Whether the economy is on an upswing or in decline has a major impact on the kind of incentive compensation that firms want to offer. Even personnel at the highest levels of an organization can see significant shifts in the ways they're paid and rewarded for stellar performances. What matters is that companies continue to find ways of recognizing achievement and making employees feel like their efforts are appreciated. Rather than offering them larger bonuses at the end of the month, savvy establishments are finding alternative methods of providing incentives as compensation for a job well done.

According to a study by Equilar, pay for top earners is down nearly six percent, while reward payments had fallen more than 13 percent in the last year. Among the highest-paid individuals at leading organizations, the average stock option offering was down almost 55 percent. At the same time, however, the same study showed that stock awards and deferred incentives were up more than 75 percent.

A significant reason for this change in reward options is linked to greater input from shareholders at large, The Washington Post reported. Switching from stock options to awards ensures that personnel with these bonuses are more likely to be invested in the ongoing success of an organization, rather than offering a more flexible incentive program that would ally employees to invest their options wherever they deem fit. This kind of compensation enhances staff loyalty and creates a system that feeds back into the organization, helping to save money and boost retention at the same time.

Improving working options
These kinds of programs ensure that sales professionals are always doing what's best for themselves and for their employers. In some cases where incentive compensation offers extreme bonuses for radical success, these programs can encourage behavior that's harmful to staff members or the company itself. By creating rewards that improve relationships and enhance employee investment, organizations can expect positive outcomes and higher job satisfaction.

The American Banking Association's Banking Journal wrote that these policies are reflective of new actions imposed by the Federal Reserve. The board recently released new guidelines regarding the ways in which employees can be compensated for their efforts, resulting in more healthy relationships and potentially improving overall retention. The proposal limits risk and enhances auditing and compliance within an organization, ensuring that financial institutions are acting in the best interests of their customers and professional salespeople.