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Ten Reasons Incentive Plans Fail

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    Competitive Advantage More i!e T"i#

    $% Rea#on# In&entive Compen#ation '(an#)ai(B* Tom Kort + ,a#on Ba-mgarten '-.(i#"ed On/ Monda*0 ,-ne 10 2%$1 $$/%% AM

     

    3inS"are 

    %Comment#

    Get Risk Management In Your Inbox

    T"e t"eor* .e"ind in&entive &ompen#ation i# mone* motivate# emp(o*ee# to per4orm 5e((6Un4ort-nate(*0 man* &ontra&tor# #pend a (ot o4 mone* on emp(o*ee in&entive# and re&eive(itt(e va(-e in ret-rn6

    Emp(o*ee# ma* .e&ome angr* 5it" t"e &ompan* .e&a-#e t"eir o5n e7pe&tation# 4or.on-#e# are not met6 Mora(e i# "-rt 5"en emp(o*ee# 5or! "ard a(( *ear0 *et t"e pro4it# o4t"e &ompan* #ti(( (ag .e&a-#e emp(o*ee# are 5or!ing ine44i&ient(*6 Contra&tor# t"atgen-ine(* tr* to re5ard "ard85or!ing emp(o*ee# are 4r-#trated 5"en t"e* rea(i9e t"e*-nintentiona((* &reated a negative &ompan* atmo#p"ere6 Un4ort-nate(*0 t"i# i# 5"at man*&ompanie# 4a&e 5"en t"e* in&orre&t(* de#ign and imp(ement in&entive &ompen#ation p(an#6

     Getting Employees to Do the Right Things Consistently

     A #-&&e##4-( in&entive p(an m-#t 4o&-# on a&"ieving &ompan* goa(# .* driving t"e rig"t.e"avior# in emp(o*ee#6 )or in#tan&e0 i4 t"e .-#ine## aim# to #e&-re repeat .-#ine## and5or! #a4e(*0 t"e .on-# #*#tem #"o-(d &ompen#ate emp(o*ee# 4or good &-#tomer #ervi&e0#a4e 5or! pra&ti&e# and pro4ita.i(it*6 Bon-#e# .a#ed #o(e(* on pro:e&t and;or &ompan*pro4ita.i(it* do not drive important .e"avior# "i(e it ma* #eem &o-nterprod-&tive to 4o&-# on item# .e#ide# pro4it#0 4o&-#ing #o(e(* onpro4it# &an .e dangero-# to a &ompan*?# via.i(it*6

    The Top 10 Reasons Incentive Plans Fail

    S-.#&ri.e

    http://enewsletters.constructionexec.com/riskmanagement/categories/competitive-advantage/http://enewsletters.constructionexec.com/riskmanagement/categories/competitive-advantage/http://enewsletters.constructionexec.com/riskmanagement/categories/competitive-advantage/http://enewsletters.constructionexec.com/riskmanagement/author/tom-kort/http://enewsletters.constructionexec.com/riskmanagement/author/jason-baumgarten/http://enewsletters.constructionexec.com/riskmanagement/categories/competitive-advantage/http://enewsletters.constructionexec.com/riskmanagement/categories/competitive-advantage/http://enewsletters.constructionexec.com/riskmanagement/author/tom-kort/http://enewsletters.constructionexec.com/riskmanagement/author/jason-baumgarten/

  • 8/19/2019 Ten Reasons Incentive Plans Fail

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    T"e rea#on# in&entive# p(an#

  • 8/19/2019 Ten Reasons Incentive Plans Fail

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    • a 9ero8in:-r* 5or!p(a&e

    • pre8:o. p(anning

    #"ort8interva( p(anning

    • dai(* &re5 p(anning

    • a .id8#e(e&tion pro&e##

    • an e#timate8revie5 pro&e##

    • a &"ange8order pro&e##

    • po#t8:o. revie5#

    • peop(e deve(opment and

    • negotiated 5or!6

    '. The Plan is Ine!!ective at Driving the Right %ehaviors

    I4 .e#t pra&ti&e# are 5e(( de4ined .-t emp(o*ee# do not 4o((o5 t"em &on#i#tent(*0 it i# t"e#ame a# "aving no pro&e##e# at a((6 T"e -(timate goa( i# pro4ita.i(it* and providing an

    ade-ate ret-rn on inve#tment to #"are"o(der#6 Un(e## t"e &ompan* "a# a mar!et ni&"e orper4orm# negotiated 5or! t"at provide# e7traordinar* pro4ita.i(it*0 t"e &ompan*?# .e#t&"an&e o4 #-&&e## &ome# 5"en it# peop(e/

    • 5or! #a4e(*

    • 5or! e44i&ient(* .* -#ing .e#t pra&ti&e#

    • prod-&e -a(it* 5or!

