I spent a lot of time today with a client that just completed its first year of a new employee incentive plan (for all non-union employees), and they reminded me of one particular piece of advice that I apparently repeated frequently during the plan design and roll-out process a little over a year ago.
The advice goes something like this: For organizations that are implementing a broad-based incentive plan for the first time (as this company was), the first year will be a learning year. While we certainly do our very best to design an effective plan, and we work hard to communicate with participants at roll-out and throughout the plan year, the first year will bring many lessons our way about how best to incent employees in this particular organization. The key is to leave an opening for -- and make a commitment to -- putting those lessons to work. The end of the first plan year is a golden opportunity for the "design team", whoever they may be, to regroup and revisit how things went. To recognize the successes and figure out how to address the stumbling blocks. To discuss what -- if any -- changes in the organization's strategy and objectives should be reflected in an updated plan design. To use any lessons learned to make the plan even better for the following year.
I tell all my clients to clearly communicate upfront their intent and right to review (and potentially modify or even, as required, scrap) the plan at the end of every year. Employees must understand that this is part of the deal.
The world is a dynamic place. Incentive plans must be dynamically managed if they are to keep pace and continue to deliver value.
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