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WhyYou Should
Stop Paying Incentives
22
Today’s Presenter:
Ken Gibson
SeniorVice President
(949) 265-5703
kgibson@vladvisors.com
7700 Irvine Center Drive, Suite 930 ⬧ Irvine, CA 92618 ⬧ 949-852-2288
www.VLadvisors.com ⬧ www.PhantomStockOnline.com
33
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44
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We value your input.
55
Post Webinar Intro
5 Minutes:
 Who We Are
 What We Do
 How We Do It
66
7700 Irvine Center Dr., Ste. 930
Irvine, CA 92618
(888) 703 0080
www.vladvisors.com
www.phantomstockonline.com
www.bonusright.com
 Headquartered in Irvine, CA
 Founded in 1996
 Over 450 clients throughout North America
VisionLink’s Focus: Help Business Leaders Build and
Sustain a High Performance Culture
Accelerate performance through pay strategies that
transform employees into growth partners.
If you do that…
• Quality of talent will improve.
• Employee engagement will expand.
• Performance will be magnified.
• Business growth will be accelerated.
• Shareholder value will increase.
99
The Incentive Plan Issues
 How many times have you revised
your incentive plan in the last five
years?
 What does your incentive plan cost?
 How is your incentive plan paid for?
 How do you measure the success of
your incentive plan?
 How much of your incentive dollars
reward short-term performance and
how much rewards long-term?
 What metrics drive the value of your
incentive plan?
 What ROI are you getting on your
incentive plan?
1010
Why You Should Stop Paying Incentives
A 21st Century Reality
Incentive plans, as traditionally
designed, are not the best way to
reward employee performance.
1111
The Evidence
Survey Results
Only 10% of responders
indicated they felt their
annual incentive plan was
effective. (World at Work 2016 Survey)
1212
Why?
1313
Four Key Reasons
Number One: Most plans are
built on the wrong premise
1414
The Wrong Premise
Influence Behavior Through
Careful Selection of Plan Metrics
 Reward your employees for achieving
results that are as close as possible to
their job duties.
 “Select the best metrics” for each
employee or at least for every
department.
 Assume that all the collective mini-
improvements will roll up into
shareholder value creation.
14
1515
When the plan isn’t effective . . .
 Most employers re-double their
efforts to find the “right metrics”
 More metrics (KPIs) are added to
the plan formula to focus
employees on behavioral
outcomes
 Employees focus on the KPIs
rather than the big picture
15
1616
“Let’s change behavior”
“…when financial incentives are
applied to increase…motivation,
intrinsic motivation diminishes. A
meta-analysis of 128 independent
studies conclusively confirmed this
effect.”
(“Stop Paying Executives for Performance,”
HBR, February 23, 2016)
16
1717
Metrics Focus
8 Problems
1. Impossible to link every metric to true value
creation.
2. Multiple KPIs create confusion and sap
motivation.
3. A focus on behavior incentives can lead to the
opposite behavior.
4. Difficult to find metrics for every position.
5. Results may be manipulated or loopholes
exploited.
6. Impossible to equalize metrics across individuals
and departments.
7. Unintended and unanticipated negative
consequences.
8. Pursuit of “perfect” metrics is a time waster.
17
1818
Outcomes, not Methods
"You cannot hold
people responsible for
results if you supervise
their methods.“
(Stephen R. Covey)
Corollary:
"You cannot hold
people responsible for
results if you pay them
for their methods.“
18
1919
Solution #1: Transition from Incentives
to Value Sharing
The premise should be to promote value
creation and value sharing:
▪ “When you help us create value you
participate in that value”
▪ Define value creation around the
shareholders’ most important goals
2020
Shareholder’s Most Important Result
Sustainable and growing profitability
20
2121
Key Metric
Focus on One of These:
 Profit
 Increase in Profits (% or $)
 (Sometimes: Revenue Growth)
21
2222
Not Just Profit but Productivity Profit
Productivity profit is that
surplus that can be
attributable to the
productivity of your people,
not just your capital at work.
