Questions About Your Employee Incentive Plan

by on June 15, 2009 · 0 Comment POSTED IN: HR Info Center

How to Defend Your Employee Incentive Plan

  1. The employee incentive plan is unfair. I did great, but all of the others slackers on my team cost me to lose out.

    If the company didn’t achieve their goals overall, they won’t have extra money to pass around for bonuses. Everyone is tied at the hip, and everyone needs to improve the performance of the entire team and this is the way it was when the company designed the employee incentive plan and the design probably makes sense.

  2. I didn’t get my bonus because there was no way I could influence results. Why did you set it up that way?

    Sometimes you don’t get your bonus because the company overall didn’t perform that well and you didn’t have the money to fund the bonus. Most bonuses start with determining if the company has excess profits or did they have enough profits to fund the bonus or many of the components of a bonus. If you designed it well, you’re tied together.

    Most bonuses are not handed out to people lower in the organization. They’re handed out to people in the middle or higher and people in the middle or higher tend to be tied even more at the hip. These groups are interdependent and a lot of the things you get rewarded for even at those levels are things that you don’t have total control over and that’s not necessarily a bad thing. So again it depends on specifics here but it’s not necessarily a bad thing to have a bonus based partially on things you can’t control.

  3. Why did I only get 80% of my bonus instead of the whole thing?

    Bonuses are normally formula driven, so normally this answer is pretty direct and easy. You look at the math on it, there’s probably at least one goal where you didn’t achieve the 100%.

    And again, some of these things are subjective, others are quite objective. This answer should come as a function of the formula used to compute the employee incentive plan.

Edited Remarks from “Salary Talk: How To Discuss Pay So Employees Feel They’re Treated Fairly” by Gary Markle

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