Articles | September 30, 2020
It’s safe to say no built environment organization anticipated the coronavirus when first designing their current incentive compensation plans. But the current pandemic, which has caused many contractors to experience ever-decreasing backlogs, remains our reality for the foreseeable future.
To stay competitive in this environment, you need to make sure your incentives reflect what motivates today’s employees — not yesterday’s. We’ll help you understand the basics of effective incentive compensation so you know where to start with your new 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Employees struggling to receive bonuses or other financial incentives under a set of outdated metrics will likely feel unmotivated at work, which is obviously bad for your company’s overall effectiveness.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.
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:
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.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
Don't miss out. Join 16,000 others who already get the latest insights from Segal.