Incentives: Wells Fargo

Compensation Cafe

Today is a steaming jolt of quadruple espresso in response to the Wells Fargo incentive pay mess. If you have been under a log for a couple of weeks, please start by reading a couple of earlier Compensation Café Articles (my own When Incentive Pay Goes Rogue!

Incentive Plans Work Too Well (here’s the trick)

Compensation Cafe

It's not that incentive plans don't work well, it's that they can work too well in motivating unintended consequences. Are any incentive compensation experts shocked by this? The failed Wells Fargo incentive plan and Tax Reform are similar.

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. Dan is a leading expert on equity compensation issues.

Compensation Wormhole

Compensation Cafe

This amount will also impact your future bonuses and other pay. Many of us can do a better job communicating the benefits of culture and incentive pay programs. Showing the growing value of long-term incentives can put Velcro into the seat of your employees’ pants. Time Travel.

Equity Compensation is Like The Iditarod

Compensation Cafe

Speaking of frozen things, let’s talk about equity compensation and The Iditarod Trail Sled Dog Race. Like a well-designed equity compensation plan, The Iditarod is long and not for the faint of heart. All of these things can also be said of a successful equity compensation program.

Critical Incentive Pay Lesson from a Jeopardy Champion

Compensation Cafe

This is where we can leverage Jeopardy to improve incentive plans. Most incentive plans are very heavily weighted toward “winning.” When you have already earmarked your potential incentive compensation, this risk of losing some of it can stop you from earning all of it. Incentive plans can be designed to offer measurable value if a real effort is made even when results may not be achieved. This provides an incentive to try.

Incentive Pay is Like a Par 4 Golf Hole

Compensation Cafe

He is passionately committed to aligning pay with company strategy and culture and considered a leading expert on equity compensation issues. Dan has written several industry resources including a recent Performance-Based Equity Compensation issue brief.

Cafe Classic: The Best Laid Plans of Mice and Compensation Professionals

Compensation Cafe

As an HR or compensation professional, even the best plans require the agreement of others. If you can’t get that incentive plan budget for the entire staff at least make sure you get something for the group of people without whom you will suffer or fail.

Don't Do That! Bad Habits and Compensation

Compensation Cafe

Everything we do in compensation is communications. Change management should be the foundation of 90% of compensation communications. New incentive coming up next year? No wonder there can be so much frustration about the effectiveness of compensation communications.

Long-Term Incentives for a Short Term Generation

Compensation Cafe

Second, this means that the majority of these workers do not intend to benefit from the entirety of their Long-Term Incentives (LTI). Designing LTI to attract, motivate and retain the “next” generation: Opportunity 1: Consider “Mid-Term Incentives” that link to Long-Term Incentives.

5 Reasons to Design Your Incentives Like IKEA Furniture

Compensation Cafe

Use their methods for building your incentive plans. Your incentive plan should be designed to ensure even the unexpected isn’t a surprise. When you build an incentive plan, take the time to customize the tools for planning, modeling and tracking progress. Make sure your incentive plan delivers on its promise. Your incentive plans can benefit from being far more translatable.

Compensation Dentistry – The Orthodontist (part 3)

Compensation Cafe

They have a business plan that requires a ton of new hires and a compensation philosophy or structure designed for the company they were a year ago. The impact of poorly managed and planned compensation can include slow or difficult hiring processes and nonoptimal retention or motivation.

Compensation Dentistry – The Tooth Fairy Years (part 2)

Compensation Cafe

Learning how to create a basic compensation philosophy, applying a pay strategy and pricing approach consistently and thoughtfully considering the long-term ramifications of incentives given today are all pieces of building a good compensation habit. Baby Teeth, Why care?

Sales Compensation During Turbulent Times

SuccessFactors

Sales compensation may not be top of mind during these turbulent times, but it does affect a number of people in the front lines of business, including your sales organization. Sales compensation levers can enable established sales organizations to support and retain sales talent.

Sales Compensation During Turbulent Times

SuccessFactors

Sales compensation may not be top of mind during these turbulent times, but it does affect a number of people in the front lines of business, including your sales organization. Sales compensation levers can enable established sales organizations to support and retain sales talent.

Mark Zuckerberg is Wrong About Remote Pay

Compensation Cafe

For right now, let’s just talk about compensation. It isn’t often that compensation professionals get to truly change the way businesses do business. If we wait for some non-compensation person to “lead” and create the best practice for us, we will surely regret it in the future.

6 Things You Think Are True, But Aren’t (Compensation Edition)

Compensation Cafe

The video got me thinking about things compensation professionals believe that have little, or no, foundation in reality. Incentive pay motivates people to perform. It has been sold to businesses that a great incentive program can motivate a person.

Cafe Classic: Putting on Your Explorer Cap via Appreciative Inquiry for the Compensation Pro

Compensation Cafe

Editor's Note: More than a few of us number nerds populating the field of compensation have a Classic deficit in the soft skills required to constructively explore and understand the territory and circumstances surrounding employee and organizational performance. .

Cafe Classic: Can Your Compensation Plan Tell Time?

Compensation Cafe

Editor's Note: In this wonderful Classic, Dan Walter reveals how great compensation plans share characteristics with the analog clock, one of the oldest and most amazing of human inventions. How much are your compensation programs like an analog clock?

Cafe Classic: What Do CFOs Wish Compensation Professionals Knew?

Compensation Cafe

Editor's Note: We recently featured Dan Walter's Classic post on what CEOs want from compensation professionals. Recently I provided some insight into what your CEO is thinking when you talk to them about compensation. Heck, they even enjoy being compensated (like most of us!)

Cafe Classic: Are Your Compensation Plans on Autopilot?

Compensation Cafe

In our busy organizational lives, many of us allow our compensation plans to simply roll forward from year to year with only minimal adjustments. In their book Decisive: How to Make Better Choices in Life and Work , Chip and Dan Heath examine the double-edged sword of operating on autopilot.

Cafe Classic: Is Your Incentive Plan a Strategy Killer?

Compensation Cafe

Editor's Note: Do your incentive plans make the right decisions seem wrong and discourage the choices most critical to your organization's future? Are your incentive plans designed to support or defeat your organization's business strategy?

Be a Compensation Paleontologist

Compensation Cafe

Is your compensation structure a Payalotasaur? No matter your approach to pay, you are probably acting as a Compensation Paleontologist to get things done. The best compensation pros do much the same thing. Only compensation professionals can prevent this.

Cafe Classic: Driving Your Compensation Programs in Reverse

Compensation Cafe

Dan Walter, master of the compensation metaphor, shines a light on the Classic problem we all face at one time or another - particularly those of us who work in or serve smaller, entrepreneurial organizations. We think it’s OK and want to fix our bonus program by the end of this year.