Great Design Teams Create Great Compensation Plans

Successful Incentive Plans – It’s About Ownership

We work with organizations of all shapes and sizes, from 3 person $2M brokers to the top global supply chain providers and we see success in many forms. Success is not about the revenue generated, as we've seen small companies be far more successful on many dimensions than some of the largest publically traded companies. Nor is success (at least the way I measure it) based on the size of the bank account of the CEO. To me, success is about how employees feel about an organization. Do they feel a sense of "ownership" – is it something they have been entrusted with to care for, and do they take their duties seriously, acting with passion and dedication? This creates sense of loyalty and ownership of any company initiative creates success.

Developing incentive plans offers an interesting window into the psychology and culture of organizations. Rarely is there a topic that draws more impassioned responses at all levels of the organization….than pay. Pay is why people go to work, pay is what management must do to have workers complete tasks, and pay is what can make an employee feel valued or devalued. For better or worse, our society is one that equates a paycheck with worth. If you've ever hung around sales people, you learn quickly that they talk about "W2" and how much money they have made, will make, or did make at one point in the past. Changing these pay structures (which is what Prosperio does) riles many in an organization and brings out the best and worst that an organization has to offer.

What Makes For Organizational Success

We've now worked with over 150 organizations developing incentive plans for nearly every role inside an organization you can imagine. We complete our work through a typical Assess > Design > Test > Implement model that draws on multiple members from the company, pulled into a "Design Team" structure. We can track a project's success nearly from the start of the process based on the nature of the interactions of the Design Team members with each other and with us.

Successful Incentive Programs come from Design Team members that exhibit the following traits during the meetings:

  • Members are prepared and focused

  • The mood can be light and joking, but when it's time for business…it's time for business

  • There is limited checking of email or phones during the meeting

  • Active participation occurs throughout

  • Polite (but sometimes heated) debate is carried out, but decisions are made and stuck to once agreed upon

  • There is an internal process manager who helps ensure the client team stays on task between meetings

  • Limited other activities are scheduled during the design process to ensure meetings are kept to scheduled times with minimal need to reschedule

  • Team members understand their role and fulfill their duties, while allowing outside help to fulfill their role in the manner that has proven successful in the past

  • Senior Leaders are supportive of the process, and truly delegate decision making authority to the team

  • Team members "dive in" intellectually to truly understand and "own" the outcome of the meetings

Conversely, dysfunctional organizations exhibit the following traits during the meetings:

  • The jokes never stop, and in fact prove to be a stalling tactic used to prevent decision making

  • Team members do not show up for meetings, come in and out frequently, or are absorbed in their electronics during the meetings

  • Lip service is paid to decisions to "check the box" without any real understanding of what is being decided

  • Outside consultants are "guided" into processes, decisions, or given such narrow boundaries that success is nearly impossible as their "unbiased outside help" has been twisted to serve an internal agenda

  • Senior Leaders are not involved in the process but have preconceived ideas of the outcome, and do not allow the team to make independent decisions

  • Management does not engage in the process and does not understand the results

  • Team members do not understand the criticality to success of internal "ownership" and instead expect the consultant to magically fix everything

  • The team does not follow up on tasks assigned during or after the process is complete

  • The team exhibits any group dysfunction, including but not limited to: stalling, road blocking, finger pointing, blaming, obfuscating, or dodging responsibility

When we have left an organization, we can predict with nearly 100% accuracy which ones will see success from the process they have gone through with us, and which will not, and the differences can be profound. We have worked with organizations that have grown 1,000% in 3 years after putting in new compensation plans (from $12M to $150M in revenue), and others who have seen no success at all…thankfully these are very few in number. While we would like to claim all responsibility for the successes (and none for the failures), the reality is we (and other service providers like us) can only provide the tools. It's up to the organization to decide what to do with the tools we have given. If they don't use them, they will see no gain. A hammer won't put in a single nail by itself, but…put into the right hands, that hammer can build a house (or a $150M company out of a $12M one).

Assessing Compensation Plans

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