Establishing 'Making it Happen' as a 'Formal & Predictable' Discipline

Employee Performance and Feedback Cycle	Employee Career Planning and Management

Execution-MiH ENCYCLOPEDIA → Execution Making-it-Happen → SECTION - Human Capital →

CHAPTER -

Employee Rewards and Incentives

Employee Rewards and Incentives are not only based upon the employee performance, but on many other factors as well. Rewards & incentives are key determinants of employee performance. This chapter provides various dimensions on how rewards & incentives for an employee should be determined to achieve multiple goals of motivation, retention, execution focus, alignment with strategic priorities and budget-compliance. This chapter also shares the mechanics of team-rewards.

Topics

Components of Rewards and Incentives

Rewards and incentives can have many variations. This includes the salary increase, differentiated performance bonus for employee's own achievements, enterprise variable pay for bonus related to organization or teams achievement, accelerated bonus, etc....Each component is designed to promote a certain kind of behavior or achievements. Methods of rewards and incentives is not the only variation, but also "how much" we differentiate across the higher and lower end of performance, the distribution of monies across various methods, the frequency of payments, etc....

Role Differentiation of Rewards & Incentives

There are various factors based on which an employee gets higher or lower levels of incentives & rewards. One such factor is the role being played by an individual, and the criticality of the role. In today's world as the organization priorities and its money-machine changes, there are some roles, which are more important than the others, and an enterprise needs to invest more into those roles to achieve higher performance and employee retention vis-a-vis other roles. This has nothing to do with an employee's performance within his-her role. Another role based differentiation is the split between salary and bonus. Sales people typically have a higher component of variable pay (bonus) vis-a-vis back-end support people.

Performance Differentiation of Rewards & Incentives

This is the fundamental differentiation for rewards & incentives. More monies go to employees who perform better. The question with an organization is the level of differentiation, which means that how much more a better performing employee gets from lesser performing employees. Organizations with higher performance differentiation can typically drive higher performance lest they become too excessive in that.

Level Differentiation of Rewards & Incentives

An execution-focused organization typically has a higher component of variable pay for the senior levels, as they have a greater control, empowerment and decision authority to achieve their goals.

Team Rewards and Incentives

In the past, most of the employee rewards and incentives were linked to the person's own performance. This was paradoxical, as organizations have been placing a great emphasis on team-work and collective performance. For an execution-focused enterprise, it is must to have hard-nosed team rewards, which are not cosmetic but form a significant portion of an employee bonus or variable pay. This may not be universal as some roles are individualistic in their construct like sales staff.