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Ownership Thinking by Brad Hams

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Elements of Poorly Designed Incentive Plans

Prior to starting my consulting practice, I noticed that most incentive plans I’d seen did not work, and (as I pointed out in the Introduction) many actually caused damage to the organization. So when I started Ownership Thinking in the mid-nineties, I did some research on what mistakes companies make when designing their incentive plans. I found the following to be common flaws:

 The plan creates separate fiefdoms.

 The plan is discretionary.

 Employees think that (true or not) the goals are unrealistic or unattainable.

 The payout opportunity is too small—there is no perceived value.

 The goals of the plan are not communicated, so employees cannot see the connection between the work that they ...

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