Key takeaways

• Strategically-designed incentive compensation plans will help your business stay competitive by helping to recruit and retain the right talent to support your business success
• Plans that specifically spell out employee expectations and rewards will help nurture a more motivated and effective workforce
• Incentive compensation plans should also promote the company’s larger strategic objectives such as workforce planning, D&I, getting work, meeting schedules and rewarding safety

Why you need to modernize your incentive compensation plan

COVID-19’s impact on the built environment industry means many construction firms saw their plans for 2020 (and beyond) wither in the face of canceled or delayed projects. Many of the goals set for employees pre-COVID are now out of reach in the current environment.  

Employees struggling to receive bonuses or other financial incentives under a set of outdated metrics will likely feel unmotivated at work, which is obviously bad for your company’s overall effectiveness. Rehauling your incentive compensation plan will take a great deal of time, thought and effort, but it comes with an enormous benefit: the opportunity to create a program better reflecting the current economic reality and your employee’s current needs and capabilities.

How an incentive compensation plan motivates your people

An effective incentive compensation plan boils down to one word: accountability. Not only do your employees need clear goals and metrics to strive toward, but you also need to make sure your plan holds the company accountable to specific incentive promises.

That alone represents a major shift in thinking for companies still dangling the old discretionary bonus model in front of their employees and wondering why they aren’t volunteering to work weekends. Under these “trust me” plans, leadership agrees in vague terms to give an arbitrary bonus to employees for working hard and helping the company meet its business goals. 

To keep your people motivated and productive, you want a transparent plan that spells out what rewards they’ll receive, what objectives they need to meet in order to get those rewards, and why those goals help the company. In other words, your plan needs to:

• Clearly communicate what the company’s overall strategic goals are and how the individual employee goals help the company move forward
• Be specific about what each employee will earn if they accomplish the goals set for them
• Give employees several goals while avoiding overloading them with an unmanageable number of tasks
• Check in regularly with employees on their progress and consider reevaluating a goal if either too few or too many people are meeting it

Creating a new incentive compensation plan requires the alignment of your employees’ individual goals with those of the company’s, and that’s not easy. But it is worth it.