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Involving employees in the development of the performance measures used to determine their incentive pay offers HR/ compensation managers-and their incentive plans-many benefits. First, since employees have a hand in their design, such measures have a much better than average chance of gaining employee "buy-in." Second, such measures are more than likely to be attached to results employees can actually affect. And last, but certainly not least, when the performance measures underpinning an incentive plan are endorsed by employees and address areas over which they have influence, the plan's odds of success are greatly improved-particularly in comparison to "top-down" approaches that cut employees out of the design equation. Yet, findings in PFP's own Pay for Performance Strategies Survey suggest that most employees have little or no say in the development of the measures used in their incentive plans. That's too bad, as those HR/compensation managers who are missing the boat where employee involvement is concerned are also missing out on the benefits such participation provides.
Measure development-apparently, it's a management thing. As the results from PFP's strategies survey dramatically show, at responding businesses, few employees below the managerial level have much-if any-involvement in the design of their performance plan (see the table, "Who Participates in the Development of Performance Plan Measurements?"). With 81% participation, top management leads the...