Tag Archives: Compensation

Can You Metric Company Culture? Two Suggestions

Situation: A company has done a number of things to build company morale. Participation is variable depending on the activity. The CEO wants to build a system to measure employee morale. What metrics do you use to measure changes in your culture over time?

Advice from the CEOs:

  • The Gallup Organization has focused on this issue perhaps more than any other organization in the world. They find that regularly conducting surveys allows you to measure and improve your culture over time. Their surveys focus on 12 questions that they have found most critical to employee morale within a company.
  1. Do I know what is expected of me at work?
  2. Do I have the materials and equipment I need to do my work right?
  3. At work, do I have the opportunity to do what I do best every day?
  4. In the last seven days, have I received recognition or praise for doing good work?
  5. Does my supervisor, or someone at work, seem to care about me as a person?
  6. Is there someone at work who is interested in and encourages my development?
  7. At work, do my opinions seem to count?
  8. Does the mission/purpose of my company inspire me make me feel that my job is important?
  9. Are my co-workers committed to doing quality work?
  10. Do I have a best friend or mentor at work?
  11. In the last six months, has anyone at work given me a review or talked to me about my performance/progress?
  12. This last year, have I had opportunities at work to learn and grow?
  • Notice that not one of these has to do with compensation or benefits. Rather they focus on employee perception of how they are managed, whether they have to do the tools to do their job, and feeling that others at work care about them.
  • Another measure to watch is employee retention – particularly of your best employees.

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How Do You Smoothly Transition Employee Roles? Four Suggestions

Situation: Two employees within a small company are shifting roles. One is shifting from Operations Manager, a higher level position, to an engineering role in charge of production, with no reports. The second has been promoted from Customer Service Supervisor to greater responsibilities for purchasing and production scheduling. How should the CEO adjust the titles and compensation of these individuals?

Advice from the CEOs:

  • The Operations Manger is really shifting to a staff engineer position. Consider the title Senior Engineer or Senior Staff Engineer if the individual is comfortable with this. It conveys respect for prior experience while delineating this individual’s preferred responsibility. You may want to make adjustments to compensation over time by holding back on salary raises rather than by cutting salary right now.
  • The Customer Service Supervisor is moving into new responsibilities, and this may take time. In a sense this is a lateral move with potential for growth. Consider retaining the title of supervisor until this individual has demonstrated ability to perform these new duties. Salary adjustments and raises can be added as the individual grows in responsibility.
  • There is no problem having multiple titles and business cards. Many small companies do this. You can give the second person two titles: Customer Service Supervisor and Production Supervisor. This enables you to elevate this individual to manager of one or both areas as ability is demonstrated to take on additional responsibility and accountability.
  • Because both employees will be working in production, albeit in different capacities, monitor the situation closely to assure that conflicts don’t develop.

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How Do You Transition from Product to Business Development? Three Thoughts

Interview with Trevor Shanski, Founder, eWORDofMOUTH, Inc.

Situation: A company with a new lead generation solution is ahead of the curve for their market segment, and ready to transition from a product development focus to a full-scale business development focus. This means developing new capabilities on a limited budget. How have you made the transition from product development to business development?

Advice from Trevor Shanski:

  • The reality of early stage companies is that they live on scarce resources. Founders and early executives have to be able to work for lean base salaries during the learning curve. They will be individuals who have selective characteristics.
    • They will be able to accept conservative salaries near-term, as well as during financial bumps in the road. Their focus will be growing the company’s value and their incentive will be having a material stake in the company.
    • They will have limited outside demands on their time and attention so that they can work long hours.
    • They will appreciate the challenge of heavily performance-based compensation, with the potential to win big if they can deliver.
    • They will have a network of connections and relationships upon whom they can call to gain early business traction.
  • Characteristics for successful early stage executives include the ability to work intimately with the founding team. Early stage companies are idea and capability incubators where things change quickly. Players must be able to get the job done with little support.
  • It is critical to have a clearly defined set of expectations for the first few months as you bring on new executives. Early foci will include:
    • Immersion in understanding the product capability and possibilities.
    • Sitting down with a white board and openly looking at fresh thoughts for how the market should be approached. Founders frequently suffer from tunnel vision after a long period of development and need a fresh outside perspective on the market and messaging. What partnerships could accelerate market development? What knowledgeable experts should be leveraged to build awareness? What potential is out there that the founders are not seeing?
    • After these factors are defined, the next step is to develop an action plan and milestones to guide plan execution, plus a budget and alternatives under different resource scenarios.
    • Once the plan is in place, the focus will be to gain early feedback on the company’s product and capabilities, and then iterate quickly to find the right message to target significant segments of the market.
  • The focus of early stage companies has to be on quickly developing plans, and then executing.

You can contact Trevor Shanski at [email protected]

Key Words: Product, Business, Development, Limited, Budget, Transition, Resource, Scarce, Incentive, Focus, Compensation, Performance, Network, Expectations, Action Plan, Execution

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How Do You Build A High Performance Environment? Three Steps

Interview with Paul Limbrey, CEO, Elkiem USA

Situation: Leaders who are successful in the long-term have figured out how to build high performance environments. This enables them to continually produce breakthroughs by stimulating the performance of others, and to rise above their competition. What are the factors involved in building a high performance environment?

