Skin in the Game

Employers large and small need to consider practical strategies when designing effective incentive compensation programs for today's highly fluid business environment. There are also key legal considerations they need to address proactively to protect the business in the event of employee disputes. An effective incentive compensation program should attract, motivate and retain key employees in a cost-effective manner to serve the company's long-term best interests. To achieve these goals, companies need to focus on three key plan design principles: 1. Identify the strategic individual and organizational performance metrics that will deliver strong and reliable results over the company's business plan time horizon. 2. Align incentive pay with the company's desired business results, with appropriate upside opportunities for outperforming expectations and corresponding downsides for inappropriate risk-taking or underperformance. 3. Provide a balanced focus on short-, medium- and long-term results that, together, support healthy and sustainable future growth.