Page 409 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Chapter 7. Short-Term Incentives 395

Internal/ Learning &
Strategy Financial Customer
External Growth
Product/ Percentage of Anticipate new Defect-free Identify market
service sales from needs product/service changes
innovation new products
Employee No loss of top Helpful Employee Train for
intimacy performers employees attitude surveys new skills
Customer No product Customer Facilitate Provide
satisfaction returns retention getting new decision-making
customers information
Shareholder Economic Increased Reduce cost Align incentive
return profit gains market share of sales with
performance

Operational Reduction in On-time Shorten time Provide new
optimization cost of production delivery to market technology

Community No EPA Disposable Environment- Conserve
partnership violations discards friendly environment
processes

Table 7-48. Alignment of balanced scorecard with strategy

However, the balanced scorecard should support and not substitute for management.
Furthermore, not only should the goals be quantifiable, they should be consistent with the
dominant focus of the business strategy. In addition, it is important not to overload the
scorecard with too many goals or ones the participants cannot affect.

OTHER BONUSES

In addition to annual incentive awards, some companies have additional bonuses. These include
special accomplishment awards, executive succession awards, hiring bonuses, leave bonuses,
retention awards, transaction awards, and transition awards. Let’s examine each briefly.

Special Accomplishment Award

This award has the avowed purpose of recognizing any singularly notable accomplishment
that contributes to the successful conduct of the business. The emphasis on accomplish-
ment distinguishes such programs from suggestion system programs, where a recommen-
dation on a product or process improvement is submitted and payment given in relation
to some formula related to cost savings (e.g., 15 percent of the first year’s net labor and
material savings).
Typically, the special accomplishment award program has a number of levels. It may
range from a token recognition award, often paid in nonmonetary gifts such as dinners, the-
ater tickets, and merchandise (perhaps with a maximum of $500), to the chairman’s award for