Human Resources Administrative Practice Manual
Classification, Compensation, and Payroll
Incentive Compensation and Rewards Policy
|Official Title||Incentive Compensation and Rewards Policy|
|Abbreviated Title||Incentive Compensation|
|Responsible Office||Human Resources|
|Originally issued||October 1, 2017|
USG employees are public servants and expected to devote their full effort to furthering the mission of the institution. Base pay plans should be designed to appropriately compensate employees for their service in a fair and equitable manner while also providing merit-based adjustments consistent with employee performance. As such, incentive compensation should be used sparingly and only when clearly in the best interest of the institution. Institutions should ensure that incentive plan use does not create a culture of expecting that simply performing one’s duties well or contributing to the institution’s improvement entitles the employee to incentive compensation. High-performance employees normally should be recognized through merit adjustments, training and assignment opportunities, and promotions.
The Board authorizes Incentive Compensation and Rewards Programs as outlined in this policy to 1) promote efficiency and effectiveness in achieving strategic organizational goals and 2) enhance the recruitment, engagement, and retention of critical skills and talent necessary to achieve institutional goals. Incentive plans are also acceptable for critical projects or needs substantially above the normal work requirements. Performance criteria or goals must be specified in the institutions plan.
Prior to implementation, each institution intending to establish an Incentive Compensation program must submit a plan, which is consistent with state law, board policy and guidelines, to the USG Office of Fiscal Affairs and Office of Human Resources for approval.
Entities Affected By This Policy
All units of the University System of Georgia are covered by this policy.
Incentive Compensation programs are funded by individual Institutional budgets and subject to funding availability. The Institution’s Office of Fiscal Affairs is required to identify the funding source and certify funds availability for each program prior to approval for implementation.
Incentive Compensation and Reward Programs
Incentive compensation and rewards are available through the following programs:
- Goal-Based Incentive
- Hiring Incentive
- Extraordinary Service, Acts, Achievements, or Suggestions
Institutions that choose to adopt Incentive Compensation and Reward programs must develop well-defined program policies and procedures and administer the program in a fair and equitable manner. Each program plan document should include the following components for consideration and approval:
- Type of Program
- Eligible Employees. An institution may choose to exclude hourly, seasonal, temporary, and part-time employees from specific incentive compensation and award programs at its discretion.
- Program guidelines to include nomination, award, and restrictions
- Internal approval authority
- Funding sources (department/institution)
- Type of award (monetary or non-monetary)
- Treatment and timing of payment and/or award. Payments and/or awards should be made within the fiscal year of achievement.
Treatment of Incentive Pay
Taxes; Incentive payments are included and taxed as salary in the pay period issued.
Overtime; The incentive payment is included in the regular rate of pay for non-exempt employees’ overtime calculations.
Retirement; Incentive compensation payments shall not be included as earnable compensation for determining retirement benefits.
Coding; To ensure proper pay and reporting, Institutions must use the appropriate SCOA and HCM codes to document payments under Incentive compensation programs.
Incentive Compensation Programs become effective upon approval by the USG Office of Human Resources and the USG Office of Fiscal Affairs. Certifications remains in effect for one year. When critical goals are achieved and incentive pay is provided, new target goals should be established and the plan resubmitted or the plan must be discontinued.
For the purposes of this policy, the following terms and definitions apply.
(a) “Incentive payment” means a one-time lump sum payment, which is tied to an incentive plan, and does not become a part of base salary.
(a) Goal-based Incentive Program:
The Goal-based Incentive Program may be used by an institution to reward an employee or team for meeting or exceeding predetermined, and objectively measurable criteria that are beyond and above the employee’s normal work requirements, addresses a critical strategic need and enhances the effective operation of the institution.
- Goal-Based Incentive plans must include the following components:
- The critical institutional need that will be addressed by the program
- the eligible jobs and/or positions that are eligible to participate,
- terms and conditions of employee eligibility,
- the pre-determined productivity standard or revenue goal(s) that are significantly above normal business goals and objectives, and
- the amount(s) to be awarded to eligible employees who meet or exceed the established criteria.
- A Goal-based incentive payment is a one-time payment for meeting or exceeding established predetermined criteria above normal business goals and objectives. Goal-based incentives may be paid only to eligible employees in jobs and/or positions listed in the plan.
- Employees must be in good performance standing (received a meets or exceeds expectations rating on their most recent performance review and no disciplinary actions) to be eligible for an incentive payment.
- In order to receive an incentive payment, the individual must be a current employee of the awarding institution at the time of payment.
(b) Hiring Incentive Program: The Hiring Incentive Program is a formalized incentive program designed to provide institutions greater flexibility to hire prospective employees with critical skills and qualifications necessary to meet institutional strategic business objectives. For an institution to utilize critical hiring incentive payments, the institution must establish and maintain a certified Hiring Incentive plan prior to such utilization.
- A Hiring Incentive Plan must include the following:
- The critical institutional need that will be met
- A list of the jobs and/or positions that the institution will make eligible for hiring incentive compensation based on one or more of the criteria listed below.
- The incentive amount(s) to be awarded.
- A position determined by the institution to be critical and hard-to-fill (such as a position that has been vacant an excessive period of time with no qualified applicants, or that requires a skill set that is unavailable or rare in a particular geographic area, etc.);
- A position that is critical to an institution meeting its accreditation standards; or,
- A position that is critical to maintaining public safety; or,
A hiring incentive payment is a one-time payment for the hire of a prospective employee with critical skills and qualifications. Hiring incentive payments may only be used for jobs and/or positions listed in the institution’s plan.
