A global vision to address the key issues of incentive compensation

Our expertise is based on unique know-how incorporating all the skills required to manage bonus schemes, from design to implementation.

Alignment of incentive compensation schemes with companies’ strategies

A company’s strategy is constantly developing and is often renewed every three or four years, while compensation schemes are subject to successive changes that often complicate and confuse things for employees.

To overcome this problem, our approach involves diagnosing, with mathematical rigour, the effects of the scheme, then determining and primarily explaining how the original intentions of its designers are not being respected.

This approach can also be supplemented by a more qualitative approach involving interviews with field managers where the corporate context of the company allows this. At the end of this work, we can give very precise recommendations that any new scheme will have to take into account.

Engineering in the design of incentive schemes

The second issue is more technical because it is an engineering issue: how to get an overview and ask the right questions, without trying to go straight to the solution to translate a corporate strategy into specifications for incentives achievable through variable pay.

  • Should the incentive be based solely on the economic result or should incentives be integrated into the way it is achieved?
  • What level of selectivity and differentiation is needed?
  • What budget sensitivity is acceptable?

These are all structuring questions that allow us to build a compensation policy that will be shared by the entire company. We can then propose solutions that correspond very precisely to these specifications, what we call prototypes, which we will need to calibrate against the various collective and individual budget simulations so that everything is under control.

A communication challenge for all components of variable compensation

The last issue is communication. This is without doubt the issue that is most often underestimated. It primarily involves explaining the change and getting employees to embrace it.

To do this, the choice of words and images used is crucial and we help our clients with this, so that they can benefit from all our experiences in very different contexts.

Then it is time to calculate the first bonuses when the impact of a miscalculation or a deferred payment can be extremely damaging. This is why we have developed professional tools that meet the needs of the most challenging environments. From making calculations more reliable, to automatically producing reports for multiple decision-makers, and generating workflows for the approval of objectives or managerial ratings, anything is possible!

But above all, we have developed a web interface to help employees predict their achievements and simulate the immediate impact of their performance on their bonuses. The key to success lies in bringing life to the remuneration system while giving employees all the levers to act on their expected performance.

This is why encouraging employees to predict their performance can only increase the impact of a compensation scheme.

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Innovative Primeum calculation processes

In addition to the classic “drivers” such as target bonuses, commission and ranking systems, Primeum offers exclusive bonus calculation procedures that provide specific incentives. These calculation procedures are based on 25 years of research and innovation, combining maths and social sciences to offer our client operational solutions to the incentive needs they want to create for their teams.

The surface

Motivate employees to achieve two interlinked requirements

The Primeum “Surface” enables companies to create bonuses for two criteria which are inextricably linked to one another, without overpaying the beneficiaries when their performances are unbalanced between those two criteria.

It can sometimes be necessary to generate an incentive to produce two performances which do not necessary follow on from one another; for example, optimizing margins and revenue at the same time. Classic calculations based on additive mathematical formulae can generate a number of undesirable effects, which the Surface enables us to avoid.

The performance quality process

Giving your teams direction

Recognizing the contribution of various roles to overall performance is increasingly considered as essential, but this cannot be only measured using usual economic criteria.
More and more often, the main performance variable must be expressed via the quality of execution of an action plan.

The objective is clear, but requires a genuine ability to understand the difficulties in manipulating qualitative objectives within an incentive scheme.

The Primeum Performance Quality Process allows you to create an intrinsic link between two requirements: the need for quality and the need for economic performance.

The commitment

Getting employees to commit achieving the right targets

Primeum Commitment enables you to make the achievement of an ambitious objective more profitable for the employee than over-performing on a minor objective.

A truly revolutionary concept in terms of target bonus systems, here we replace the traditional negotiation of objectives with the establishment of a robust plan of action.

This enables the beneficiary and his/her manager to commit to an ambitious realistic objective, leaving behind the undesired effects of traditional Sales vs Target system.

The contributor

In cases where it is not possible to set individual objectives, incentivize each employee to make a greater contribution to achieve results, without the limitations of a ranking scheme.

Ranking schemes are often used in situations where strict budgetary oversight is being sought. However, they lead to disconnect the incentive budget and the company’s overall results, and above all do not account for the real differences between beneficiaries.
In practice, if the first of the ranking whose performance level is actually below the initial target, should they earn the same bonus they would have if the team’s overall performance had been better?

With its ability to assess individual contributions, the Primeum Contributor tool avoids the major problems associated with traditional rankings systems, by offering a simple way of expressing the relative contribution brought by each beneficiary to the overall group performance, while also ensuring the advantage of a full budget control.

The adjusted commission

Enhancing recognition of individual contributions via progress requirements

Adjusted commission introduces the principle that even with the same overall sales results, performance is considered better when it represents significant individual progress.

Therefore, the procedure creates an inextricable link between individual contributions to overall sales results and individual progress.

In this way, a weaker contributor who has made significant progress can receive a bonus equivalent to that of a major contributor whose performance stats are down.

This mechanism incentivises the “middle of the pack” within a team, encouraging them not to become complacent with their gains, but to pursue higher levels of progress in order to optimize their commission. At the same time, the top contributors are always motivated to stabilise their portfolio.
Our approach allows companies to adjust their commission structure based on performance progress levels, while also retaining full budget control.