The Incentive Plan Problem
A growing consulting firm with employees across the United States and internationally engaged with Helios HR to enhance their current incentive plan to align with the current and future business strategy. This business had previously designed and implemented a successful incentive program to drive the behaviors of their consultants; and as the business grew, they outgrew the incentive program. They applied the original plan goals and structure to new functional areas of the business and they just simply didn’t marry up anymore.
Helios HR was entrusted to develop three incentive compensation programs specific to separate business units within the organization to drive the desired behaviors, and that was much easier to administer as a now mid-sized company.
Current Vs. Future State Incentive Compensation Design Approach
At Helios, we believe strongly there is no one size fits all solution to the people challenges that organizations face; this is particularly the case when it comes to incentive compensation design. We also believe the people of an organization, the end users of an incentive program, can offer great insight into a few key components of a successful program:
- what isn’t working about the current incentive program;
- what is working for the current incentive program; and
- how they want to be incentivized to go above and beyond in their work moving forward.
Employee Participation
For this particular client, employee participation in the design of the incentive plan was critical to its success given both the importance of collaboration as an integral part of their culture and the complexity of the three different environments. We first met with the executive team members to understand the parameters of which we had to work to design the incentive program. Knowing which areas the executive team would allow some creativity, and which areas they had firm preferences for, helped us steer and develop the right program for both the end users and the executive team.
Helios then engaged three separate working groups, one for each business unit. In these working groups, we explored the ins and outs of the current program and began to brainstorm what the future state may look like for the incentive plan. At the beginning of the project, the executive team shared a desire to continue to link individual performance to the incentive plan through their performance management process.
Measuring Performance
In our working groups it became quickly evident that before we could design a successful incentive program, our client needed to revamp their performance measurement program as it was the biggest criticism amongst the employees in the “what’s not working” portion of each of our brainstorming sessions.
At this point in the project, Helios went back to the executive team to share the feedback we had received. They were investing a lot in a new incentive program, and it was as important to us that the new program is successful. It was critical our client understood while we could push forward and develop an incentive program, it would not be the successful program they were hoping to implement given this larger issue around performance measurement. The client appreciated our transparency and we agreed to adjust the scope of the project to first redesign the performance management program for each of the business units before moving forward with the incentive compensation design we had started.
The three working groups re-engaged to conceptualize the best way to measure performance within their respective business units. They were so engaged and dedicated to the success of this project they spent extra time outside of our meetings to brainstorm and discuss the components that may best make up the different programs. We used the team’s feedback to do brainstorming and ultimately design new performance feedback processes and incentive compensation plans that were unique, yet all aligned, for each business unit.
Project Outcomes
At the end of the engagement, our client walked away with three individual performance measurement systems that intentionally folded into an incentive program for each of the business units within the company. The new programs were built around their corporate values, which was very important to the executive team as the corporate culture already operated daily around these values. The programs were championed by leadership and had buy-in from employees company-wide before they were formally rolled out. This support was a result of the employee working groups who not only individually contributed to the design but, sought out feedback from peers who weren’t directly involved in the process.
After their mid-year review cycle, our client shared, “It is a success! Employees are very impressed by the streamlined approach. It’s thorough, given the feedback is timely and relevant, and the sessions are taking half the time as in previous years."
Employees now have clarity with:
- what the expectations of performance are for their respective roles,
- their opportunities and requirements to earn additional income through their new incentive compensation program, and
- the process for each program.
Performance measurement is now automated, saving time for both the employees and the managers while ensuring consistency in execution amongst different teams. Executive time spent on evaluating an individual’s eligibility and resulting payment under the new incentive compensation program has been reduced by 50% through the new program. When we followed up, we discovered the HR Director was preparing to present an overview of the programs to the company’s investors, as they were interested in implementing similar programs at other businesses in which they have invested.
It is stories like this that keep us passionate about what we do and ensuring successful results for our clients.
