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Considerations of Incentive Pay Plans

Identify and explain the five key factors employers should consider when designing an incentive pay plan. Why are they an important consideration of the process? Do you need all five to be successful?

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The five factors are: group versus Individual Incentives, level of risk, complementing or replacing base pay, performance criteria, and time horizon: short term v. long term.

Group versus individual incentives is an important part of the process, due to the fact that there need to be different criteria for group and individual incentives in order for them to be fair.

Level of risk is an ...

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