The current business environment is challenging to say the least. The rise of AI has every organization questioning the future of their industry and workforce. The post-COVID hiring frenzy is a thing of the past. More than ever, organizations need to grow efficiently without overextending resources, and attracting and retaining high-performing talent is critical.
All these factors have driven many business leaders to rethink their approach to compensation. Some are starting to transition away from static salary models, opting instead for compensation systems where pay is directly tied to individual or team performance.
While traditionally common in sales, performance-based compensation is now extending across departments. In fact, my firm’s 2025 State of Incentive Compensation Management Report found that 72% of organizations plan to expand incentive compensation plans to new departments over the next couple years. And it’s a smart move.
Strategically aligning incentives with key performance indicators can unlock untapped potential, foster a culture of high performance, and drive collective success.
Here are five examples of nonsales teams that can benefit from well-designed incentive compensation plans, along with potential implementation strategies.
Finance and operations
The most obvious incentives hinge on overall company performance, but consider taking it a step further by introducing ways to drive more individual- and team-level accountability. For example, focus a portion of the bonus on the accuracy of cost structure forecasts.
Rewarding finance for precise cost management and budgeting can encourage teams to take a more active role in contributing to the company’s success, creating a sense of ownership while driving deeper engagement that positively impacts the bottom line.
HR and talent acquisition
Tying incentives to key HR metrics can drive improvements to the company’s culture, hiring practices and more. For example, HR teams can be rewarded for reducing time-to-fill open positions, improving employee satisfaction scores, or increasing employee retention rates. Just be careful not to incentivize quantity over quality; the most effective approaches incorporate qualitative measures — such as candidate experience — to ensure recruiters are incentivized to identify high-caliber individuals who align with the company’s long-term goals rather than just filling seats to meet a quota.
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While traditionally common in sales, performance-based compensation is now extending across departments.
