Incentive Compensation Management – Its Role in Maintaining Employee Morale


I came across a very interesting article concerning employee welfare. The author, David Meyer, owner of Coaching for Tomorrow, gives good insight into the psyche of performing employees and how organizations should approach retaining such talent.

The 12 questions that performing employees want answered, as David Meyer mentions in his article are:

  1. Do I know what is expected of me at work?
  2. Do I have the materials and equipment I need to do my work right?
  3. At work, do I have the opportunity to do what I do best every day?
  4. In the last 7 days, have I received recognition or praise for doing good work?
  5. Does my supervisor, or someone at work, seem to care about me as a person?
  6. Is there someone at work who encourages my development?
  7. At work, do my opinions seem to count?
  8. Does the mission/purpose of my company make me feel my job is important?
  9. Are my coworkers committed to doing quality work?
  10. Do I have a best friend at work?
  11. In the last 6 months, has someone at work talked to me about my progress?
  12. This last year, have I had opportunities at work to learn and grow?

His article delves into the reasons companies need to keep employees motivated and perform better. The topic is further justified considering the current economically tight times.

It became evident to me that a well-rounded incentive compensation management program can solve a major portion of the employee concerns raised in the article. Let us take a closer look at how incentive compensation management technology fits in to keeping employees motivated.

When incentive compensation management systems are correctly designed to align employee goals to company objectives, the question of “What is expected of me at work?” is a non-issue. Once targets and quotas are identified for each employee, the opportunity for confusion or doubt is nullified.

However, when employees are made to work on redundant activities like shadow accounting – recalculating compensation to check if the company is paying them their correct compensation benefits – their motivation starts nose-diving.

Instead, a robust compensation management system in place not only provides transparency to the compensation calculations and metrics, but also builds confidence in employees to focus on priority-based and business critical activities – activities they do best. Their enhanced focus on the job helps the company as well.

With reliable performance reports, every employee is acknowledged for their merits. When a sales rep exceeds his/her monthly quota target, it is reflected in the incentive compensation reports – and their paycheck. The recognition of their performance continues to encourage them to perform and makes them feel important to the company’s business activities. Of course, words of appreciation cannot be generated by technology, and are still best delivered by supervisors!

In six months time, the impact of a compensation management system on employee morale becomes evident.  Especially when integrated with a Customer Relationship Management (CRM) solution, the entire client base that sales reps have generated for the company is stored and easily accessible, calling more attention to performance. Further, this data can be recalled at any point in time to measure the progress of each employee – be it annual, quarterly or monthly. Employees can keep a track of their performances and learn where they have improved and where they need to focus. This ensures employee gratification in their career growth as well.

All in all, a robust Incentive Compensation Management definitely plays an integral part in companies’ processes, assisting them in keeping employees motivated and retaining talented performers.


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