Compensation Plans That Drive Performance Assignment

Playbook Activity 2.4: Compensation Plans that Drive Performance

Read the article Compensation Packages That Actually Drive Performance to examine how organizations approach the design of senior executive compensation plans and how they have leveraged such plans to improve performance.

For this activity, please consider what performance measures are important to the organization of your choice and how you can use them to drive senior executive performance.

Consider the research used by the articles authors to identify strategies for driving performance, including their findings on how boards approach executive compensation. Think of your organization or one familiar to you and address at least two of the prompts below:

According to the studys authors, a poorly structured and implemented executive compensation plan can lead to outcomes such as misaligned objectives, loss of key talent, and unmotivated executives. Briefly discuss an instance when your organization experienced one of the above outcomes.

Provide an example where the board did not consider the personality of a senior executive when structuring that executives compensation plan. What was the result, and how did it impact the organization?

The authors discuss how, in a long-cycle capital organization, the design of compensation structures is usually long term to incentivize sustainable long-term behavior that aligns with the organizations objectives. Discuss one example from your own experience where executive behavior led to positive long-term organizational outcomes.

The COVID-19 pandemic changed how executive compensation contracts are designed and received. How did the pandemic affect contracts in the organization?

How can an organization design compensation contracts that drive performance?

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