STI and LTI

Short Term Incentive And Long Term Incentive

Incentives are an effective way for organisations to motivate their employees and achieve specific goals. However, not all incentives are created equal. It is important for organisations to consider both short and long-term incentives when designing their incentive programs.

Short-Term Incentives

Short-term incentives are rewards that are typically given for achieving specific, short-term goals or targets. These include bonuses, gift cards, or other financial rewards, as well as recognition programs or team events. Short-term incentives can be an effective way to motivate employees to achieve specific objectives or milestones, as they offer an immediate reward for their efforts.

However, short-term incentives may not always be the best approach. While they can be effective in motivating employees in the short term, they may not be sustainable over the long term. Additionally, short-term incentives may not be effective in promoting behaviours or outcomes that are more strategic or long-term in nature.

Long-Term Incentives

This is where long-term incentives come in. Long-term incentives are rewards that are given for achieving strategic, long-term goals or objectives. These include profit-sharing plans, stock options, or other equity-based rewards, as well as promotions or career advancement opportunities. Long-term incentives is an effective way to align employee behaviour with the organisation’s strategic objectives. They encourage employees to think beyond immediate goals and consider the long-term impact of their actions.

Long-term incentives can also be more sustainable than short-term incentives. They offer ongoing rewards for sustained performance or achievement. Additionally, long-term incentives can help build a culture of loyalty and commitment, as employees who are invested in the organisation’s long-term success are more likely to stay with the organisation over the long term.

Both short and long-term incentives have their place in a comprehensive incentive program. Short-term incentives can be effective in motivating employees to achieve specific, short-term goals or targets. Long-term incentives can help align employee behaviour with the organisation’s strategic objectives and promote loyalty and commitment over the long term.

When designing an incentive program, organisations should consider both short and long-term incentives and tailor their rewards to the specific goals and objectives they are trying to achieve. Additionally, organisations should regularly review and evaluate their incentive programs to ensure they remain effective over time and are aligned with the organization’s evolving goals and objectives.

We can review the organisations Incentive structure to assist the Board to effectively use Incentive Scheme vehicles so that eligible staff within the organisation are being appropriately incentivised, and that the correct behaviours are being driven.

For more information email [email protected] or call +2711 026 3442
Visit our Facebook page.