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A Deep Dive on Compensation – In The Trenches
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Questions Asked
Verne Harnish: Crafting Company-Wide Compensation Plans (3:06)
Verne Harnish is the founder of the Entrepreneurs’ Organization (“EO” for short), a global network of entrepreneurs and CEOs that boasts over 16,000 members worldwide. He is the author of multiple global bestselling books including Mastering the Rockefeller Habits, and Scaling Up, which has been translated into 23 languages and has won eight major international book awards.
- You have a new book out called Scaling Up Compensation. Can you briefly summarize the five core compensation principles that you explore in this book?
- When crafting a compensation plan, what is the best way to balance between individual goals, departmental goals, and company goals, knowing that they three can sometimes present conflicts and/or unintended consequences?
- What are some examples of customer-centric goals that tie together company, departmental, and individual incentive schemes?
- When creating a customer-centric compensation scheme, how do you decide which customer requests you should be listening to, and which requests you should ignore?
- In crafting compensation plans, you’re an advocate of “fairness, not sameness”. But if individual incentives plans are tailored to specific people, how do you avoid the risk or too much complexity and administrative burden? Or lack of confidentiality among employees?
Dave Prusinski: Sales Compensation (20:55)
Dave Prusinski spent 10 years as the Executive Vice President of Sales and Marketing at FleetComplete, a technology provider to fleet-owning businesses around the world. Under Dave’s leadership, FleetComplete grew their annual revenues by ~25x, achieving a ~50% revenue CAGR for 9 of his 10 years. Dave now spends his time as a Revenue Coach to several SMBs, working directly with their CEOs and Heads of Sales to optimize their sales and revenue generation processes.
- What are the biggest mistakes CEOs make when crafting incentive comp plans?
- How do you know if a comp plan is sufficiently simple & easy to understand?
- How do you re-structure a comp plan mid-year if you’re forced to do so?
- How do you know if you should change a comp plan mid-year vs. leaving it as is?
- How much change do you generally make to your comp plans year-over-year?
- When should a new annual comp plan be in the hands of sales reps?
Rich Manders & Brent Beshore: Equity or Options as a Form of Compensation (37:48)
Prior to becoming a CEO Coach, Rich Manders Co-Founded and led iAutomation, a Massachusetts-based machine control and automation company, and grew the business from $0 to $90M in sales with 180 employees, until selling the business to The Riverside Company (a leading global Private Equity firm).
Brent Beshore is the Founder and CEO of Permanent Equity, a private investment firm that invests in Founder-owned private companies. Permanent Equity is a long-term investor that typically intends to hold portfolio companies indefinitely, often without the use of any leverage.
- What have you learned about granting equity or stock options to your management teams as a form of non-cash compensation? Are they as motivating as the finance textbooks tend to suggest?
Jim Sharpe: Managing Wage Inflation & Salary Expectations (51:00)
Jim Sharpe has been at the Harvard Business School since 2009, holding positions as a Senior Lecturer in the MBA and Executive Education programs, an Entrepreneur in Residence, and now serves as a Visiting Executive. In 1987, Jim purchased Extrusion Technology, an aluminum extrusion fabricator that he ran as CEO for over 20 years. In 2008, Jim sold the company to a private equity firm, having grown the company from $4MM to $32MM in revenue throughout his ownership tenure.
- How did you manage wage inflation within your employee base? What mistakes did you make and what did you learn from them?
Randy Street: Surprising Lessons Specific to Compensation (55:05)
Many of you will know Randy Street as co-author of the book Who: The A Method for Hiring, which introduced the now widely used Topgrading hiring method to the world. The book went on to become a New York Times, Wall Street Journal, BusinessWeek, USA Today, and Publishers Weekly best seller. Most importantly though, more than any other book of which I’m aware, this book acts as the “hiring bible” for countless CEOs across the world.
- Specific to compensation, are there any surprising or counter-intuitive lessons that you’ve learned in your 30+ years helping CEOs hire and develop talent?
Bob Pritchett: Compensation Mistakes (1:03:05)
Bob Pritchett is the author of one of my favorite business books of all time entitled “Fire Someone Today (and Other Surprising Tactics for Making Your Business a Success)”. In addition to being an author, Bob is also a lifetime entrepreneur and CEO, having founded Logos Research Systems (later renamed Logos Bible Software and now Faithlife) in 1992, and acting as its CEO for 30 years until recently assuming the role of Executive Chairman.
- What have you learned about how to properly align & incent the employees within your company? What are some of the biggest mistakes you’ve made in this regard?
Thanks to our Sponsors
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