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More control over performance and bonus plan volatility
Traditional performance measurement is diluted by external effects and can result in misleading signals and bonus plans that swing with the economy. Indexing gives executives the tools to better manage their performance. Furthermore, bonus plans become more stable, especially in economic downturns.
Benefits:
- Indexing performance tells the true story by measuring only what executives control: their investments and operations, independent of external effects.
- Bonus plans become more robust and crisis-proof, reducing the need for plan re-designs and ad hoc adjustments while allowing control of bonus variability and motivation.
- The risk of losing key talent is reduced, as bonuses provide better retention of outperformers in a downturn.
The Bonus Index rewards performance and not the impact of distorting external factors. As it is cycle-proof, transparent and provided by an independent party, the Bonus Index is fair for both executives and shareholders.