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RAPPORT

Improving Strategic Alignment in Bonus Plans

How can companies improve strategic alignment in their bonus plans?

Bonus plans should motivate employees to perform well on their Key Performance Indicators (KPIs).

The extent to which these KPIs are aligned to the objectives of the company determines the level of strategic alignment. However, for most employee KPIs it is hard to quantify the level of strategic alignment. If bonuses are solely dependent on the performance on these KPIs, companies run the risk of spending more on their
bonus plan than company performance can justify.

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