Interesting question that was raised at a recent meeting of the National Association of Corporate Directors in Los Angeles, one that has value for every company that has a management team of non-owners. If you own a company that is managed by professional executives, even if you are the owner/CEO who manages that team, consider these thoughts: First, my assumption: You have a vision for the company and a mission statement that supports that vision. If it doesn’t have those things clearly defined, you can stop reading. The company’s planning systems are probably not sufficiently goal based for these advanced ideas, so it doesn’t matter.

OK, if we’ve gotten past that obstacle and the company has a well thought out long range or strategic plan in place, how does the compensation of the company’s management team support movement toward fulfilling the mission and achieving the vision? Specifically:

How are managers paid for achieving goals set out in the strategic plan?

• Are there multi-year bonus elements in their pay package in addition to the usual “thanks for a good year” raises and bonuses based on short term performance?
• Are payouts based in part on milestones of significant value in the plan?
• Are your milestones specific enough to enable identifying success with acceptable certainty?
• Is every manager eligible for such payouts clear on what is expected to earn those payouts?

Going beyond money to the more personal side, is there appropriate recognition, in addition to bonus payouts, when a key milestone is reached?

• Is the achievement publicized to others in the company, along with credit to the achievers?
• Is there a congratulations lunch, dinner or other event to make the most of that recognition, perhaps at which the compensation reward is actually presented?
• When a promotion opportunity arises, are the achievers with the capability to succeed at a higher level given priority for that promotion, and the achievement recognized as part of the basis for the promotion?

You know what the right answers are, and you know what your answers are. If they’re not the same, maybe you should call us for a consultation. The number is 888-788-6534.

As always, I welcome your feedback and suggestions.