Practices

Incentive Plan Design

A well-designed incentive plan focuses executives on goals that are critical to the organization and rewards them for high performance. Conversely, a poorly designed plan can frustrate executives and fail to drive organizational performance.

As a firm dedicated to providing expert advice to tax-exempt health care organizations, Integrated Healthcare Strategies is uniquely positioned to help organizations design new incentive plans or review current incentive plans. We are able to draw on our vast knowledge and experience from working with incentive plans at other health care organizations. Our counsel will ensure that plans are (1) effective in achieving organizational goals, (2) in compliance with applicable regulations, and (3) consistent with practices in the health care industry. 

We take the following steps in designing incentive plans:

  • Background Review -- Collecting and reviewing pertinent information, including copies of the organization’s annual and long-term strategic plans, financial statements, budgets, samples of any metrics currently used to measure performance and samples of any recent reports the Board has used to evaluate performance.
  • Compensation Committee Interviews -- Interviewing Committee members to discuss the goals and priorities of the organization, their views on the most appropriate performance measures and the performance management process for the executive team.
  • Design Workshop -- Meeting with senior executives to begin identifying the most appropriate overall structure for the incentive plan and the most appropriate performance measures to use.
  • Design -- Formalizing the structure for the incentive plan, as well as the goals for next year, including recommendations for mix of organization-wide (team) and departmental or individual goals, types of performance measures to use, weighting of performance measures and general guidelines for administering the plan.
  • Presentation of Recommendations -- Preparing and presenting a report to the Committee documenting proposed incentive design and goals and making any changes necessary to gain Committee approval of the new incentive plan.