Broad-based incentive plans (those that focus on and reward the performance of a broad group of employees) 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 for every $1.00 in payout), evidence abounds that our broad based plan efforts often misfire or fall short.
We often cite line of sight - the perceived ability of employees to impact broad measures of business performance - as one of the biggest obstacles to group incentive plans. I think we may be missing the point. One of the beautiful things about broad based plans is that they give us a great vehicle for communicating business strategy and objectives to employees, while also providing them a stake in making these things happen. Like any other "vehicle", however, incentive plans can't get you to that destination all alone. In the same way that the mere presence of an automobile in your driveway isn't sufficient to get you to that vacation destination without clear directions, a committed driver, fuel and regular maintenance -- your broad based incentive plan won't take you anywhere if you just plop it in and leave it unattended.
With the right communication and education efforts in place to support it, a group incentive plan can be a platform for leaders to help their employees "think big picture and act small picture." By talking regularly about an incentive plan that focuses on a few critical measures indicating profitable progress toward strategic goals, managers can help employees see where the organization is trying to go and what it must do to get there. By coupling that regular big picture reminder with ongoing conversations about the things the employees can do - every day, in their own roles - to help move the big needle on these critical performance measures, managers can support their staff in taking the right small picture steps.
And then, of course, there's a payout if their collective efforts drive the right results
Rather than dismissing group rewards because of line of sight concerns, we need to recognize the potential that these plans offer - with the right care and feeding - to connect big picture thinking with small picture acting for all employees.
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School, reads incessantly and is an aspiring cook in her spare time. Follow her on Twitter at @annbares.
Creative Commons Photo "The Bigger Picture" by krossbow
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