2323
Case Study
23
2424
Core Changes Shift from “Incentives” to “Value
Sharing”
 Took away local measurements
driving management incentive
plans—all paid on same metrics
▪ “We live together and we die
together”
 Aligned everyone behind
company success
▪ “I call it ‘pay the company first.’ ”
24
2525
Pay the Company First
“Basically, up to the company’s
operating profit target, all of
the profits go to the company;
and only after that target is
met, do we start funding the
incentive pool.”
Example: If UL’s target is
$80 million--
 100% of first $80 in
profit goes to company
 The next $20 million
goes to the incentive
pool
 From there on, 50/50
between company &
incentive pool
2626
Pay the Company First
Once value creation is defined,
compensation can follow a formula
for sharing value in a way that aligns
key producers with the company’s
business plan and priorities.
26
2727
Example:
Item Amount
Capital Account $20,000,000
Cost of Capital 12%
Capital Charge $2,400,000
Operating Income $10,000,000
Productivity Profit $7,600,000
Total Rewards
Investment
$25,000,000
ROTRI™
Return on Total Rewards Investment
30.4%
(ROTRI™ = Productivity Profit/Total Rewards Investment) 27
2828
Example:
Item Figure
Capital Account $20,000,000
Cost of Capital 12%
Capital Charge $2,400,000
Operating Income $10,000,000
*Productivity Profit $7,600,000
Total Rewards
Investment
$25,000,000
ROTRI™ 30.4%
(ROTRI™ = Productivity Profit/Total Rewards Investment)
*Variable Pay
Plans (Value
Sharing) are
financed from
Productivity
Profit
28
2929
Setting Payout Thresholds
 Base
 Target (budget)
 Superior
29
3030
What’s Base?
 Base is the threshold amount of
profit that justifies employee
bonuses
 Begin sharing value above that
threshold
 Below Base = No bonus
 You should expect to achieve Base
performance 4/5 years
3131
What’s Target?
 Target is the amount of profit that is
expected to be achieved
 Bonus values at Target should be
your “Market” opportunity
 You should expect to achieve Target
performance 3/5 years
3232
What’s Superior?
 Superior is the amount of profit that
is achievable assuming exceptional
performance
 Bonus values at Superior should be
impressive
 You should expect to achieve
Superior performance 1/5 years
3333
Other Metrics
Minimum profit thresholds
must be met first. Then…
 Department or team metrics
 Non-correlated factors (customer
retention, customer or client
increase, etc.)
 Individual performance metrics
3434
Solution #1 leads to . . .
Every employee understanding:
▪ The importance of sustainable
profits
▪ How those profits are generated
▪ How they can contribute to the
generation of profits
▪ That bonuses are not guaranteed
(they’re based on value creation)
▪ How their variable pay programs
work
34
3535
Four Key Reasons
Number Two: Most plans mis-
manage the role of individual
employee performance
3636
Ways to treat individual performance
 Component of the
allocation
 Discretion
 Modifier
3737
Component of Allocation
 Allocation to plan participants
contingent on:
▪ Company Performance – Employees
should have all or a majority portion of
their bonus based on company
performance
▪ Org Unit Performance – A portion of an
employee’s bonus can be allocated based
on department, location, division,
or business unit
▪ Individual Performance – A portion of the
bonus is allocated to Individual Results
3838
Problems
 Unless the slice is big, many employees will pay little
attention to it
▪ “I can still get 75% of my bonus without worrying about that piece”
 Performance management score may not be trustworthy
▪ “I hate to give him a low score because it will reduce his bonus”
3939
Problems
 Full (or even partial) discretion may lead to charges of
unfairness or even discrimination
▪ “Why was he paid more than me?”
 Lengthy list of employee goals may be hard to track fairly or
accurately
▪ “I didn’t get that done because you asked me to focus on something
new”
4040
Performance
Management
Revolution
40
4141
Individual Performance
 Trend is to disconnect performance from
incentive pay
 Performance Management is still
important
 Managers more likely to be honest about
performance if incentives are not directly
correlated to performance rating
 If performance is deemed “Unacceptable”
discretion should be utilized to eliminate
incentive payment
41
4242
Solution: Spot Bonuses
What about employees who made
special contributions over the course
of the year?
