Research tells us consistently that top performers outperform average team members by a ratio of at least 3 or 4 to one. If you take a moment to do the math, the implications are simply staggering. How could a prudent leader allow his or her super stars to languish among the troops at a time when we all need to elicit the very best performance ever to stimulate a turn-around? Clearly, it is important to make a strong connection between performance and rewards, now more than ever.
In the last few posts, we have been discussing the importance of keepingtop performers motivated, engaged, and excited about helping you to achieve your business goals. So far, we have talked about focusing on total rewards, not just cash compensation, and customizing the rewards to the employee’s personal needs and circumstances. We have also started to focus on how you can begin allocating a larger percentage of the merit pool to your top performers. Here’s another thought on managing incentive compensation:
- As your business allows you to pay short-term incentives, provide those making the most significant contributions with the most attractive incentive pay. In other words, review your plan, and make sure that you are paying for performance.
The point here is that we often forget about incentive plan design, and simply “let the old plan ride”, rather than taking the time and effort to review and update the program. All too often, we see organizations that are rewarding employees for efforts that are actually contrary to the current needs and goals of the organization. There’s no better time than now to revise your incentive compensation plan to ensure you are getting a solid return on investment. In other words, make sure that you are driving the right efforts and activities, and giving the lion’s share of the incentive compensation to the team members who are delivering the most significant results. It may sound like a no-brainer, but when times are tough, it’s sometimes hard to prioritize reviewing plan docs and revising incentive structures. Even so, it is well worth the effort.
What do you think? Do you need to brush the cobwebs off of your incentive plan and offer up more cash for the top tier?
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