Incentive compensation should focus on long-term goals

Businesses offer incentive compensation management programs to ensure that personnel always feel driven to try harder, sell better and seek out opportunities to do better than before. However, offering a one-time payoff for a job well done may not encourage the kind of positive, ongoing motivation that organizations need in order to keep employees engaged. Creating a sense of ownership toward the business itself and value for the company as a whole is one of the best ways of increasing the amount of effort personnel put in every day at work, and producing this outcome could call for heightened reliance on long-term incentive compensation.

CFO Online reported that one of the greatest options that medium and large businesses have is in offering their employees a greater stake in their operations as a whole. Granting top-performing personnel shares in the company means that the value of these rewards is tied to how well the corporations continues to do. That means the more revenue a sales team representative brings in, the better the next quarter's report will be for the organization. Positive annual feedback amounts to ongoing increases in the value of incentive rewards for employees of all kinds.

Easy money options
Making employees vested after a certain number of years is therefore an increasingly popular option for many firms. Not only does this option create a sense of ownership and personal interest in the organization as a whole, it also doesn't really cost the business anything to grant. Rather than rewarding personnel with incentive compensation resources like money, trips or time off, businesses simply grant top-performing personnel shares in the organization with inherent value tied to how well the organization does as a whole. This creates a significant return on investment for employees and corporations alike, as staff members are granted a highly valuable incentive compensation resource that grows as they help further improve the company.

According to Modern Healthcare, as personnel even at the highest levels of the organization make more money, so too do businesses fare better. Though the associated growth is somewhat skewed in favor of individuals, companies saw an overall 2 percent increase in annual revenue and performance metrics, while executive-level personnel made around 20 percent more in incentives and salaries than they did in 2011. The source reported that as much as 60 percent of each employee's individual income was directly tied to performance metrics, meaning that staff members have been exerting themselves and taking more ownership of their work in response to enhanced incentive compensation offers.