Last week I read an interesting article
written by Gonzo Arzuaga, formerly of Startups.com. In it he talks
about the five key lessons he learned as result of experiencing the
failure of his company. As I read them, I realized each one applied to
the world of compensation just as much as they did the world of
entrepreneurs. I thought I’d share these with the Compensation Café
readers and invite readers to add their own lessons. (note: I switched
the order of numbers 4 and 5 from the original list.)
Lesson 1. Do your thing
While
knowing what your peers are doing is important, doing what they are
doing is probably not the path to success. Too often we get caught up in
market data, trends and the next great thing. Sometimes we change
things that are working because some outside consultant or new executive
throws out an idea. Instead of taking the time to validate our gut, we
take even more time to validate theirs.
Your company has a personality, culture and unique product or service
to offer the world. Don’t be afraid to stand out from the crowd of
beige plans and data that permeate so many industries.
Lesson 2. There are no shortcuts
Give yourself
the time to do things right. Putting together a great compensation
program, getting people to understand it and then making sure it is
executed properly takes time and effort. Taking two or three more weeks
to get something done correctly may make all the difference. Of course,
if the program is event driven you may not have that luxury, but most
issues are not that unexpected.
Think of your compensation programs in the lifespan of people. We
regularly put programs together that, if they were kids, would be 5th or 6th
graders by the time they pay out. That is a long time. If you don’t
plan a decade in advance you will still be planning to do the same thing
a decade from now.
Lesson 3. Do one thing
I recently had a client
with a compensation staff of .5 (yep, ½ a person.) They asked if they
should be changing their sales compensation program at the same they
were designing a new equity compensation program and reevaluating base
pay for the entire company. I recommended a staggered attack. While all
three need to be done, each needs to be done right. Don’t try to do
everything at once, just because you have some open time over the
summer. Take the time to lay out a plan of attack. Identify the
expertise you have and what you will need to bring in from outside. Then
only do as many things as you can execute properly.
This quote is from Gonzo: “Do one thing, no matter how small.
When you have it burning, you can make it bigger, better, faster and
stronger… later.”
Lesson 4. Focus, execution and details
Some
compensation pros are strategy freaks. They like big ideas, cool
concepts and how pay programs impact behavior. Others are tactic
hounds. They tend to like the numbers and rules and make sure that
things run smoothly. The trick is that execution actually applies to
both strategy and tactics. No matter which type of compensation expert
you are, in the end it’s all about the little things. The best ideas,
plans, data, reports and presentation are only as good as the steps
taken to turn things into actionable reality.
So many companies do everything right except for the last step. The
last step is execution. If you can’t execute it, then don’t start it.
Lesson 5. Know when to fold up your tent and go home
This
one is tough. So many companies have half-dead plans moldering in
corners of their pay programs. Lots of other companies have plans that
are failures that just keep perpetuating, even in the face of stark
evidence proving their lack of worth. We all need to clean our
compensation house more often. We need to kill off the plans that take
time and resources away from those that truly work.
Sometimes we keep plans because we put so much into them. Other
times we keep them because ending them will require a lot of
communication. The worst plans are the ones that no one even knows
aren’t working. Take the time to evaluate every plan every year. Clean
out the old or pointless plans, even if they still look new and still
have the price tags on them.
My thoughts on this are simple. The list above is fairly universal,
but we often lose sight of it in the swirling storm that is every day
life. If you speak to the CEO at a Fortune 500,
the founder of a startup, or an Olympic athlete, they will give you
very similar lists. Be who you want to be. Take the time to do it right.
Don’t move on until you get it right. Focus on the little things and
execute. If you executed it well and it still doesn’t work have the
courage and common sense to move on to something else.
I’d love to hear your thoughts on this list. What’s missing? What examples do you have?
Dan Walter is the President and CEO of Performensation an independent compensation consultant focused on the needs of small and mid-sized public and private companies. Dan’s unique perspective and expertise includes equity compensation, executive compensation, performance-based pay and talent management issues. Dan is a co-author of “The Decision Makers Guide to Equity Compensation”, “If I’d Only Know That”, “GEOnomics 2011” and “Equity Alternatives.” Dan is on the board of the National Center for Employee Ownership, a partner in the ShareComp virtual conferences and the founder of Equity Compensation Experts,
a free networking group. Dan is frequently requested as a dynamic and
humorous speaker covering compensation and motivation topics. Connect
with him on LinkedIn or follow him on Twitter at @Performensation and @SayOnPay