Maximize the Effectiveness of Short-Term Incentive Plans
Focus on leveraging a STIP to drive behavior and results, rather than just a necessary cost to running the organization.
RETIRED CONTENT
Please note that the content on this page is retired. This content is not maintained and may contain information or links that are out of date.STIPs that do not have a tangible impact on the organization and are not aligned with organizational objectives often:
- Motivate significant spend with a lack of return.
- Risk becoming viewed as an entitlement rather than an earned reward.
- Reward employees who do not meet expectations, discouraging desired behavior.
- Result in significant spend with a lack of return.
- Risk becoming viewed as an entitlement rather than an earned reward.
- Confuse rather than drive intended behaviors.
An optimized STIP:
- Identifies and controls for behavioral risks.
- Rewards and retains top talent.
- Clarifies expectations, behaviors, and resulting payouts.
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Module 1: Assess the Current Organizational State and STIP
The Purpose
- Identify the needs of the organization to tailor and optimize the STIP.
Key Benefits Achieved
- Current state of STIP evaluated. Key objectives and behaviors identified to align the STIP with organizational goals.
Activities: | Outputs: | |
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1.1 | Assess current state. |
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1.2 | Evaluate current STIP (optional). |
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1.3 | Determine organizational objectives that the STIP will support. |
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Module 2: Define STIP Structure and Eligibility
The Purpose
Design a STIP that is customized to the organization.
Key Benefits Achieved
A focused STIP that drives employee behavior and results.
Activities: | Outputs: | |
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2.1 | Identify STIP structure. |
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2.2 | Determine STIP participation. |
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2.3 | Select performance measures. |
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Module 3: Plan to Design and Implement the STIP
The Purpose
- Evaluate risk posed by STIP design.
- Plan STIP training, communication, and implementation process.
Key Benefits Achieved
- Incorporate risk mitigation into the STIP.
- An implementation plan for the STIP that addresses potential risks.
Activities: | Outputs: | |
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3.1 | Examine potential risk associated with each performance measure. |
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3.2 | Identify how to gather data. |
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3.3 | Plan to design and implement the STIP. |
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