This document discusses variable pay plans and how to design effective incentive programs. It outlines several key elements: defining measurable performance criteria and goals, determining appropriate incentive payout frequencies and amounts, and establishing thresholds and caps. It also identifies important issues to resolve such as setting clear objectives, selecting the right performance factors, ensuring goals are realistic, and providing resources and feedback to support participants. Well-designed variable pay plans can motivate employees by linking meaningful rewards to achieving business-critical results.

1. Variable Pay Plans Presented by Ted Turnasella Comp-unications

2. Variable Pay Plans THE MOTIVATIONAL MODEL Something to keep in mind... EMPLOYEE’S EFFORT EXPECTED RESULTS MEANINGFUL REWARD Skills, Tools, Information, Autonomy, Fairness of Goal Trust, Timing, Performance Review, Interpersonal Conflict

4. Variable Pay Plans Define Mission: What will be accomplished by the individual or unit? Define Role: What will the individual or team be required to do? Identify Areas of Discretion: Where does the individual affect the outcome? Line of sight. Select Performance Criteria : What outcomes or behaviors will determine success? Objective or Evaluative. Feasibility review. Look for the offset. Establish Goals : Is there an expectation of certain results? Define minimum acceptable and exceptional performance. Determine Frequency of Payout: How often will the incentive be paid? Implement: What will be the cost? How will we communicate? Process Steps Determine Targeted Earnings: How much incentive will the successful employee be paid?