 Create a discretionary reserve
inside of plan funding
 Reserved for “exceptional”
performers only
 Point to clear contributions (the
reason for the award)
 Immediate recognition (not end
of the year)
 Nomination process
 Budget a “reserve” to fund these
awards
 They don’t have to be big ($500).
42
4343
Solution #2 leads to . . .
Every employee understanding:
▪ How individual performance can
influence variable pay
▪ That end-of-year awards are a
celebration of team results
4444
Four Key Reasons
Number Three: Most plans
don’t balance rewards for
short-term and sustained
performance
4545
Dual Focus
Peter Drucker once wrote that the
manager’s job is to keep his nose to the
grindstone while lifting his eyes to the hills.
He meant that every business has to
operate in two modes at the same time:
producing results today and preparing for
tomorrow. (Ken Favaro, Strategy+Business)
4646
Solution: One Philosophy, Two
Performance Periods
Wealth Multiplier Philosophy
We want all stakeholders to
participate in the wealth multiple
they help create.
 Fair
 Prudent
4747
Rewards Orientation
 Short-Term focuses on
rewarding profit
 Long-Term focuses on
rewarding business value
increase
4848
9 Long-Term Value Sharing Alternatives
Stock Option
Performance Shares
Restricted Stock
Phantom Stock
Option
Performance
Phantom Stock
Phantom Stock Profit Pool
Performance Unit
Strategic Deferred
Compensation
4949
Grant Equity or
Not Equity?
Full Value or
Appreciation Only?
Yes
Appreciation
Stock Option
Full Value
Performance Based?
Yes
Performance Shares
No
Restricted Stock
No
Reward for Value
Increase or Financial
Performance?
Value Increase
Full Value or
Appreciation?
Appreciation
Phantom Stock
Option
Full Value
Performance Based?
Yes
Performance
Phantom Stock
No
Phantom Stock
Financial
Performance
Appreciation-
Performance Based or
Employee Directed?
Performance
Based
Reward for Profit/Cash
Flow or Other Metrics?
Profits
Allocation or
Objectives Based?
Allocation
Profit Pool
ObjectivesOther Metrics
Performance Unit
Employee Directed
Strategic Deferred
Compensation
5050
Four Key Reasons
Number Four: Most plans are
not properly communicated
and reinforced
5151
View Employees as Growth Partners
Engage employees in a conversation about
the contributions they can make to
profitable growth. 51
5252
Reinforce Line of Sight
Vision
Where?
Strategy
How?
Roles and
Expectations
My Contribution?
Rewards
What’s in it
for me?
52
5353
Communication
 The Key to the success of the plan
 Employee communication statements should communicate incentive
target opportunity
 Regular performance updates during the plan year
 “Partners” understand basic company performance
 Private companies don’t always disclose all financial information to all
employee “Partners”:
▪ Financial performance in private companies communicated via
percentage against target
▪ “After Q1 we are tracking 95% against our ‘Target’ financial
performance”
53
5454
“Help me
understand how
the plan works”
“Help me
understand what
has to happen to
optimize the value
of the payout for
me”
“Help me believe
that we can
achieve those
results”
“Talk with me
about how I can
contribute to
those results”
“Let me know
how we’re doing
regularly so I can
make a
difference”
5555
Market a Future that’s Relevant
 Here’s our future.
 Here’s how we’re going
to get there.
 Here’s the role we picture
for you.
 Here’s how we encourage
our people to grow and
contribute.
 Here’s our philosophy
about pay and rewards.
 Here are our specific pay
programs.
 Here’s how our pay
programs will work for
you if we achieve our
plan.
5656
Employee Value Statement
Year 1 2 3 4 5
Targeted
Results
100% 100% 100% 100% 100%
Salary $160,000 $166,400 $173,056 $179,878 $187,177
STVS $64,000 $66,560 $69,222 $71,991 74,871
LTVS
(EOY)
-- $74,000 $186,000 $311,000 $448,000
401(k)
@7%
$17,120 $36,123 $57,169 $80,428 $106,086
Total
Cash
$224,000 $232,960 $242,278 $251,970 $262,048
Wealth
Accrual
$17,120 $110,123 $243,169 $391,428 $554,086
Total
Value
$241,120 $567,083 $942,407 $1,342,636 $1,767,343
5757
Solution #4 leads to . . .
