Insights on Incentives has as its sole purpose the facilitation of thought and discussion on the subject of incentive compensation for banks and credit unions.  Once a month NSS will be sending out an e-mail with one insight on the area of incentive compensation.  The insights will come from our research, discussion with customers and finally, those of you who decide to offer an insight on this important sales management issue.

The best way to test the effectiveness of an Incentive Plan is to have a control group. That is, a group that operates with the new plan and one that continues to operate without a plan. After an appropriate period of time you can look at your metrics to determine if you increased your operating efficiency with the new Incentive Program.

However, not every organization is positioned for that kind of test. Therefore, another consideration is looking at your performance during the immediate pre-implementation period and forecasting a continuing performance trend without an Incentive Plan. Now you are positioned to plot the actual performance over several intervals of time following the implementation of the Incentive Plan. Hopefully, you will see a positive deviation of actual performance with the Plan versus the forecast without a Plan.

Testing a plan is not an easy task, but one that must be done to justify the ROI for incentive pay.

Insights on Incentives is brought to you by NSS Corp.