The term “unicorn” refers to a pre-IPO company valued at more than $1B. When the term was coined in 2013 there were only 39 such companies. As of October 2020, there was a herd of at least 450 of them! Terms like “decacorn” and “hectacorn” have been used to define $10B and $100B companies, but I prefer Godzillas. Godzillas are truly unexpected. They cause you to change your approach. And if you don’t handle them well, they may destroy things that everyone finds valuable.
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Sales people are eager and enthusiastic to get started with a new plan, new sales cycle, new anything. This can be tough on the people who are trying to enhance or create sales plans. You want them to be engaged. Once this goal is achieved, your sales people are ready to sprint. It can be a challenge when every project begins with: On your marks! Get set! (The 5 year-old next to you starts running.) GO! And once again you are playing catch up. Prepare well before you start explaining your approach because you won't get much time once everyone is involved.
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I often say that the most important aspect of any incentive plan is its intent. Intent drives the details of design. Intent sets the foundation for communications. Intent informs people of the definition of success. But intent without great execution will nearly always fail.
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Being locked up at home for the past nine months has given me the time to watch some videos that wouldn’t have made the list in a normal year. The rabbit hole of streaming information recently brought me to a series of videos on triathlons. Watching a few of these events (appropriately sped up) reminded me of the power of a compensation philosophy.
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Editor's Note: There are a lot of reward terms out there and they aren't always universally understood. Leave it to Dan Walter to illuminate this challenge with his Classic humor!
We all wish we were better at communicating. We create presentations (decks) and plan summaries (SPDs). We carefully choose our words and have our colleagues review things before sending them. Our efforts need to be understood by people with wide ranges of experiences, education and levels of interest. But what if our best efforts were making things worse?
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Given enough Lego and you can build just about anything. Sales compensation is similarly simple, flexible, and potentially complex. Do you focus people on volume, quality of sales, profitability, growth, long-term builds? This list is nearly endless. How you motivate people to stay focused is similarly flexible. Do you use commissions, SPIFFs, spot bonuses, long-term incentives, quarterly goals, annual goals, team metrics, or individual achievement? Do you focus on granularity or stay tuned with the big picture? Any program requires buy-in from so many people and groups. The final result is something that people depend on to pay their own bills and keep their company afloat. Making small changes is simple, but real change is hard.
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It’s time to be honest and evaluate what your talent acquisition team and managers are telling prospects and employees about their awards. Are you Tom Sawyer getting people to whitewash a fence or just one more employer looking to put another cog in the machine?
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Usually the drive for pay for performance comes from the top of the company. “We need to have people be more productive.” “I don't want to have to pay people that much, unless they are REALLY doing a great job.” While these are valid concerns, we must be able to better define what people do that makes a company successful.
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It’s been a hairy year and it’s time to get out the combs and brushes. Break out your good scissors and clippers. I hate to be the one to tell you, but your compensation plans have “COVID-hair.” We get it. t’s been six months since the last time you sat in the chair of a professional and had your ‘do done. It may have been that long since the last time you covered your roots with someone other than an off the shelf solution.
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Anyone who has taken a class or performed a Google-search on performance goals has learned about the concept of “SMART” goals. The most common breakdown seems to be: S - Specific, M - Measurable, A - Attainable, R - Relevant, and T - Time-bound. We all seem to know this and yet many still seem to have problems creating successful pay for performance programs. I would like to propose a new D.U.M.B. approach that celebrates the spirit of insanity.
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As we move into the compensation planning season, I thought it was time for a quick reminder to focus on keeping things simple. Over-complicating the basics of pay, can make it impossible to successfully accomplish the most complex things. So many small and mid-sized companies work so hard to make base pay “perfect” that they have no time or energy to build effective short-term incentive plans or rational equity compensation plans.
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