Incentive Compensation Principles

What really motivates people? The real answer is: a variety of things. People are not monolithic in the type of rewards they value, nor in what drives them to set and achieve goals. Ideally, incentives should recognize these differences - designed to fit the individual. And maybe if you’re a small business owner with a half-dozen employees, you could do so. But how cumbersome would it be for a large business with hundreds of employees to have a vast array of individually customized incentive plans? That’s completely unworkable, of course. Still, many companies try to get there by having goals developed for each individual (or team), that relate specifically to what they do all day, and can also be measured objectively. Some weight can then be given to these objectives in an overall incentive formula, and perhaps thereby achieve some level of customization in incentives.