“The only way to do great work is to love what you do. And part of that love comes from being recognized and rewarded for your efforts.” — Steve Jobs.
In today’s business environment, where the focus is on keeping on board the best performers and ensuring their consistent performance, long-term incentive (LTI) become an important component. Towards this end, it is important to note that such incentives cannot be used indiscriminately. The employees at various levels of management within the organization have different needs and career aspirations as well as expectations. Therefore, designing long-term incentives according to the levels of employees would ensure that every employee in the organization is motivated and aimed at achieving the firm’s long-term vision.
This post will address the way long-term incentives should be targeted at diverse employee levels, particularly at entry, middle and executive cadres, and why incentive management platforms like Kennect are essential in the development of incentive strategies.
The Importance of Customizing Long-Term Incentives
Incentives are beyond just monetary benefits; they are also meant to foster allegiance, enhance productivity and harmonize personal objectives with those of the organization. Specifically, the long-term incentives are aimed at keeping the people on board and not only that but also to motivate them to work for a prolonged period. Such incentives could be offered in the form of stock options, profit sharing, onboard training, special benefits such as working from home and excessive management training among others.
But, what is the necessity of customization? For instance, it is clear that a fixed high-ranked executive would be driven by different parameters of motivation compared to that of a medium manager or someone at a lower entry stage. For instance, stock options may attract a chief executive officer who is interested in making profits for him or herself in the long run, unlike a young office assistant who is likely more concerned with climbing the ranks of management. This also customizes long-term incentives to help ensure every individual employee is appreciated and motivated in the right manner promoting engagement and healthy performance.
Long-Term Incentive Strategies for Different Employee Levels
1. Entry-Level Employees: Building Engagement and Loyalty
Since entry-level employees are usually inexperienced, they are bound to keep their eyes on learning as many skills as possible, attaining job stability, and climbing the career ladder. The best strategy for inspiring this group is to provide motivational packages that encourage their development and provide them with a sense of attachment to the organization. For this level, long-term incentives can include:
- Mentorship Programs and Professional Development: Long exposure to mentorship and skill development can attract and retain low-cadre employees. There can be inclusions of all expenses paid certifications, therefore needing leadership training and even tuition reimbursement for other education opportunities. A report about the Association for Talent Development (ATD) revealed that businesses that have active learning and development programming are 24% more profitable than those who do not have.
- Flexible Work Options: For younger employees, the option to work remotely, or to vary one’s hours on a daily or weekly basis is often an important long-term incentive. As reported by LinkedIn’s Global Talent Trends Report, 72% of workforce practitioners consider work-life balance a major determining factor when they are looking at job offers.
- Stock Purchase Programs for Employees: While stock options may not have the same value for entry-level employees, stock purchase plans can be offered enabling employees to buy shares in the company at a discounted rate.
2. Mid-Level Managers: Driving Performance and Growth
While often viewed in one dimension, mid-level managers in most organizations act as the linking pin between the workers and the upper echelon. These employees are almost always preoccupied with the need to manage their careers, accept more responsibilities and better themselves. This group should be provided with long-term benefits in recognition of their efforts that will also help to advance them further. Such as:
- Performance-Based Bonuses: One of the aspects of the compensation package that would entice a mid-level manager would be performance bonuses that acknowledge the manager’s function in aiding the department to perform. This could help keep them performance-oriented over the year and help them achieve results that matter.
- Profit Sharing and Stock Options: Mid-level managers are typically at the stage where they are still hoping for something more from the company. Offering such employees opportunities to participate in profit-sharing plans or even stock options would help to motivate such employees in the course of their service. As noted in research conducted by the Harvard Business Review, there are positive effects such as retained workers and productivity growing by 15-20% in organizations where long-term stock option plans are introduced.
- Leadership Development Programs: Leadership training, coaching for executives, or management certifications are all factors that can give a strong boost to mid-level managers. They provide opportunities for enhancing their leadership abilities while indicating that they are preparing themselves for higher levels of management.
3. Senior Executives: Aligning Success with the Company’s Growth
While often viewed in one dimension, mid-level managers in most the organizations act as the linking pin between the workers and the upper echelon. These employees are almost always preoccupied with the need to manage their careers, accept more responsibilities and better themselves. This group should be provided with long-term benefits in recognition of their efforts that will also help to advance them further. Such as:
- Stock Options and Equity Compensation: Stock options are probably the most frequent form of activism among the CEO incentive services since they make it possible to link one’s wealth directly to the growth of the firm. A good stock option scheme may act as a safeguard to executives not acting against the company and its shareholders’ interests.
- Deferred Compensation Plans: Senior executives may also benefit from deferred compensation plans which allow an executive to accumulate a portion of their income or funds from the employer that is withheld and earned, but not paid (normally for pay periods ending employment), until some mutually acceptable date (no payment during employment periods for example retirement) thus lowering tax exposure and encouraging the executive for the healthy growth of the firm in the years to come.
- Executive Perks and Benefits: When it comes to offered packages, senior executives expect some other factors to be considered aside from monetary benefits. Such long-term non-financial motivators include private health insurance, extra paid leaves, personal training enlistment into high-class fitness centres and many more.
How Technology is Helping to Customize Long-Term Incentives
Considering the intricacies associated with the administration of diverse incentive schemes for employees at different levels, organizations are beginning to make use of technology to enhance the process. An example of such technology in use is the [Kennect](https://kennect.net/) incentive management software which assists corporates in designing and administering incentive schemes.
It helps organizations plan long-term incentives for various employee tiers, provides tools to monitor such performance measures while promoting visibility within the organization. Its benefits include the following:
- Customization: Using Kennect, corporations actively integrate these plans within their organizational levels as they come up with organizations. Whether it is their mid-level managers who get bonuses or employees who are stock option holders like the rest of the company, there is flexibility in offering different incentives and what exactly is offered.
- Performance Tracking: There is someone monitoring the performances of the organization’s employees using the Tolun platform and the information is connected to the incentive system. This means that every employee knows the fixed determination of their long-term incentives depending on operational results.
- Transparency and Fairness: The management of incentives presents the problem of all the employees accepting the system is in use as being equitable and is visible. Kennect facilitates this by explaining and showing how the incentives are earned and distributed so that there is no confusion within the organization.
- Automation: It is worth noting that where there are many systems of benefits being applied to the employees it may be laborious to do this manually. Kennect handles most of the work, thereby easing management aspects and enabling faster and accurate implementation of incentive payments.
Why Customization Matters in Today’s Workforce
In the current war for talent, employers cannot simply motivate all their employees by using the same blueprints irrespective of the individuals. Organizations are free to customize long-term incentives to meet the abilities, needs and wants of each employee which makes every one of them feel important and involved. This is essential in creating a high-performance culture that does not only lure but also keeps the best candidates.
A report by McKinsey & Company has shown that companies that relied on personalized incentives had a 15-20% improvement in employee stabilisation rates the pinnacle of the need to customize in planning long-term incentive schemes.
Conclusion
The need to adjust long-term incentive plans for various levels of employees with the organization structure is no longer an example of human resource management best practice. It is a necessity for any organization that seeks to have motivated employees and employees with a high level of performance. By providing a balance between salary, opportunity for growth and additional benefits, a company can ensure that every employee supports and is in line with the vision barrel of the company.
Solutions such as the Kennect incentive management platform enable organizations to cross this bridge and resolve the challenge, providing engagement and performance solutions for every section of the organization. In light of the current changes in the business workspace, modern organizations will place a premium on long-term unique incentives as the primary factor in top talent retention and overall success.
