Realign Short-Term Incentive Programs

Background
Moses Cone Health System, a major health care system with 7,200 employees in Greensboro, North Carolina, was faced with designing a new, more effective short-term incentive plan.

Challenge
The primary objective was to replace the existing short-term incentive program with a program that would complement the organization's mission by focusing on four key objectives: financial performance, patient satisfaction, quality, and employee/physician satisfaction.

Solution
Findley Davies saw the opportunity to develop an incentive plan where the emphasis was not only on financial viability but also on those factors that influence patient care. Another goal of the incentive plan was to ensure that employees' opportunities were market competitive and that the ultimate payouts were commensurate with Moses Cone's performance.

Keeping in mind the goals, a short-term incentive plan based on a balanced scorecard was developed. Balanced scorecards for not-for-profit organizations are ideal because they more fully capture the way these organizations define success. The scorecard design also makes it easier to communicate organizational performance throughout the year.

Moses Cone's short-term incentive plan based on the balanced scorecard was developed using the following design elements:
Incentive opportunities were competitive with the market;
• Organizational goals and individual performance goals were defined and measured according to the organization's key objectives;
 Organizational and performance goals were weighted differently based on the employee's level in the organization; and
 Performance levels above or below target results enhanced or reduced payouts.

Results
The result is a short-term incentive program that works. This is because the balanced scorecard approach allows organizations to reward employees based on the key factors that drive the business. Its straightforward design is easy to communicate and to understand.
According to Noel Burt, Chief Human Resources Officer, the new short­ term incentive plan has been successful. "On the organizational scorecard," stated Mr. Burt, "our employees recognize the link between our four key objectives and the way we define success here at Moses Cone."

"On the individual scorecard," continued Mr. Burt, "employees see how their specific individual goals link their direct actions to the incentive program."

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