Individual incentives are meant to be a reward for individual performance. These payments are those that are separate from typical base pay and are often based on some physical measure rather than subjective ratings. These usually are seen as very rare in the workplace because many jobs lack a physical measure of output or the fact that there may be too many ethical issues involved. Back in Financial Accounting with Dr. Vandenberg we watched a documentary on Enron. This was a situation where the company executives began to focus solely on outcomes or the ends rather than the means. The business began to be run strictly to reach projected figures. These soon became unrealistic and the business began creating fictitious figures specifically targeting incentive packages.
In my experience at my internship I have seen a much less corrupt incentive system. The system for managers at Delaware North Companies is based upon budget. The financial planners and controllers from each specific division map out a budget for each department for the year. They call these figures the “plan”. Every manager strives to be below “plan”. Being below “plan” means you are saving the business money while still operating efficiently. This type of behavior is rewarded with a hefty bonus ranging anywhere from $5,000 to $10,000 depending on how much you beat “plan” by. I feel this is a useful system that focuses on operational efficiency rather than unethical output practices. By having the incentive system based on how much you have saved the company you encourage more conservative decision making across the board.
Put it on Ice 