Published in Workspan November 2010

Worth Diving Into: The Two-Pool Approach to Rewarding Top Performers

By Jim Heim

Incentive opportunities are improving for employees as the economy shows continued signs of recovery. Increasingly, however, many companies are looking to differentiate award levels, based on individual performance, and want to explore alternative incentive distribution system that emphasizes the contributions of high performers.

This article looks at more traditional program structures such as “Pool and Allocation” and “Goal and Target.” He then discusses the potential middle ground offered by a two-pool bonus approach, in which a percentage of the overall bonus pool is set aside for additional discretionary bonuses.