Incentivizing executives and employees alike

21 Aug

Companies are increasingly turning toward alternative methods of incentivizing top performers and executives. By incorporating some form of long-term incentive (LTI) program into their employee management systems, companies are able to reward major players in the business by linking performance with salaries. This was the same theory behind stock options. However, Human Resource Executive Online reported that the question of whether these LTIs are actually linked to performance or not is actually uncertain.

A recent study by Towers Watson reported by HRE Online shows that in the 430 participating companies, the successes and failures in the marketplace were fairly broad, while the payouts received from LTIs to executives were narrow. In other words, whatever system is being used to make these awards to major company impact-makers is not yet completely in alignment with the actual performance of the business.

"For pay mix, the shift away from stock options to performance-based LTI vehicles may limit LTI's upside potential over periods of strong performance," the study said, according to HRE Online. "[This suggests] that performance-plan thresholds [and significant levels of restricted stock] may protect awards [at companies performing at a lower level of success.]"

Other ways to reward employees
Companies that seek to retain talent not only at the executive level but in lower levels as well can look to perks. According to, perks are a great way not only to reward workers and keep people from leaving the company, but businesses can also establish culture through the perk selection.

Google, for example, features nap pods for those who want to sleep. This is part of its strategy of making its employees feel valued through quirky things like do-it-yourself espresso bars and an in-house barber shop. Other companies have done this on a smaller scale through choices like bagel Fridays and free coffee.

Incentives at companies can also have to do with what the company's business is. They can additionally be methods for encouraging wellness or other good worker behavior. For example, Caesars Entertainment, a casino in Las Vegas, gives specially earmarked cash to its workers, who can use the money to gamble. It also offers free meals in the employee dining room. Bally Technologies, a company that builds Casino gaming machines, offers subsidies for local gym memberships, as well as tuition reimbursement for going to college.

Having perks for your workers doesn't necessarily have to cost money. Some companies throw in-office parties, which don't have to cost much, while others offer a happy hour or a poker night.

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