Incentive plans are a highly effective way to recruit, retain and reward employees. Businesses can use short-term and long-term incentive plans together to complement one another and get the most out of their efforts.
Smart HR can help organizations to define and implement successful incentive programs.
Short-Term Incentive Programs
Our short-term incentive programs, or STIPs, motivate key employees to work toward the company’s goals and make good decisions year-round. These goals should reflect the organization’s current priorities.
Benefits of STIPs for Employers
STIPs provide significant “pay for performance” flexibility and give employees the opportunity to share in business successes. They allow the organization to focus on specific results and outcomes and can significantly improve employee performance. The costs of the plan are often indirectly offset by increased profitability.
Popular STIP Approaches
There are a broad range of short-term incentive pay plans that can be implemented, including profit-sharing plans, gain-sharing plans, retention bonuses, project bonuses, spot awards and discretionary bonus plans.
Long-Term Incentive Programs
Our long-term incentive programs, or LTIPs, are designed to encourage employees to work toward long-term growth and increase the organization’s value in over time. For employees who are in a position to help a company grow, tying part of their pay to the growth of the company can be incredibly effective.
Benefits of LTIPs for Employers
A well-designed LTIP can help companies navigate uncertain economic times by giving executives increases in targeted compensation without compromising immediate cash flow. It also encourages long-term retention. With LTIPs focused on long-term results, it encourages employees to stay with the company. This can help reduce the costs associated with employee turnover.
Popular LTIP Approaches
- Appreciation-Based: These LTIPs tie the value of the employee’s award to how much the value of the company rises over time.
- Stock-Based: Employees will be given shares in the company after a defined period of time has passed.
- Cash-Based: Employees will receive a cash bonus.
- Performance-Based: Employees will receive shares in the company after meeting certain goals rather than after a set time period.
Our team can determine the best approach for your organization.
Smart HR’s Incentive Program Process
Here is a brief look at what is involved in our inventive program services.
We will begin by reviewing your current compensation tools and considering other approaches that may be effective, such as equity vehicles.
Our team will work together with your organization’s leadership to determine which roles will be best suited to each type of incentive. We will consider the total reward package that each role type or individual employee is currently being offered, along with the current approach being used to manage and document performance factors, in making our recommendations.
We will use our cutting-edge compensation tools and technologies to analyze market data and determine which options should be incorporated in your incentive plan.
Our team will also ensure that any plan you implement complies with all relevant regulations related to compensation, tax and privacy.
Communicating and Launching
We will communicate our recommendations to your organization’s key stakeholders and provide a written report with potential plan designs and their projected valuations and cost impacts.
After deciding the best path forward, we can implement these incentive programs to put your company and employees on the path to better results.
Reach Out To Smart HR
Smart HR offers organizations high-end human resources management. Reach out today to learn more about how our expertise in incentive plans can help your business reach new heights.