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How to Communicate About Incentive Plan Results

For many corporate employees, this is bonus season.  In February, when year-end results are being finalized, the buzz builds. Will we make bonus, and by how much?  In March, the anticipation is unmistakable.

Whether the news is good or bad, bonus season gives leaders a spotlight to connect individual performance and business results.  While the architecture of bonus plans vary, most include a performance-related reward with a pay out when the company’s financial results and the individual’s performance meet set criteria.  For example, when Apple missed sales and profit goals for 2016, Tim Cook saw a cut to his performance-based cash incentive.  Don’t worry about Tim. Overall, he still did pretty well.

Whether the news is good or bad, the way you tell the story will impact employee engagement. Let’s look at communication strategies for both scenarios.

When the incentive target is achieved

  • Explain how it works.  The only people who truly understand the bonus system work in Compensation.  Prior to bonus announcement, send out a review of the bonus program with visual examples.  Provide an online bonus calculator.
  • Celebrate.  Good news should never be buried in an email. Create a brief video from the senior leadership team thanking employees for their contributions last year. An authentic thank you is always appreciated.
  • Set expectations for the current year. High performance cultures innovate, collaborate and continuously improve. Now is the time to be talking about 2017 stretch goals and aligning performance and priorities so bonuses are achieved in 2018. Create talking points for managers to cascade.

When the incentive target is missed

  • Explain how it works.  See above. Talk through the plan structure.  If thresholds were not achieved, clarify how that impacted pay outs. Remind employees that the bonus is just one component of a comprehensive rewards package and it’s performance-based. It’s extra pay for exceptional results.
  • Pre-announcement preparations.  Prepare for this like you would for a customer or shareholder meeting.  Compose key messages, draft FAQs and ensure managers are informed and prepared.  Set up a channel for employee questions.
  • Hold town hall meetings.  Where did the company fall short? Talk about it. Listen, answer questions, and discuss priorities and opportunities for 2017.

Proactive communications help connect the dots for team members. Businesses win when everyone knows, understands and lives the company’s values.  Show them their contributions make a difference.