Indexed Performance Measurement Is at the Heart of Obermatt's Origins

In this conversation, Carola Repky and Hermann Stern of Obermatt trace the origins of indexed performance measurement and its later incorporation into executive compensation. Obermatt began using indexed performance measurement in 2001 and first implemented this relative performance measurement in compensation systems in 2009, which was new in Switzerland at the time. Relative performance measurement can motivate professionals more reliably in any economic climate. That is why Obermatt's first clients remain satisfied clients today.

Advice is important when introducing indexed performance measurement, because mistakes can easily arise that later cause unnecessary costs for the company. Linking compensation to planning is particularly problematic, because it leads to realistic and therefore, by definition, mediocre targets. Linking compensation to planning should be avoided. The coronavirus pandemic has also made this virtually impossible, because reliable plans for the future can now hardly be made. So-called rolling forecasts make more sense, giving companies the flexibility they need. Indexed compensation supports these flexible planning systems because it works without any agreed compensation targets.

Even in a crisis, however, it is important to know how well you are actually managing it. Even if the numbers look bad, you may have performed better than comparable companies. Knowing where you stand relative to the overall market also helps you identify the right tactical priorities.