Every employee understanding:
▪ That they are being treated like partners
in the success of the business
▪ What they can do to improve the value
of the business and . . .
▪ How that aligns with their own rewards
▪ Everything more regularly (no surprises)
5858
Why You Should Stop Paying Incentives
A 21st Century Reality
Incentive plans, as traditionally
designed, are not the best way to
reward employee performance.
Replace incentives with value-
sharing.
5959
Post Webinar Intro
5 Minutes:
 Who We Are
 What We Do
 How We Do It
6060
www.BonusRight.com
www.bonusright.com
6161
 New SaaS tool
 Build and manage
your bonus plan
online.
 Indicate on survey
if you would like
to schedule a
demo.
6262
Take advantage of a one-hour
consulting call with a VisionLink
principal at no charge.
Indicate interest on final survey.
Request Consultation & Take Survey
Request a copy of our
slides, report,
complimentary consultation
and BonusRight demo.
We value your input.
6363
www.phantomstockonline.com
www.vladvisors.com
Subscribe to our blog!
6464
Free Report:
HOW TO SHARE VALUE WITH EMPLOYEES WHO
DRIVE LONG-TERM BUSINESS GROWTH
Request your copy on the final survey
6565
Q&A
6666
Today’s Presenter:
Ken Gibson
SeniorVice President
(949) 265-5703
kgibson@vladvisors.com
7700 Irvine Center Drive, Suite 930 ⬧ Irvine, CA 92618 ⬧ 949-852-2288
www.VLadvisors.com ⬧ www.PhantomStockOnline.com
ThankYou!
6767
Post Webinar Intro
5 Minutes:
 Who We Are
 What We Do
 How We Do It
6868
6969
7070
7700 Irvine Center Dr., Ste. 930
Irvine, CA 92618
(888) 703 0080
www.vladvisors.com
www.phantomstockonline.com
www.bonusright.com

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Why You Should Stop Paying Incentives

  • 2. 22 Today’s Presenter: Ken Gibson SeniorVice President (949) 265-5703 kgibson@vladvisors.com 7700 Irvine Center Drive, Suite 930 ⬧ Irvine, CA 92618 ⬧ 949-852-2288 www.VLadvisors.com ⬧ www.PhantomStockOnline.com
  • 3. 33 We’re happy to provide a copy of today’s slides. To open or close the control panel: Click the red arrow For questions during today’s presentation: Use the question area on your control panel Webinar Q: Are the slides available? A: Yes, more info will be provided at the end
  • 4. 44 Take advantage of a one-hour consulting call with a VisionLink principal at no charge. Indicate interest on final survey. Consultation Offer & Survey Request a copy of our slides and complimentary consultation. We value your input.
  • 5. 55 Post Webinar Intro 5 Minutes:  Who We Are  What We Do  How We Do It
  • 6. 66 7700 Irvine Center Dr., Ste. 930 Irvine, CA 92618 (888) 703 0080 www.vladvisors.com www.phantomstockonline.com www.bonusright.com  Headquartered in Irvine, CA  Founded in 1996  Over 450 clients throughout North America
  • 7. VisionLink’s Focus: Help Business Leaders Build and Sustain a High Performance Culture Accelerate performance through pay strategies that transform employees into growth partners.
  • 8. If you do that… • Quality of talent will improve. • Employee engagement will expand. • Performance will be magnified. • Business growth will be accelerated. • Shareholder value will increase.
  • 9. 99 The Incentive Plan Issues  How many times have you revised your incentive plan in the last five years?  What does your incentive plan cost?  How is your incentive plan paid for?  How do you measure the success of your incentive plan?  How much of your incentive dollars reward short-term performance and how much rewards long-term?  What metrics drive the value of your incentive plan?  What ROI are you getting on your incentive plan?
  • 10. 1010 Why You Should Stop Paying Incentives A 21st Century Reality Incentive plans, as traditionally designed, are not the best way to reward employee performance.
