Building Unified Financial Visions

One of the best things that should result from good compensation policy is clarity. “I get it! Now I know what results you expect from me.” This is one of the best possible reactions you can get from an incentive plan.  The problem with many incentive plans is that they lack one or more of the following:

• Clarity
• Believability
• Meaning

Clarity is achieved when I understand what has to happen for me to maximize the value under my incentive plan. I should understand what needs to happen at the company level, department level and personal level.

But clarity is not helpful unless the intended results are also achievable. If I believe the individual, department and company results can be achieved you’ve added believability to the mix. Being clear without believing is worthless. But if I can see what needs to happen and believe it can you’re two-thirds of the way towards locking me into your business plan.

The final essential element is meaning. This relates to the relative value of the potential award. If it’s meaningful to me I’m willing to pay a price to achieve it. But if the potential size of the ward is not significant to me you may not have captured my heart and mind, even if I understand it and believe it can be achieved.

Great incentive plans speak to a fundamental philosphy of respect for the partnership quality of great cultures. Help me see clearly where you’re trying to go and what has to happen to get there. Make sure I believe it can happen. And make the reward meaningful to me. If you do those three things you can be certain I’ll do all I can to help get you there.