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.
Resetting targets
Targets are a generic term for the purpose of this discussion that can take the form of a baseline, quota, goal, gate, or threshold in your incentive compensation program. Whatever form the target takes, it is important to communicate up front to plan participants that this number will be reset each year. In addition, it will be extremely important to establish and communicate the basis for the new target. Some of the options for establishing new targets are the following:
- Two-year or three-year rolling averages
- Previous year actual
- Quarterly rolling averages for eight or twelve periods.
Also don’t forget to consider a special provision for the
situation where you experienced a sharp business downturn.
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Insights on Incentives is brought to you by NSS Corp.
