« If a Tree Falls in the Forest... | Main | Rewards Make Strategy Perform Better »

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451df4569e2016765cc089f970b

Listed below are links to weblogs that reference The Perils of Stretch Goals and High Incentive Hurdles:

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Thanks for sharing. This website is to I too have to help. Very good.I like the way you write.

Ironic, ain't it, with the Citigroup CEO recently slammed for getting patty-cake easy goals as discussed here http://www.compensationcafe.com/2012/04/heres-what-the-wall-street-journal-had-to-say-this-morning-about-the-loud-no-they-heard-from-55-of-citigroup-shareholders-wh.html. Shareholders demanded more stretch goals!

Personally, I never found symmetrical goal models with gates very realistic, although they appeal to many in our field. Curves with various leverage rates always seemed to work best in my experience. They were actually easier to understand and communicate, too, rather than the "feast or famine" options. For example, aggressive leverage (ratio of reward to achievement improvement rate) while moving ROI from -10% to positive 5%, a rise from there to 15%, then gradual easing of payoff rates until a steep drop at the 30% ROI level where you want them to back off, stop pushing aggressively and keep things steadily profitable, moving to a maintenance mode rather than remedial/maximizing. Just an illustration, mind you, showing how you can build long term strategy into your remuneration tactics.

I love the post, Ann, but I want to go off-point a bit and address the issue of BHAGs. In my world, BHAGs are never individual, only organizational. As my friend Stephen Lynch says, "They're the choice of which mountain to climb." When they work well, they're multi-year and inspirational. That's the way they were described in Collins' and Porras' Built to Last. When we try to turn them into a short-term motivational tool it's like using a hammer to stir soup.

Jim:

Ironic yes - and a confirmation of the level of care and balance that sound incentives require.

Wally:

You're right - and the issue is that of the long-term inspirational BHAG, as Collins and Porras presented it, being repurposed for short-term achievements.

Thanks - both for the insights and comments!

If I have seen farther than others, it is because I have stood on the shoulders of giants. Road is stepped by feet, history is written by people. Every step of man is writing his own history.

The comments to this entry are closed.

About The Author

  • More Info Here
    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

Compensation Force Spot Survey

Enter your email address:

Delivered by FeedBurner

Search This Site

Widgetbox

  • Get this widget from Widgetbox