While Many contractors now have employee incentive plans and offer them to half of their staffers, on average most rely on "discretionary" plans that do not note the level of bonuses in advance or what it takes to earn them, says a June survey of 224 contractor executives by industry consultant FMI. "Three out of four contractors pay discretionary incentives after the fact, which is least motivating to the employees," says study author and FMI consultant Radek Knesl. Only 21% of respondents say plans were "very effective," says FMI. The survey also says incentive plans may work for employee retention but not so much to improve company productivity or attract new talent. Nearly one-third of respondents say their biggest challenge is setting the right incentive amounts. Contractors "may be overpaying marginal performers and unable to attract higher performers," says FMI. "It is apparent that doing nothing or paying discretionary bonuses is least effective for moving your company forward," adds Knesl.