Creating Alignment to Drive Performance (short and long-term) for Your Company - Employee Retention and Incentive Compensation collide.

Today we have a guest blog from Chad Blevins:

For nearly all business owners, the real engine that drives performance is the employee base.  And even more specifically, it is the leaders within the employee base that can make or break a company. 

Because of this, these same owners struggle with the idea of how best to attract, motivate and retain these key leaders over time.  Whether your goals are to double in size, to enable you to spend 3 months a year in Palm Desert, or to create a succession option – your success will begin and maybe even end with your leadership team. 

So how do you design and implement an incentive compensation program that creates an environment where these leaders can truly help drive a company’s success? 

While all company cultures have their own nuances and owners have their own goals – there are some key elements of a successful plan that hold true in nearly every organization.

• Alignment, Alignment, Alignment.  The simple idea is to create alignment so that everyone is going in the same direction.  Easily enough said – often tough to do.  It includes:

o   Alignment of the leaders among themselves to truly work as a team.  If you measure their performance only in the respective areas they manage their incentive is to only do what benefits their “area”.  Even worse, it can cause actions/behaviors that are actually counter-productive to other areas of the company.

o   Alignment of leaders and owners.  Seems simple enough, but is often not practiced.  If you as the owner have specific goals – create an incentive plan that motivates behaviors toward those goals. 

o   Alignment of leaders and long-term health.  Everyone has heard the horror stories from the Fortune 500 world where decisions are made to make quarterly earnings that will hamper long-term success.  Incentive compensation plans can have the same impact in closely-held companies.  Balance short-term performance with long-term health. 

• Communication.  Tell the key employees how you are going to measure them.  Even better, share the company objectives and get them to help define actions and measurements they can impact to help achieve those.  All too often employees get a year-end bonus with little explanation of what created that bonus, much less communication at the beginning of the year around how they will be measured.  If you want them to act a certain way…tell them.  Then tell them how they did.

•  Data Sharing.  Hold quarterly meetings with the key leaders around how the company is tracking.  If you need them rallying, the last quarter of the year is too late.

• Measurement and Consistency.  Have a methodology for outlining their expected performance at the beginning of the year and measure them at year-end to those expectations.  Use the same methodology consistently year-over-year to ingrain it in the culture.

• Return on Investment.  At the end of the day, any incentive compensation program ultimately shares some of the benefits of success with the employees (usually cold hard cash).  Because of this, a properly designed program will look to create a return on investment for the owner for doing so.  Outline that need and measure it. 

Again, each company has its own key attributes that make it unique.  But every company can foster a culture of performance while still maintaining its own uniqueness. 

So ask yourself… do you have a plan that addresses all the aspects outlined above?  Is it driving a culture of performance?  Is it enabling the leaders of the company to truly lead rather than just follow you?  Are they motivated to work together as a team?  If not, can you get a better Return on Investment with a different approach?  

CHAD BLEVINS

Chad Blevins founded Blevins Financial to serve the complex financial and estate planning needs of the closely-held business owner and high net worth individuals. His focus on combining an overall estate planning strategy with life insurance analysis positions him to serve clients in a more comprehensive -- and often more simple -- manner.

He has held executive leadership positions in Fortune 500 companies (GE, Honeywell, MagneTek), private start-ups as well as family-held businesses. His experience includes executive positions in Sales, Marketing, Business Development, Finance, Operations and M&A work. This diversity of experience allows him to work in a highly comprehensive manner in dealing with client’s personal and business objectives.

Chad is a Board of Directors member for the Northwest Family Business Advisors, which focuses on teaching advisors how to work together for the client’s benefit.  His level of expertise and desire to educate has also prompted speaking engagements with the following organizations:

Washington State CPA Association Association of General Contractors (AGC)

National Electrical Contractors Association (NECA) Approach Management Systems/Smart Association Northwest Family Business Advisors.

Chad was a recent honoree by the Puget Sound Business Journal as one of the “40 Under 40" top business people in the Puget Sound area, recognizing his contributions to both the business and charitable communities.