Three Critical Compensation Challenges

There are at least three compensation challenges: eligibility, "at-risk" pay, and performance tracking. To develop a successful compensation plan, management must take all three into account.

Eligibility

Eligibility means that some people who had been paid strictly on a salary are now going to be eligible to participate in variable, incentive compensation. Typically, a larger number of employees are now eligible for incentive compensation because they have a role in the sales and customer relationship management process that they may not have had before. Or, if they had the role, it was never formally recognized and compensated.

This raises several questions. The biggest challenge is to determine who is ...

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