Incentive Plans

Since its foundation, at Thomas More Management Consulting (TMC) we have worked on Executive Compensation, serving a diversity of clients in almost all continents. We have drawn up plans for both local companies and organizations with a regional and global presence. In TMC, each case is unique and each design is tailored.

The creation of incentive plans at the executive level, an area in which we have extensive experience, is a diligent process that goes through several stages, some of which we summarize below:

I. Understand the organization, its strategic and operational plan

The first step is to understand the particularities of the organization. What are your goals? What is your strategic plan? What is your operational plan? How is your organization? How is your culture? What experiences have you had with incentive plans? The goals and the way you want to obtain them tend to unique plans. Thus, the subsequent design is, consequently, unique in its concept, design, formulas, performance measures, among others.

II. General design

The second stage has to do with the configuration of the incentive design. As executives are expected to have power in their organization, the combination of certain attributes is essential to configure sustainable plans over time: Short term, medium term or both? Common / non-common objectives and / or common or differentiated weights? Corporate and / or group and / or individual? Goalsharing, gainsharing or both? Which should be the pay mix? The combination of these design aspects gives the plan a unique feature with different impacts on the behavior of the executives and managers of the organization and in general on the eligible population of incentive plans.

III. Performance measures

The third major stage consists of the preparation of the payment tables. This is an aspect that, combined with the results of the previous stages, has important impacts on the behavior of those involved. In general, the incentives are Threshold, Achievement, Over-achievement and achievement in advance. At TMC we work with more than 50 combinations of these four performance measures and select the right for each organization. Each selected combination seeks to optimize performance, which encourages the achievement of superior results, obtainable before the expected time.

IV. Finance and simulations of the plans

One of the most important aspects, from the point of view of alignment, is the multiple simulation of the predesigned plans and their comparison with their funding. At TMC we simulate the payment of incentive plans in different scenarios and compare them with financial results. The models we use allow us to preview the results. The purpose, among others, is to produce the highest degree of "correlation" between the results and the payment granted, and to examine the financial viability of the designed incentives.

V. Governance

An incentive plan has, in general, two sources of success: right design and right governance. Once the design is complete, TMC can help you configure the control structure and follow up plans. This includes the configuration of the documents of these and their corresponding formalization, the mechanism of allocation of goals / quotas, and their possible variations, if applicable, throughout the period of application of the plan, the mechanisms of exception and transition rules, among others.

VI. Communication

Communicating incentive plans is a regular stage of these. As part of the plan's sales process, TMC can configure the appropriate audiences, select the appropriate messages for each of them and the emotional processes involved. Likewise, define media and mechanisms of transmission and consultation, as well as feedback of the plans.