Incentive compensation issues need to focus on fairness

There are some personnel who may expect to always receive incentive compensation at the end of each year, regardless of their personal performances. For some businesses, the promise of these annual bonuses is the best way to attract and retain top talent in critical levels of infrastructure. However, there need to be fair ways of assessing performance and rewarding employees for the quality of work they put out, even if these individuals are those at the top of the organization. If lower-ranking staff members feel the incentive system is unfair, they may feel less inclined to produce the kind of revenues that companies rely on for success.

Creating better compensation plans
Dealing with front-line workforce versus executive-level employees usually presents a situation where people are getting paid differently than one another. Sales incentive compensation strategies must be crafted to pay out each person in the organization according to their titles, efforts and expected pay grades, yet there are ways to ensure that individuals aren't being granted rewards in excess of what they should be gaining for output.

The Kansas City Business Journal reported that a recent publication from the Institute for Policy Studies showed that CEOs in many major corporations may be seeing the kinds of unbalanced awards that make other business personnel dissatisfied with their own positions. The source wrote that around 40 percent of executives at this level were involved in fraud, firing and failed firm issues.

Taking the blame
These elements make it difficult for entities to warrant the level of pay each of these people received between 1993 and 2012, as accountability problems and performance concerns were associated with many of these negative cases. Sales incentive compensation in these instances were quite high, yet these individuals were not giving the same amount of effort as other key players or acting in a responsible fashion.

There are legal guidelines for how businesses are supposed to reward some of their highest ranking employees for these reasons. The key issue for many companies though should be regarding how to make the pay plan for incentives match the output their staff members have to offer. Otherwise, businesses could be facing fallout not only from irresponsible leadership, but also among retention rates for dissatisfied lower-level workers.