  • 11. 1111 The Evidence Survey Results Only 10% of responders indicated they felt their annual incentive plan was effective. (World at Work 2016 Survey)
  • 13. 1313 Four Key Reasons Number One: Most plans are built on the wrong premise
  • 14. 1414 The Wrong Premise Influence Behavior Through Careful Selection of Plan Metrics  Reward your employees for achieving results that are as close as possible to their job duties.  “Select the best metrics” for each employee or at least for every department.  Assume that all the collective mini- improvements will roll up into shareholder value creation. 14
  • 15. 1515 When the plan isn’t effective . . .  Most employers re-double their efforts to find the “right metrics”  More metrics (KPIs) are added to the plan formula to focus employees on behavioral outcomes  Employees focus on the KPIs rather than the big picture 15
  • 16. 1616 “Let’s change behavior” “…when financial incentives are applied to increase…motivation, intrinsic motivation diminishes. A meta-analysis of 128 independent studies conclusively confirmed this effect.” (“Stop Paying Executives for Performance,” HBR, February 23, 2016) 16
  • 17. 1717 Metrics Focus 8 Problems 1. Impossible to link every metric to true value creation. 2. Multiple KPIs create confusion and sap motivation. 3. A focus on behavior incentives can lead to the opposite behavior. 4. Difficult to find metrics for every position. 5. Results may be manipulated or loopholes exploited. 6. Impossible to equalize metrics across individuals and departments. 7. Unintended and unanticipated negative consequences. 8. Pursuit of “perfect” metrics is a time waster. 17
  • 18. 1818 Outcomes, not Methods "You cannot hold people responsible for results if you supervise their methods.“ (Stephen R. Covey) Corollary: "You cannot hold people responsible for results if you pay them for their methods.“ 18
  • 19. 1919 Solution #1: Transition from Incentives to Value Sharing The premise should be to promote value creation and value sharing: ▪ “When you help us create value you participate in that value” ▪ Define value creation around the shareholders’ most important goals
  • 20. 2020 Shareholder’s Most Important Result Sustainable and growing profitability 20
  • 21. 2121 Key Metric Focus on One of These:  Profit  Increase in Profits (% or $)  (Sometimes: Revenue Growth) 21
  • 22. 2222 Not Just Profit but Productivity Profit Productivity profit is that surplus that can be attributable to the productivity of your people, not just your capital at work.
  • 24. 2424 Core Changes Shift from “Incentives” to “Value Sharing”  Took away local measurements driving management incentive plans—all paid on same metrics ▪ “We live together and we die together”  Aligned everyone behind company success ▪ “I call it ‘pay the company first.’ ” 24
  • 25. 2525 Pay the Company First “Basically, up to the company’s operating profit target, all of the profits go to the company; and only after that target is met, do we start funding the incentive pool.” Example: If UL’s target is $80 million--  100% of first $80 in profit goes to company  The next $20 million goes to the incentive pool  From there on, 50/50 between company & incentive pool
  • 26. 2626 Pay the Company First Once value creation is defined, compensation can follow a formula for sharing value in a way that aligns key producers with the company’s business plan and priorities. 26
  • 27. 2727 Example: Item Amount Capital Account $20,000,000 Cost of Capital 12% Capital Charge $2,400,000 Operating Income $10,000,000 Productivity Profit $7,600,000 Total Rewards Investment $25,000,000 ROTRI™ Return on Total Rewards Investment 30.4% (ROTRI™ = Productivity Profit/Total Rewards Investment) 27
  • 28. 2828 Example: Item Figure Capital Account $20,000,000 Cost of Capital 12% Capital Charge $2,400,000 Operating Income $10,000,000 *Productivity Profit $7,600,000 Total Rewards Investment $25,000,000 ROTRI™ 30.4% (ROTRI™ = Productivity Profit/Total Rewards Investment) *Variable Pay Plans (Value Sharing) are financed from Productivity Profit 28
  • 29. 2929 Setting Payout Thresholds  Base  Target (budget)  Superior 29
