{"id":427,"date":"2010-05-19T08:06:24","date_gmt":"2010-05-19T15:06:24","guid":{"rendered":"https:\/\/berkonomics.com\/?p=427"},"modified":"2010-05-19T08:06:24","modified_gmt":"2010-05-19T15:06:24","slug":"align-incentives-with-your-goals","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=427","title":{"rendered":"Align incentives with your goals."},"content":{"rendered":"

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0And be generous to your high achievers.<\/em><\/strong>\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Recently I was asked to review an offer letter for a senior director of business development. The CEO was concerned that he was offering far too much in the form of incentive compensation, with bonuses that could greatly exceed the base salary if all of the bonus items were achieved.\u00a0 I asked the CEO to imagine what the company would look like if all of those bonus-expensive items were completely achieved in one year.\u00a0 Upon reflection, he stated that revenues could double the following year, and that the company\u2019s reputation among larger customers would be so greatly enhanced that the company could become the leader in its niche.\u00a0 My obvious retort: \u201cThen why not offer this candidate the moon if he can achieve this?\u201d\u00a0 The offer was sent and the CEO was much happier, dreaming of the possibilities, not the incremental cost.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 I love to point out that my top several sales people were making more than anyone else in the company, including their boss.\u00a0 These outstanding achievers worked for salaries below those of their engineering peers, and had to put it all on the line every day to earn their keep, let alone excel.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The best way to encourage alignment between your managers and the company\u2019s goals is to create a bonus plan for each, with its payments made based upon the key performance indicators established for them and for their areas of responsibility, all in turn based upon the tactics and strategies contained in the company\u2019s strategic plan.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It is amazing how few company CEOs grasp the concept that executives and managers should be compensated not just for doing their named job, but for exceeding expectations while advancing the corporate goals.\u00a0 To align everyone in the organization in exactly the same direction is a task, one that is a powerful driver for growth.\u00a0 People should be compensated well for such outstanding contributions.<\/p>\n

[Email readers continue here…]<\/span><\/em>\u00a0 What is the general rule for such a bonus plan? Provide no more than five key performance indicators derived from the strategic plan and fitted to the specific job of the manager.\u00a0 Set time-based goals for each.\u00a0 Provide bonus opportunities that add to approximately 50% of the base salary if all are achieved within the year.\u00a0 Meet and measure progress truthfully each quarter.\u00a0 Perhaps pay a portion of the bonus upon completion of these meetings.\u00a0 Do not make the usual mistake of ignoring or passing on the progress of any of these items by just paying a part of the bonus at yearend because no-one carefully reviewed progress, or because circumstances changed and the bonus item could not be completed as written.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Incentives are powerful tools when used well and reviewed often.\u00a0 They are a major part of a good manager\u2019s work and should be treated as such by the CEO and all senior managers.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0And be generous to your high achievers.\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Recently I was asked to review an offer letter for a senior director of business development. The CEO was concerned that he was offering far too much in the form of incentive … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[8,11,10],"tags":[],"class_list":["post-427","post","type-post","status-publish","format-standard","hentry","category-depending-upon-others","category-growth","category-surrounding-yourself-with-talent"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/427","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=427"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/427\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=427"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=427"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}