Strategy-based incentive systems

The objective of a strategy-based incentive system is the cascade of

the overall strategy into individual performance plans of the Based on our experience and sup-
Management and the employees. ported by recent research, we have
defined three critical factors for the
The strategy-based incentive system is based on a consistent cascade successful implementation of a
of the relevant objectives to all hierarchical levels. It shows the role of incentive and reward system:
each individual to the strategy implementation and motivates to contri-
Balanced consideration of
bute towards achieving the strategy.
intrinsic (Content of my work,
responsibility, personal freedom,
etc.) as well as extrinsic (pay,
career plan etc.) motivation
factors.

The affected individuals need full

participation in the process of
performance and target setting,
performance review and evalu-
ation. Process fairness is a key
for the acceptance and therefore
the success of a reward system.

High transparency on the degree

of individual contribution to the
agreed objectives and measures
of the performance plan: there
has to be a strong linkage bet-
ween the performance and the
Key elements of a strategy-based incentive system defined measures.

The most important factors are:

The individual objectives of the management and the employees
are based on an aligned objective framework: „My objective as well
as our objective.”
The appropriate cascade to each organisational level is serving as
a filter for achievable objectives that drive motivation.
The variable part of the cash compensation model is adequately
linked to successful strategy implementation: “Share the crisis,
share the success.”
OFFER
Scope of services

Our services around the topic

strategy-based incentive and reward
systems are fully based on the
clients expectations. The project
scope and plan is developed in a
joint effort with the client.

Price: according to individual

requirement and scope

The implementation of a strategy-based incentive system includes

Success factors: the following generic steps:
Completeness and clarity of the 1. Objective, structure and requirements
existing strategy Objective, elements, scope (employees, cash, non-cash compen-
sation etc.), project plan, sign-off by senior management
Degree of integration between
the strategy and organisational 2. Linking strategy and organisation
units and/or individual responsi- Linking strategic objectives, measures and actions to business
bility units and responsibilities
3. Cascading objectives and measures
Top management co-operation Analysis of cause and effect relationships between strategic
and willingness to change the objectives, organisational cascade. Detailed description and
existing incentive structure selection of measures

Buy-in, commitment and 4. Process and templates

co-operation of human resources Preparations and integration in the existing target setting process,
management preparation of templates and forms as well as process adminis-
tration
5. Implementation and roll-out
Role-based training of involved personnel. Perform the target set-
ting meetings, systematic documentation and feedback. Adjustment
process and system based on feedback. Roll-out into organisation.

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