To stay within tight budgets yet effectively motivate their skilled workforce, some employers shift more employee compensation from a fixed-pay approach to one that relies on variable compensation to a greater extent. This remuneration is affordable from a company’s perspective because awards are typically tied to specific, measurable, and agreed-upon financial performance goals, according to Mercer’s report 2014 Short-Term Incentives around the World. The scope of short-term incentives, however, depends on an employee’s role and the region in which the company operates.
“Short-term incentives (STIs) can be effective in keeping the workforce motivated while focusing employees’ behavior and performance on metrics that relate to the organization’s success,” says Samantha Polovina, the Mercer Principal responsible for the report. “But, it’s vital for companies to know common employee expectations and employer practices in all markets in which they operate to avoid the risk of either overpaying or underpaying for these important incentives.”
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For more information about this report, go to 2014 Short-Term Incentives around the World.