Compensation Information for Mid Markets

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Purpose
Short-term incentive plans are designed to motivate and reward participants for the improvement of company and individual employee performance.  These plans are short-term in nature - usually with an annual or quarterly measurement period and cash awards.  Plans are designed to directly support the longer-term financial and non-financial imperatives of the strategic plan, and communicate to participants how they can impact these initiatives in the current period.

Design
Considerable flexibility exists for the company to design the incentive plan(s) to fit their strategy, culture, and short-term goals.  A well-designed plan will include the following fundamental design principles:

• Plans should directly support and reinforce the company strategy and objectives.
• Plans should include employees who have a substantial impact on the plan goals and performance measures.  Employees should have a direct "line of sight" between their actions and the performance metrics.
• Plans should provide for the payment of truly meaningful awards based on superior performance.
• Plans should recognize the performance contributions of individual employees as well as company or group performance.
• Plans should be reviewed periodically and revised to maintain vitality and motivational impact in an ever-changing business environment.

 
Summary
Short-term incentive plans can be highly effective tool to motivate and reward individuals, small work teams, and/or classes of employees to increase current performance.  The plans help the company effectively define, communicate, and reinforce the company and individual priorities that lead to overall company success.