- The maximum award on a hiring incentive is 10% of the annual Offer Salary.
- The jobs/positions included on the plan should be re-evaluated annually to ensure relevancy.
- Continuous Service Requirement. Institution policy should require hiring incentive payment to be contingent upon the employee’s agreement in writing to repay a portion thereof upon separation if the employee does not remain employed a minimum specified period of at least two years. The specified period and the repayment schedule are determined at institution discretion.
(c) Employee Suggestion Program (ESP). Institutions may use this incentive program to recognize employees who provide a suggestion or idea to improve the institutions operations and/or efficiency. The suggestion or idea must be beyond and above the normal responsibilities of the job and implemented by an Institution with a recorded outcome of improved effectiveness.
- Plan components must include the following:
- How to Submit a Suggestion. Written Suggestions may be submitted online, by mail, e-mail or in person to a Suggestion Program Coordinator. Verbal suggestions are not considered.
- Each suggestion should clearly and concisely identify the issue, propose a detailed solution to the issue, and explain the expected benefit to the institution. Inventions, whether patentable or not, will also be considered.
- Group suggestions should be signed by all participating individuals. Awards for adopted group suggestions will be prorated.
- Suggestions relating to the following areas will not be considered:
- Personal grievances;
- Specific assigned duties or responsibilities of a particular employee;
- Classification and/or pay of positions;
- Matters recommended for study, review, or summary;
- Matters that result from assigned or contracted audits, studies, surveys, reviews, or research;
- Matters requiring the enactment of legislation by the General Assembly; and
- ESP Policies.
A Suggestion Program Coordinator must be appointed and will collect and provide the President or his/her Designee with written recommendations regarding employee suggestions. After reviewing the written recommendations, the President or Designee will make final determination regarding any action to be taken.
The following factors should be considered by the President or Designee in making the final award determination:
- Roles of potential recipients (suggestion must be beyond and above the normal responsibilities of their job(s))
- Impact of the benefit to the Institution
- Extent of application (i.e., how many departments adopt the suggestion);
- Originality and ingenuity of idea;
- Cost of adoption;
- Effort undertaken by the employee in formulating the suggestion; and
- Clarity and completeness of the suggestion.
- Suggestions for improving safety are given more weight in determining the amount, if any, of a cash award.
- Suggestions Resulting in Quantifiable Savings:
An employee whose suggestion is approved, adopted and implemented by an Institution that results in direct and measurable cash savings or cost avoidance may receive a cash award (e.g., an award amount that is based on a percentage of the expected 1st year savings). Awards that exceed $3,000 must be approved by the Chancellor. Awards may not exceed $5,000.
- All Other Suggestions:
Other suggestions that are approved, adopted and implemented by an institution may result in significant improvements that cannot be measured (e.g., suggestions involving improvements in working conditions; changes in procedures, or employee morale, health, or safety, etc.). These suggestions may be eligible for a maximum cash award of $100.
- Certificates of Commendation:
When the submitted suggestion results only in minimal savings or minor improvement, the employee may receive a certificate of commendation in lieu of a cash award. An employee receiving a cash award may also receive a certificate of commendation.
- Employees must be in good performance standing (received a meets or exceeds expectations rating on their most recent performance review and no disciplinary actions) to be eligible for an incentive award.
- In order to receive payment of a cash award, the individual must be a current employee of the awarding institution at the time of payment.
Rights of the Parties:
- Rights of the Institution: An institution has the right to use a suggestion in any form or manner without making any payment, including royalties, other than an award determined by the President of the Institution pursuant to the Employee Suggestion Program.
- Rights of the Submitting Employee: The right to receive a suggestion award is the submitting employee’s sole right under the Employee Suggestion Program.
(d) Extraordinary Service Program (EXSP): Institutions may use this type of program to recognize an employee or group of employees who go beyond the ordinary demands of the job in performing an extraordinary service, act, or achievement in the public interest and related to the institution’s mission, vision and goals. Service, acts, or achievements deserving of an Extraordinary Service award include, but are not limited to, the following:
- Performing an act of heroism above and beyond the normal demands of the job;
- Responding in an extraordinary manner to an unanticipated problem or opportunity on behalf of the institution;
- Performing a service, act, or achievement that particularly enhances public perception of the institution; or,
- Obtaining innovative or unique success when others’ efforts have failed or it has been stated that the job could not be done.
- Plan components must include the following:
- Eligible Employees
- Program guidelines and procedures
- Internal approval authority
- Type of award. Awards may include certificates of merit, pins, buttons, or other emblems. Extraordinary Service awards are discretionary, non-cash awards
- Funding sources (department/institution)
- Timing of award. Awards should be made within the fiscal year of achievement
Website Address for This Policy
Related Forms, Documents and Resources
The responsibilities each party has in connection with the Policy on Salary Increase Administration Process are:
|USG Vice Chancellor for Human Resources||Establish and maintain USG incentive compensation policy and guidelines. In coordination with the Office of Fiscal Affairs, review institution plans for compliance.||404-962-3235
|Institution Chief Human Resources Officers||Establish and maintain institutional incentive compensation policies and procedures as appropriate.||See University System HR Officer Listing at http://www.usg.edu/hr/officers|
Garnishment of Pay