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.

July 2003

When selecting specific performance measures during the design of your incentive plan there are six questions you should ask yourself about each measure:

  1. Which of the measures are the most valid and accurate indicators of the larger performance area in question?

  2. Which of the measures provide the best alignment with company business objectives?

  3. Which of the measures would provide the greatest benefit to the company if improvements were made?

  4. Which of the measures is least susceptible to distortion from outside influences?

  5. Which of the measures is impacted by the largest number of participating employees?

  6. Which of the measures will be easiest for people to understand and relate to their actions on the job?

Reference: John C. Belcher, Jr., How to Design & Implement a Results-Oriented Variable Pay System, American Management Association.
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