Is your plan going to pay out this year?

|Canadian HR Reporter|Last Updated: 10/02/2001

Feeling the effects of a bear market, many organizations are grappling with the lacklustre financial performance. For some, that has led to significant cost cutting — including, in some instances, layoffs. In this kind of environment, some organizations are now contending with the fact annual incentive plans will be delivering much more modest payments, than in years past — if there’s a pay out at all.

A well-designed incentive plan typically defines a minimum level of financial performance that must be achieved if there is to be any pay out under the plan. This kind of mechanism is created via a “circuit breaker,” which can either be built into the funding of the bonus pool or serve as the threshold level of performance for one of the key plan measures.

However, while the financial realities of the business demand less robust incentive awards in the lean times, the prospect of delivering the bad news to the troops is a cause for concern for many leaders. How can they retain and motivate key talent when the coffers are empty.