The first action to take when adopting an organization-wide variable pay plan is to:

The correct answer is C. Evaluate whether or not the incentive will improve performance. Before implementing a variable pay plan, the most critical strategic step is determining if the plan will achieve the intended result -- that is, improve employee and organizational performance. All other decisions (like goal-setting or benchmarking) are secondary to establishing

Total Rewards

Question

Options

AMake sure the goals established for participants can be achieved
BSurvey peer organizations to determine what the competition is doing
CEvaluate whether or not the incentive will improve performance
DLook for ways to keep the costs to a minimum

How the community answered

(34 responses)

A
9% (3)
B
12% (4)
C
76% (26)
D
3% (1)

Explanation

Before implementing a variable pay plan, the most critical strategic step is determining if the plan will achieve the intended result -- that is, improve employee and organizational performance. All other decisions (like goal-setting or benchmarking) are secondary to establishing justification for Extract from HRCI-aligned HR knowledge (Total Rewards and Leadership and Strategy SPHR requires HR to "evaluate compensation initiatives for alignment with strategic goals and performance improvement." The decision to implement variable pay must begin with a cost- benefit and impact analysis, verifying that performance incentives lead to measurable productivity or behavioral outcomes.

Topics

#variable pay#incentive design#performance alignment#compensation strategy

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