Key Considerations for Incentive Design

Incentive compensation is widely promoted as support ing “pay-for-performance” and being necessary “to attract, motivate and retain” high performing individuals. However, it is also seen as having played an important, and negative, role in the 2008 financial crisis. In redesigning incentive plans, we must consider:

* What research tells us about the relationship between pay and performance, and * The “performance environment”.