Advice from Paul Limbrey:

  • Our work is based on 20 years of research into high performance in individuals and organizations. First one needs to understand the dynamics that stimulate high performance in people.
    • Our research indicates there are several elements that combine to form a system that stimulate improved performance in populations. These elements include concepts addressing Direction – Achievement, Failure and Strategy, providing Status of current performance, and Motivation – reason/purpose plus reward/consequence. The final unifying element is the culture or guiding philosophy in an environment.
    • On a company level, the first task is to understand these dynamics as you have created them today. This enables you to see where you need to tweak your environment to better stimulate high performance.
  • How consistent is high performance across difference fields of human endeavor?
    • We find that all elements that encourage high performance exist in all environments.  However the potency of each element varies with the particular environment.
    • For example in some environments the Goals are more potent (Sales groups or athletes). In others culture is potent (the Military or companies like Southwest Airlines). In others the reward systems are most potent (Investment Banking) or the potential for failure (airline pilots or first responders).
    • Any of the elements can stimulate performance improvement.
  • How does one go about matching the right system and solution for a particular company?
    • Start by focusing on the potency of each subsystem – Directional, Status and Motivation – in your particular environment. How critical is each in shaping decisions and action taken?
    • Take the example of a CEO who has no vision for the future of the company. The result is inconsistent decisions day to day or week to week. The organization can’t focus on effective execution. The solution is to focus on Direction.
    • What about the CEO who is concerned with complacency. This is best addressed by looking to define what represents sub-standard more clearly for the organization.
    • If you have an “excuse rich” environment or desire greater accountability, look to your status or “exposure” systems to provide more accurate performance status first before looking toward your consequence systems.

You can contact Elkiem at [email protected]

Key Words: Leadership, Strategy, Performance, Environment, Success, Goals, Compensation, Measurement, Values, Behavior

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What Are Best Practices for Selecting Business Development Staff? Four Thoughts

Situation: A company wants to expand its business development staff. What is your experience, and what has worked best for you in selecting among business development candidates?

Advice from the CEOs:

  • Your first priority is your compensation plan for the new person. There are three basic compensation schemes:
    1. High Base/Low Commission
    2. Medium Base/Medium Commission
    3. Low to No Base/High Commission
  • Choice between these options depends on your own philosophy, as well as common practice within your industry. Compensation is central to candidate selection. The CEOs recommend asking candidates about their own preferences for compensation.
    • If they prefer Option 1, don’t hire them – they either lack experience or confidence.
    • They ideally prefer Option 3 – they can make more money, but cost you little unless they perform.
    • If they prefer Option 2, probe. They may be good but face personal obligations that make it difficult to choose the high risk/high reward option. Ask about past compensation and performance. Verify any claims made during the interview.
  • You want to structure sales compensation so that non-performers leave of their own accord – without costing you dearly in time or money.
  • What are the most important traits to seek in a good B.D. candidate?
    1. Understanding of customer’s requirements as well as purchase behavior.
    2. Understanding of your product or service.
  • How do you find candidates?
    • Use a Head Hunter who knows your industry and competitors.
    • Use written tests to evaluate the individual’s traits.
    • Let the recruiter find and screen prospects and present the top 2-3 to you.

Key Words: Business Development, Candidate, Compensation, Experience, Traits, Evaluation, Base, Draw, Commission, Industry Practice, Verification, Performer, Non-Performer, Selection, Head Hunter, Personnel, Recruiter, Test

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How do we Get our Doer/Sellers to Sell? Four Recommendations

Situation: The Company has a geographical sales and service organization. Much of the sales effort comes from the consulting reputation of the managing director of each geographical unit, but he directors’ core values usually favor consulting over meeting sales plans. How do we get these directors to meet sales goals?

Advice from the CEOs:

  • Experience turning around a consulting organization with no sales culture:
    • Ours was a 5-year process. It starts with a leader who sells successfully and teaches by example.
    • As we made the transition, we selected new hires for sales skills to compliment their consulting skills. This facilitated our transition to a strong sales culture.
  • You need to commit to build a sales culture.
    • Moving to an account manager team versus an engineering/professional team was a big shift. It takes time and patience.
    • Hire effective sales people to jump-start the process. Most of the successful seller/doers will be new hires.
    • Revise your reward and recognition structure around your objectives.
    • Make rainmakers your best paid people. This will bring others out of the woodwork.
  • Bias sales compensation for doer/sellers toward variable compensation. Allow successful individuals to make over $200K per year.
    • Consider a 3-year phase-in by not increasing base pay through raises. More than make up the difference in available variable pay. Directors will now have more incentive to hit their sales numbers.
  • This is a difficult change in both sales leadership and culture. You may have to make significant leadership changes.

Key Words: Sales, Compensation, Core Values, Consulting, Goals, Reward, Incentive, Transition, Hiring, Culture  [like]

Working On vs. In the Business – Six Thoughts for your Staff

Situation:  The Company created five customer-centered divisions headed by Business Development Managers (BDMs) who oversee project management as well as business development in their markets. A year after implementation, the BDMs are more focused on managing their teams than on developing new business. How can we enhance focus on business development?

Advice from the CEOs:

  • Your BDMs are technicians; business development (BD) isn’t their strength.
    • People gravitate toward important/urgent activities in their comfort zone.
  • Supplement your staff with people who have a proven talent for business development.
    • You may not need 5 people – 2 or 3 may be sufficient to support the BDMs.
  • What if our customers demand technical expertise in business development personnel?
    • Make category expertise a requirement when hiring, in addition to experience in BD.
    • There are specific traits that characterize successful BD personnel. Specify these traits in your hiring process and verify these abilities in candidates both by testing for these traits and through reference checks. The Sandler Organization has good tests for BD talent.
  • The BDMs are responsible for coordinating bidding and pricing. Should this responsibility be handed over to the new BD personnel?
    • Not completely. You have two options.
  • Require BD personnel to coordinate with the BDMs when it comes to pricing and project delivery, and/or
  • If you determine that the BD personnel need to be able to negotiate pricing on their own, tie their commission compensation 100% to margin on projects bid.

Key Words: Sales, Business Development, Customer-Centered Organization, Hiring Requirements, Hiring Selection, Collaborative Sales, Compensation  [like]