    #ati#4* &-#tomer#

    • motivate #-.ordinate# and

    • &omm-ni&ate 5e(( 5it" ot"er#6

    (. The Company )as a Poor Employee Per!ormance*Evaluation Process

  • 8/19/2019 Ten Reasons Incentive Plans Fail

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    T"e emp(o*ee eva(-ation pro&e## i# a pain4-( e7er&i#e in man* &ompanie#6 )ir#t0#-pervi#or# m-#t 5rite a #"ort #-mmar* o4 a #-.ordinate?# per4orman&e on #-.:e&tivei##-e# t"at o4ten in&(-de/

    •  :o. !no5(edge

    • pro.(em #o(ving

    • pro4e##iona(i#m

    • motivation and

    • intera&tion 5it" ot"er#6

    T"e#e &riteria are #-.:e&tive and rat"er meaning(e## in driving t"e rig"t .e"avior# in

    emp(o*ee#6 T"e per4orman&e metri 4or a &ontro((er ma* in&(-de t"e 4o((o5ing o.:e&tive

  • 8/19/2019 Ten Reasons Incentive Plans Fail

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    T"e eva(-ation pro&e## #"o-(d tie in 5it" t"e in&entive &ompen#ation p(an6 T"e metriidenti4ied 4or ea&" po#ition #"o-(d .e meaning4-(6 Eva(-ation# are o4 (itt(e va(-e -n(e## t"e*are #imp(e to &reate and provide periodi& 4eed.a&!

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    10. The Incentive Plan Itsel! Causes Division

    T"ere i# a(5a*# #ome ten#ion .et5een e#timating and operation#6 Ho5ever0 5it" #omein&entive &ompen#ation program#0 5"en an e#timator (eave# #omet"ing o-t o4 t"e e#timate0it a44e&t# t"e pro:e&t team?# &ompen#ation0 adding to t"e ten#ion6 Additiona((*0 i4 4ie(dmanager# are moved on and o44 :o.#0 i##-e# a.o-t "o5 to #p(it .on-#e# ari#e .e&a-#eever*one 5i(( not agree on 5"o rea((* &ontri.-ted to t"e pro:e&t?# #-&&e##6

    RELATED

    CREATE AN E))ECTIVE INCENTIVE COM'ENSATION 'AN

    THE E))ECTIVENESS O) INCENTIVE COM'ENSATION

    GEOGRA'HIC E'ANSION AS A MARKET STRATEGY

    http://enewsletters.constructionexec.com/riskmanagement/2013/06/create-an-effective-incentive-compensation-plan/http://enewsletters.constructionexec.com/riskmanagement/2013/06/effectiveness-of-incentive-compensation/http://enewsletters.constructionexec.com/riskmanagement/2015/01/geographic-expansion-as-a-market-strategy/http://enewsletters.constructionexec.com/riskmanagement/2013/06/create-an-effective-incentive-compensation-plan/http://enewsletters.constructionexec.com/riskmanagement/2013/06/effectiveness-of-incentive-compensation/http://enewsletters.constructionexec.com/riskmanagement/2015/01/geographic-expansion-as-a-market-strategy/

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    Tom Kort

    Tom Kort0 a(-mni o4 t"e )MI &on#-(tant team0 a##i#ted 5it" &ontent deve(opment6Conta&t/,a#on Ba-mgarten

    ,a#on Ba-mgarten0 i# a prin&ipa( 5it" )MI0 management &on#-(tant# to t"e engineering and&on#tr-&tion ind-#tr*0 and t"e 5e#tern &on#-(ting gro-p manager6 He #pe&ia(i9e# in #trategi&p(anning0 organi9ationa( deve(opment0 &"ange management and prod-&tivit* improvement&on#-(ting6 He ma* .e rea&"ed at $161262%$$ or .* e8mai( at :.a-mgarten4minet6&om6Conta&t/

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