Each month, The Salary Sage features a performance measure from Incentive Plan Builder. These measures are intended to offer you on a wide range of options suitable for including in your company's incentive plan programs.
This month, we are looking at Environmental Responsibility. Businesses are becoming very interested in encouraging managers to focus on doing everything they can to protect the environment. One excellent way to do this is is to add a measure to management incentive plans. Not only will this encourage managers to focus on the issue, it will reward them when they do. Here are some guidelines on how to do it.
Reducing the company's environmental footprint
Calculating environmental responsibility normally involves some or all of the following elements:
1) Developing environmentally sustainable processes and products.
2) Reducing energy, chemical and raw material consumption.
3) Minimizing the businessÃ¢ÂÂ carbon footprint.
4) Making responsible decisions about outsourcing products and services.
5) Tracking the costs and savings associated with implementing environmental policies and practices.
When to use this measure
As businesses proliferate and grow to meet the increasing product demands of the world's growing population, countries are challenged to establish regulations to protect their environments. Throughout the world, environmental regulations are emerging at unprecedented levels. Companies unaware, unable, or unwilling to respond proactively to these demands may find themselves confronting substantial fiscal risk, market closures, or even criminal prosecution. Companies that deal effectively with these challenges have found that they can reduce their impact on the planet while simultaneously improving financial performance.
How to use this measure
Effective deployment of this measure involves the following key steps:
1) Questioning wasteful practices and implementing programs and processes that promote profitability and benefit the planet.
2) Providing detailed and actionable engineering, legal, facilities and product-specific recommendations.
3) Collaborating throughout the organization to meet environmental goals.
4) Measuring and monitoring results.
Accomplishing these improvements requires the involvement of the CEO and other members of the senior leadership team to define the business benefit of environmentally responsible business practices, then helps them form a commitment towards accomplishing these practices. Furthering the commitment to environmental responsibility requires training multi-level teams aimed at identifying wasteful processes, unnecessary materials, and business opportunities.
Who is this measure best for?
Every company has the potential to both reduce its environmental footprint and save money at the same time.