  • 30. 3030 What’s Base?  Base is the threshold amount of profit that justifies employee bonuses  Begin sharing value above that threshold  Below Base = No bonus  You should expect to achieve Base performance 4/5 years
  • 31. 3131 What’s Target?  Target is the amount of profit that is expected to be achieved  Bonus values at Target should be your “Market” opportunity  You should expect to achieve Target performance 3/5 years
  • 32. 3232 What’s Superior?  Superior is the amount of profit that is achievable assuming exceptional performance  Bonus values at Superior should be impressive  You should expect to achieve Superior performance 1/5 years
  • 33. 3333 Other Metrics Minimum profit thresholds must be met first. Then…  Department or team metrics  Non-correlated factors (customer retention, customer or client increase, etc.)  Individual performance metrics
  • 34. 3434 Solution #1 leads to . . . Every employee understanding: ▪ The importance of sustainable profits ▪ How those profits are generated ▪ How they can contribute to the generation of profits ▪ That bonuses are not guaranteed (they’re based on value creation) ▪ How their variable pay programs work 34
  • 35. 3535 Four Key Reasons Number Two: Most plans mis- manage the role of individual employee performance
  • 36. 3636 Ways to treat individual performance  Component of the allocation  Discretion  Modifier
  • 37. 3737 Component of Allocation  Allocation to plan participants contingent on: ▪ Company Performance – Employees should have all or a majority portion of their bonus based on company performance ▪ Org Unit Performance – A portion of an employee’s bonus can be allocated based on department, location, division, or business unit ▪ Individual Performance – A portion of the bonus is allocated to Individual Results
  • 38. 3838 Problems  Unless the slice is big, many employees will pay little attention to it ▪ “I can still get 75% of my bonus without worrying about that piece”  Performance management score may not be trustworthy ▪ “I hate to give him a low score because it will reduce his bonus”
  • 39. 3939 Problems  Full (or even partial) discretion may lead to charges of unfairness or even discrimination ▪ “Why was he paid more than me?”  Lengthy list of employee goals may be hard to track fairly or accurately ▪ “I didn’t get that done because you asked me to focus on something new”
  • 41. 4141 Individual Performance  Trend is to disconnect performance from incentive pay  Performance Management is still important  Managers more likely to be honest about performance if incentives are not directly correlated to performance rating  If performance is deemed “Unacceptable” discretion should be utilized to eliminate incentive payment 41
  • 42. 4242 Solution: Spot Bonuses What about employees who made special contributions over the course of the year?  Create a discretionary reserve inside of plan funding  Reserved for “exceptional” performers only  Point to clear contributions (the reason for the award)  Immediate recognition (not end of the year)  Nomination process  Budget a “reserve” to fund these awards  They don’t have to be big ($500). 42
  • 43. 4343 Solution #2 leads to . . . Every employee understanding: ▪ How individual performance can influence variable pay ▪ That end-of-year awards are a celebration of team results
  • 44. 4444 Four Key Reasons Number Three: Most plans don’t balance rewards for short-term and sustained performance
  • 45. 4545 Dual Focus Peter Drucker once wrote that the manager’s job is to keep his nose to the grindstone while lifting his eyes to the hills. He meant that every business has to operate in two modes at the same time: producing results today and preparing for tomorrow. (Ken Favaro, Strategy+Business)
  • 46. 4646 Solution: One Philosophy, Two Performance Periods Wealth Multiplier Philosophy We want all stakeholders to participate in the wealth multiple they help create.  Fair  Prudent
  • 47. 4747 Rewards Orientation  Short-Term focuses on rewarding profit  Long-Term focuses on rewarding business value increase
  • 48. 4848 9 Long-Term Value Sharing Alternatives Stock Option Performance Shares Restricted Stock Phantom Stock Option Performance Phantom Stock Phantom Stock Profit Pool Performance Unit Strategic Deferred Compensation
