How should HR structure the payout on the incentive plan for the business operations unit's goal?

The choice to keep fixed rewards the same and increase variable rewards is aligned with the principles of incentivizing employee performance and achieving specific business objectives. By maintaining fixed rewards, HR ensures that employees have a steady income that provides financial security. At the same time, increasing variable rewards—such as bonuses tied to performance metrics—creates a stronger incentive for employees to exceed their goals. This structure encourages them to focus on enhancing performance and contributing to the overall success of the business operations unit.

Additionally, increasing variable rewards can motivate employees to align their efforts with the company’s objectives, fostering a culture of achievement and accountability. It links their compensation directly to their performance, which can lead to increased productivity and engagement.

Incentive plans are often designed to reward employees for surpassing targets or for outstanding individual or team performance. By structuring the payout in this way, HR is using compensation strategically to drive results that are beneficial both for employees and the organization as a whole.