Recent Trends in the Use of Non-Financial Indicators in Incentive Plans

Why non-financial indicators are important.

The trend toward using more non-financial indicators of organizational health began before the COVID-19 pandemic and has accelerated significantly since then.

Companies are experimenting with indicators that likely lead to the long-term health and success of the company, but they don’t touch near-term financials. The challenge, in many cases, is that the linkage between non-financial indicators and organizational health is difficult to identify, if not unproven.

Andrew McElheran, Partner and Lead Consultant at Meridian, explains why non-financial indicators are important. However, these indicators also raise questions about whether companies should pay for specific outcomes, especially those related to human capital issues like diversity.