Incentive Design
Key characteristics for success of incentive programmes- Clarity
- Clear rules
- Organisational motives should be clear
- Easy to understand
- Easy to monitor
- Unambiguous measurement mechanism
- Communicated properly and timely
- Synthesis with business strategy
- All organisational factors must pull together
- Reinforce longer term strategy – not short term objectives
- Design incentive schemes based on crucial measures
- Mutuality with shareholders
- Ensure high total remuneration for high performance
- Motivational
- Communicate pre-arranged sum of money linked to achievement of targets
- Meaningful payments – perceived value (Weber’s Law)
- Targets : stretching but achievable
- Fair and equitable
- Reward improvements – progressive change
- Ownership : mutually agreed targets – performance contracting
- Monitor results and report on progress
- Provide management development, coaching and counselling
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