Modern enterprises caring about effective use of their available resources increasingly often seek for tools which will help establish a stronger link between the goals of management and owners. Hence companies often take advantage of tools in the form of incentive schemes.
What is an incentive scheme for management staff
An incentive scheme for company key personnel consists in offering additional remuneration to selected persons in an amount depending on achievement of economic goals adopted by the company. The offered remuneration may be paid in the form of stocks, stock options or in cash. The goals which have to be achieved to qualify for such additional remuneration may also be varied in character. These may include stock exchange mark rise above a given level or achievement of adequate values of key financial variables (sales revenue, profit, ROI). Additionally, obtaining the right to participate in the scheme may also depend on exceeding a certain period of employment with the company. It is advisable to select a suitable form of this additional remuneration, and the variables determining its value, on an individual basis specific to the situation of a given enterprise.
Incentive scheme implementation stages:
- Analysis of company needs and specificity;
- Preliminary development of a motivation programme – presentation of possible variants and their economic effects;
- Selection of tools and specification of parameters – target characteristics of the incentive scheme;
- Appraisal of instruments provided to key personnel within the scheme, determination of possible future payments in the profit-risk approach;
- Preparation of resolutions and rules implementing and regulating the functioning of the incentive scheme;
- Clearing the payments from the incentive scheme and audit of scheme performance.
Benefits from cooperation with RSM Poland
Development of an incentive scheme in cooperation with RSM Poland experts will allow for better identification and execution of its goals. Involvement of experts is helpful in making an informed decision about the selection of a solution that is optimal in terms of costs (including tax costs) incurred by the company and personnel and will be conducive to creating strong stimuli motivating key personnel to act with company efficiency and value increase in mind.