Benefits and Compensation

Incentive Schemes May Mean Transparency of Data

An incentive program can be a great way to motivate employees and help the organization achieve their goals. But it doesn’t come without potential pitfalls. For example, tying an incentive to reaching specific sales or profit goals means that the company will have to be candid with employees about those figures—which may be uncomfortable if it’s not something that has been done in the past.

“In order for it to have great incentive value (or to enhance its motivational value), it’s important to share information with employees.” Terry Pasteris advised during a recent BLR webinar. “Sharing information may or may not be something that your organization is used to doing.”

Incentive Schemes and Data Transparency

In thinking about setting your goals and sharing information, it’s important to consider what information is okay to disclose. Many times, financial information in private organizations tends to be closely held and not shared with employees.

When considering implementing an incentive program, be sure to know what you’ll need to disclose for the incentive program to work. Employees need performance feedback. The employees will need to understand how they’re doing compared to the goals and will need information along the way.

“If you’re not willing to disclose something, you probably can’t measure performance against it.” Pasteris warned. In those cases, you may not want to have an incentive program with specific financial goals and targets, because this will necessitate sharing information the company may not be comfortable disclosing to everyone.

In these cases, organizations often go for bonus programs that are more generic. For example, they may pay a discretionary bonus given out after a “good year” instead of after specific revenue or profit goals are met.

On the other hand, the desire to have an incentive program that motivates specific behaviors can be the catalyst that prompts greater data transparency. It may not be the first step, but it can get the company moving in that direction.

“I do not think that you want to lead the way, in terms of disclosure, with an incentive program.” Pasteris noted. “However, if you do want to become a more transparent organization – and indeed, employees often do expect this – then by all means, start doing it. Consider the company history of transparency and review how situations have been handled in the past before proceeding. “.

For more information on incentive schemes and data transparency, order the webinar recording of “Incentive Pay for Non-Exempts: How to Make Sure Bonuses for Non-Exempt Employees Doesn’t Hurt Your Bottom Line.” To register for a future webinar, visit http://store.blr.com/events/webinars.

Terry Pasteris is president of TLMP Consulting Group. She is both a Global Remuneration Professional (GRP) and a Certified Compensation Professional (CCP). Ms. Pasteris’ compensation work includes developing cash, benefit and equity programs and she has also developed performance management, staffing and communication so

2 thoughts on “Incentive Schemes May Mean Transparency of Data”

  1. It’s usually a bad sign if an employer is so concerned with disclosure that it opts out of an otherwise advisable incentive program. And it sends a horrible message to employees.

    1. Big corporations have ties in with the gorvmneent to keep stuff like this from hitting mass amounts of people. the US gov is full of greed, power so until that changes we wont see improvements on anything like this, or health care, or the truth. They trying to fix their economic. They don’t care

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