Performance Based Compensation Plans?
Hey folks! I'm Alan, one of the creators of CrewFire.com (social media brand ambassador platform) and SimpleCrew.com (street team reporting tool).
I discovered Indie Hackers via the podcast, and knew immediately this was a community of my kind of people, so thanks Courtland for all the great work you've done!
I had a question for the community regarding performance based compensation plans... Has anyone here designed performance-based compensation plans for anyone on their team? Either based on pay-raise increases, or bonuses based on targets?
If so, I'd love to hear some ideas about how to structure these.
I'm onboarding a digital marketer hire this week and would love to align the incentives, but am not sure where to start.
I'd also be interested in hearing if anyone's done this for other types of team members as well, outside the marketing function (product, engineering, design, etc...)
Any insights appreciated - let me know, thanks!
I'm the director of HR analytics at intrinio.com and I use performance based bonuses for my entire team. I've studied industrial/organizational psychology and am specialized in the area of motivation, so this is something I've given a lot of thought to.
As thomasm1964 pointed out in his/her comment, it is very easy to screw pay-for-performance systems up. A classic example of this problem is the salesperson who hits his quota but isn't a team player.
The psychological literature is clear- rewards have to follow directly from the behavior (no uncertainty), they have to come quickly (not once a year), and you have to be sure you get them (no reneging).
What we do at intrinio.com is this. We pay a base salary that is livable but that won't make anyone stick around. Then we provide a quarterly bonus- quarterly because anything longer than that isn't motivating. The quarterly bonus can be up to a certain amount.
Each quarter, management sets a goal with senior leadership. Senior leadership translates that into goals for their direct reports, and so on down the line so everyone's goals are in alignment.
I work with the managers to make sure they are good at setting goals. This takes time. Goals need to be SMART- specific, measurable, achievable, realistic, and timely. Typically, these goals have several components. 1 is process documentation (documenting what you do, how you do it, so we build org knowledge). Another is process improvement (making recs to your manager for how things can be better). Those account for 20% of the quarterly bonus.
Then the rest of the goal is related directly to the job description. In your example, its driving traffic for the marketer. Developing 5 new sources of traffic, increasing traffic by 25%, etc. These are measurable.
Each goal states specifically how it will be measured (rated by manager, google analytics, check list of done/not done). It also states a monthly target so we can see if the goal is on track each month.
Then, at the end of the quarter, the bonus is paid based on the % of goals completed. If someone had 20% of their bonus tied to web traffic, and they got 50% of the way there, they would recieve .2*.5 for that goal.
You can check out our careers page to learn more, https://intrinio.com/careers or email me at acarpenter@intrinio.com
This comment was deleted 7 years ago
This comment was deleted 7 years ago