IncentPower provides dependable structure for incentive pay - Software Review - Evaluation

HR Magazine, Nov, 1998 by David Shair

With a tight, competitive labor market and shifts in employee attitudes and values, employers face new challenges in preparing compensation packages. The scramble is on for better ways to attract and retain workers and to reward their job performance in helping to meet business goals, IncenSoft, a Maryland-based software provider, has emerged as a vigorous champion of incentive pay. The company's IncentPower program is a prime example of how technology, can help to devise and operate a broad-based, pay-for-performance program.

WHAT IT DOES

IncentPower is designed to enable the user, through a series of linked menus, to calculate and store incentive pay rewards to employees based on their performance. After building databases of financial and employee information, the employer must determine the percentage of profit to be shared, the allocation to groups and subgroups and the formula for final calculation of distributed dollars.

System administration is the first topic addressed as the program opens. Four levels of security are provided, with decreasing access to stored information.

After defining the "current year" definition, you can store data in the main database or move data for past years into an archive database.

Icons on the setup screen lead you into the heart of the program, where you can identify employee groups and subgroups and assign administrators for them. You can also set up compensation plans for special project teams. Moving through the screens, you select incentive factors, goals, objectives, employee evaluations and scores. Then you can fix the payment schedules and determine percentage allocations from designated compensation sources.

Several other functions are included:

* Entry, and regular update of data on financial benchmarks such as gross profit, profit after taxes, sales, increase in sales, economic value added and earnings per share.

* Calculation of payouts, factor by factor, employee by employee. You can opt either for a two-page summary of the reward for each individual and how it was calculated or a pie chart showing allocation of payouts for each established company group by percentages and actual dollar amounts.

* Online performance appraisals of employees.

* Support for 18 reports, grouped in five categories; six reports may be accessed only by the system manager.

WHAT I LIKE

The software includes a sizable Employee Incentive Program Manual, which gives a full review of pay-for-performance programs. Without referring to the software, the manual takes you from ideas for convincing management to surveying employees, determining incentive factors, allocating factors to groups, allocating profits, the bonus calculation and comments on final plan implementation and administration. Sample documents are included. IncentPower then becomes the tool that makes it possible to create, implement and administer a plan. Throughout the material, there is repeated emphasis on the need for equity, fairness and communication.

Much thought has been put into the design of this program. Revisions have been based on insights provided by "trial users." The software was literally a work in progress during the review period, with updates, working versions and promises of refinements to come.

Installation is smooth. Occasional calls to the Help Desk were answered promptly and efficiently. Screens are clean and clear, with numerous Tool Tips to explain the functions of the easy-to-read icons. Maneuvering back and forth is essentially problem free. The 40-page manual explains each program section, provides detailed instructions on navigation and is reproduced as Online Help. Standard suggestions and sources on various aspects of the incentive plan are stored in helpful "Libraries."

A core advantage of the software is the automated calculation of factors and allocations into an end product.

WHAT COULD BE IMPROVED

Technically, the program seems to be in good shape, based on a sample database used during the review period. Some polishing was needed to eliminate typos in the premarketing phase.

The otherwise excellent manual would benefit from both a table of contents and an index.

The evaluation category descriptions are skimpy. Suggested levels of difficulty in employee objectives (very easy, easy, slightly easy, fairly easy) are not sharply defined. The same is true of goal titles, actual titles and calculated-value titles of the incentive factors. Users must tighten these aspects.

In addition, the program should provide more opportunities for employee involvement in setting goals, objectives and incentive factors.

CONCLUSION

Pay-for-performance calls for clearly articulated and communicated business strategy and goals. Trust and loyalty are essential - but elusive - elements in today's environment. If the rewards do not match expectations, common gripes about factors beyond employee control or of mismanagement will surface. Not to be overlooked are indications from surveys that today's employees care as much (or more) about growth, training, education and broad horizons as they do about dollars.