So, total was one of those days my goal was to look at GM compensation and put together a plan. But for that, I need to have fairly accurate finance data, and forecasts for 2011. Since our forecasts for 2011 are based on 2010, I ended up reviewing in great deal the 2011 actuals, deriving various rations.
That in turn, gave me ability to forecast 2011, which in turn allowed me to plan a compensation plan. So, what started as a simple exercise in a Comp Plan, turn out to take a whole day, and 3 steps down, before I got back down to original task at hand.
Nevertheless, it was actually good to get all the forecasting solid. Its done now, and I don’t have to revisit again, and I can be confident in the numbers to make future looking decisions.
So, having said that, it took some more hours to come up with a GM comp plan – I have actually been thinking through this for some weeks now. You may think a bonus plan is easy, but you have to consider:
1. How much base vs bonus. How is that related to the market place.
2. How is that bonus attributed and earned. What KPI is used. If top line sales are used, how do you normalize that to account for margin.
3. How does the plan stand up against company goals. Is it achievable. Will it motivate or demotivate.
4. Is the plan fair in comparison to the rest of the company? And what about the marketplace?
Once that is done, I got approval from HR about the plan (yep, they report to me, but I’m messing with their happiness) – so need to make sure I have support.
So, needless to say, after a few hours, I have put together an SOP on how to determine, calculate and allocate all the factors below. Its now in HR’s hands to use and convert into a contract.
So, 2 HOT items off my to do list done now.