  • 49. 4949 Grant Equity or Not Equity? Full Value or Appreciation Only? Yes Appreciation Stock Option Full Value Performance Based? Yes Performance Shares No Restricted Stock No Reward for Value Increase or Financial Performance? Value Increase Full Value or Appreciation? Appreciation Phantom Stock Option Full Value Performance Based? Yes Performance Phantom Stock No Phantom Stock Financial Performance Appreciation- Performance Based or Employee Directed? Performance Based Reward for Profit/Cash Flow or Other Metrics? Profits Allocation or Objectives Based? Allocation Profit Pool ObjectivesOther Metrics Performance Unit Employee Directed Strategic Deferred Compensation
  • 50. 5050 Four Key Reasons Number Four: Most plans are not properly communicated and reinforced
  • 51. 5151 View Employees as Growth Partners Engage employees in a conversation about the contributions they can make to profitable growth. 51
  • 52. 5252 Reinforce Line of Sight Vision Where? Strategy How? Roles and Expectations My Contribution? Rewards What’s in it for me? 52
  • 53. 5353 Communication  The Key to the success of the plan  Employee communication statements should communicate incentive target opportunity  Regular performance updates during the plan year  “Partners” understand basic company performance  Private companies don’t always disclose all financial information to all employee “Partners”: ▪ Financial performance in private companies communicated via percentage against target ▪ “After Q1 we are tracking 95% against our ‘Target’ financial performance” 53
  • 54. 5454 “Help me understand how the plan works” “Help me understand what has to happen to optimize the value of the payout for me” “Help me believe that we can achieve those results” “Talk with me about how I can contribute to those results” “Let me know how we’re doing regularly so I can make a difference”
  • 55. 5555 Market a Future that’s Relevant  Here’s our future.  Here’s how we’re going to get there.  Here’s the role we picture for you.  Here’s how we encourage our people to grow and contribute.  Here’s our philosophy about pay and rewards.  Here are our specific pay programs.  Here’s how our pay programs will work for you if we achieve our plan.
  • 56. 5656 Employee Value Statement Year 1 2 3 4 5 Targeted Results 100% 100% 100% 100% 100% Salary $160,000 $166,400 $173,056 $179,878 $187,177 STVS $64,000 $66,560 $69,222 $71,991 74,871 LTVS (EOY) -- $74,000 $186,000 $311,000 $448,000 401(k) @7% $17,120 $36,123 $57,169 $80,428 $106,086 Total Cash $224,000 $232,960 $242,278 $251,970 $262,048 Wealth Accrual $17,120 $110,123 $243,169 $391,428 $554,086 Total Value $241,120 $567,083 $942,407 $1,342,636 $1,767,343
  • 57. 5757 Solution #4 leads to . . . Every employee understanding: ▪ That they are being treated like partners in the success of the business ▪ What they can do to improve the value of the business and . . . ▪ How that aligns with their own rewards ▪ Everything more regularly (no surprises)
  • 58. 5858 Why You Should Stop Paying Incentives A 21st Century Reality Incentive plans, as traditionally designed, are not the best way to reward employee performance. Replace incentives with value- sharing.
  • 59. 5959 Post Webinar Intro 5 Minutes:  Who We Are  What We Do  How We Do It
  • 61. 6161  New SaaS tool  Build and manage your bonus plan online.  Indicate on survey if you would like to schedule a demo.
  • 62. 6262 Take advantage of a one-hour consulting call with a VisionLink principal at no charge. Indicate interest on final survey. Request Consultation & Take Survey Request a copy of our slides, report, complimentary consultation and BonusRight demo. We value your input.
  • 64. 6464 Free Report: HOW TO SHARE VALUE WITH EMPLOYEES WHO DRIVE LONG-TERM BUSINESS GROWTH Request your copy on the final survey
  • 66. 6666 Today’s Presenter: Ken Gibson SeniorVice President (949) 265-5703 kgibson@vladvisors.com 7700 Irvine Center Drive, Suite 930 ⬧ Irvine, CA 92618 ⬧ 949-852-2288 www.VLadvisors.com ⬧ www.PhantomStockOnline.com ThankYou!
  • 67. 6767 Post Webinar Intro 5 Minutes:  Who We Are  What We Do  How We Do It
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  • 70. 7070 7700 Irvine Center Dr., Ste. 930 Irvine, CA 92618 (888) 703 0080 www.vladvisors.com www.phantomstockonline.com www.bonusright.com