Business Performance Plan

For example, if several employees earn the highest possible raise, will you be able to continue to meet your payroll the following year?

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For example, the plan might provide for a graduated annual pay increase of 0 percent to 7 percent at the individual level, as well as a large bonus if the company meets profitability goals.

In manufacturing environments, pay could be based upon the amount of widgets an employee produces each week, with additional incentives if the department meets quality milestones.

Regular communication about the company's performance relative to goals also is important, especially if one component of the pay-for-performance system is based upon departmental or company-wide performance.

A pay-for-performance plan will typically have several types of incentives, such as long-term, short-term, individual and group.

When designing a pay-for-performance plan, calculate revenues and expenses under various scenarios to be sure your cash flow will allow you to cover the performance payments.

Calculating personnel costs over a longer term, such as three years, also is important.

If employees believe they are treated unfairly, their morale and productivity will suffer rather than improve.

In designing a plan, ensure training managers create good performance measures, provide ongoing feedback, and accurately gauge performance levels. For example, a performance measure for a package delivery company would be to deliver 90 percent of packages on time.

She has been published in Security Management, American Indian Report and Tech Republic.

She has a bachelor's in communications, a master of arts in Christian education and a master of business administration.

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