Performance Program Types and Descriptions

Objective-based performance management programs all share the following common characteristics:

• Managers set goals for subordinates prior to the performance period;
• At the end of the performance period managers record achievement for each subordinate;
• A pre-defined payout schedule translates the performance rating into the incentive payment

Here are the most common objective-based performance management programs:

Management By Objectives.
Management by Objectives (MBO) has a long and distinguished history of helping companies translate corporate goals into specific accountabilities for individual contributors. These programs are sometimes called Key Performance Objectives (KPO) programs.

Management Incentive Plans.
Management Incentive Plan (MIP) provides focus to senior managers. Normally used to calculate the annual bonus payment, MIP often links rewards to both business results and individual contributions.

Key Sales Objectives.
Key Sales Objectives (KSO) programs provide field sales management with another tool to encourage sales success. KSO programs sometimes work with transaction-based incentive plans, or provide the sole measurement for sales success.

Shared Goals Program.
Shared Goal Programs (SGP) leverage the power of work teams by using a combination of unit and individual performance to reward goal accomplishment.

Merit Increase and Merit Award Programs.
Merit Increase and Merit Award Programs measure and reward individual effort on an annual basis. For merit increase programs, the rating of goal accomplishment provides the basis for granting a base pay increase. Merit Award Programs split annual pay adjustments into two elements, a market base pay adjustment and an individual lump-sum merit award.

Campaigns, Contests and SPIFS.
Short-term programs give management the ability to provide focus on immediate objectives.