In a BLR webinar entitled ‘Incentive Pay: Best Practices for Designing and Managing Pay-for-Performance Plans’, Dan Kleinman discusses the different forms of incentive pay that can be found within an organization. Here he explains the specifics of long term incentive pay.
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- Long-term incentives usually focus on job performance goals beyond a single year (e.g. growing a company’s market share)
- Beyond simply encouraging immediate results within the current year, long-term incentives require employees to look at the big picture, which is the organization’s strategic objectives
- Long-term incentives are very helpful in terms of retaining key employees
- For highly compensated workers such as executives, long-term incentives are typically a larger part of the total compensation package than base pay or short-term bonuses
- Many long-term incentives come in the form of shares of stock, deposits into deferred compensation accounts, or similar means that are not always immediately negotiable
Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. He can be reached at info@dankleinmanconsulting.com.