In a BLR webinar entitled ‘Incentive Pay: Best Practices for Designing and Managing Pay-for-Performance Plans’, Dan Kleinman discusses the combination of base pay with incentives and suggests that organizations should:
- Keep an eye open for ‘incentive creep’, which is the danger that incentives tied into individual job performances (or even the organization’s overall achievements) will gradually come to be seen as part of the employees’ regular pay
- Be clear with workers that incentives are awarded above and beyond base pay, that they’re subject to change, and that one year’s goals and bonuses don’t reflect what might be offered in future years
- Also, think about the amounts of your incentive bonuses. They should be more than just a glancing pat on the back but they should not be so large that they will devastate your workforce if you reduce, restrict, or withdraw them
Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. For the past 18 years, he has served as an independent consultant for a broad spectrum of regional, national, and international companies, providing compensation, performance, organizational planning, and reward-system design services. He can be reached at firstname.lastname@example.org.