Cafe Classic: Don't Know Where You're Going? Then Any Plan Design Will Get You There!

Editor's Note: There are some (Classic?!) mistakes that seem destined to remain with us for the long haul. Call in the Cat!

I feel like the Cheshire Cat many days.  Not because I skulk around with an insidious grin (at least, not so far as I am aware), but because I find myself repeating the reward plan version of his famous quote so often.

Especially with respect to incentive plan design.

It is enormously tempting - for executives, managers and HR pros alike - to simply convene a meeting of the right people and jump straight to the business of incentive plan design.  Why not?  Everyone's got their pet idea as well as the latest scoop on what the cool employer in town is doing.  Hitting the brakes in order to devote time to discussing reward strategy or defining specific plan objectives - well, that's just an academic exercise, right?  Not the sort of thing that busy people in the real world spend their time on.

And then they hit the wall.  How do I know?  I know because this is when they call the consultant or send long emails to the compensation blogger.

Why?  Because, to paraphrase the Cheshire Cat, if you don't know where you're going, any plan design will get you there.  Incentive plan design, in particular, flows directly from your identified plan objectives (which, incidentally, should tie to your overall reward strategy).  If you aren't clear about exactly what you want to achieve with the incentive dollars spent, it's very difficult to choose from among competing design choices.  You have no real basis for knowing whether the EBITDA-based model that the CFO is pushing is better than the balanced scorecard approach favored by the head of HR.

Without clear plan objectives, any plan design is as good as any other.  Then it just comes down to who has the political clout or persuasive skills to ram their preference through.

No easy way around this, I'm afraid.  Not if it matters that your money is well spent.

And if it doesn't... then the Cat and I wish you best of luck.  You're going to need it.

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Partner at Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys hiking, reading and hanging out with family in any spare time. 

Image courtesy of jrscm.com