Smart executives know the value of incentive compensation plans. These plans motivate workers, increase sales and can change company behavior for the better. Developing an effective program, however, requires thoughtful planning and development. So where should an executive begin when drafting a plan for an incentive compensation management plan? Keep reading to find three questions an executive should ask themselves when developing an ICM program: 1. Does the plan align behavior with company objectives? A strong ICM plan does more than just motivate salespeople to bring in more revenue – a good program will also help guide a company toward achieving objectives and staying in line with its mission statement. For example, if a company has an objective to expand sales into a new region, an executive can use an ICM plan to steer focus and sales toward expansion in a new area. 2. Do employees understand the plan? When initiating a new incentive compensation plan, it’s vitally important that employees understand the changes that will be made to the company. A VP of sales or other supervisor should hold a company-wide meeting to explain the changes, take questions and welcome comments from their workforce. Employees need to fully comprehend the plan in order to live up to the goals a company sets forth, so one meeting may not be enough. Before launching into a new plan, executives should draft a guide so workers can reference the document at any time if they have questions. 3. How will a company track progress? Once an ICM plan is put in place, VPs of sales should be able to track its success as well as the progress employees make under the new program. Compensation planning software can help companies successfully track employee performance, product sales and more. Each day, an executive will be able to see how well the plan is working and can tweak it to bring out the best performance from every worker.
