Compensate fairly
At most companies, management keeps salaries under lock and key, but Cameron takes a different approach.
“All compensations should be such that any two people can go to a bar, have a beer, and openly discuss their compensation without anybody being disappointed or mad, because at the end of the day, they’ll all know each other’s plans,” he says. “If you have little separate point plans for one person and you don’t for another person, that’s always going to come back and haunt you, so the consistency of the way we’re compensating our people … is really important, as well.”
Just like with setting goals, you have to do some research to set up consistent compensation plans.
“The first thing you need is data, obviously, and what’s tough for us is the size of our business unit in North America is five or six times bigger than the size of the business unit in, say, Spain, so to look at those drivers that allow us to be consistent in both areas is challenging,” Cameron says.
He says to look at some of the same areas as Wall Street does, such as revenue, EBITDA and gross margin.
“By having them put on the same goals as we do as a company makes it very easy for everybody to appreciate the importance, and when we give guidance as a company to Wall Street, everybody is a subset of that guidance, so anyone who doesn’t hit their particular number is going to hurt the team moving forward at this point,” he says. “Those are the hard areas.”
There are also soft areas, which he calls MBOs, or management by objectives. There’s a different one each quarter, and this is where he can break goals down regionally to reflect the special challenges areas may be facing.
“It’s a relatively small part of the overall comp, but it allows me to have a very consistent comp on the very important things but a little bit of flexibility on some of the geographic challenges that they have that I want to make sure they’re focused on,” he says.
Most of the compensation related to the company’s goals are awarded through CDC’s stock-option plan. Then as employees meet their individual goals, that’s where more compensation and bonuses come into play.
“Again, you’re looking for everybody to not only meet their particular budget and goals — the goal is to exceed them,” Cameron says. “We have compensation plans that have no ceiling on them because once they’ve met their goals, all their budget is paid for, so really, the only additional expenses you may have is some sales bonuses and commissions.”
Having the majority of the employees’ compensation tied to their individual goals is extremely important for the company to meet its overall goals.
“If you have a lot of their compensation tied to the entire company, where you have several regions not hitting their numbers and several regions beating their numbers, it can be a demotivator for a guy who could really kill his number but has a lot of his comp tied to what everyone else is doing,” he says. “In some cases, it may cause him to not perform as well as he might when he’s knowing that everything he’s doing is affecting his compensation, and obviously, the better he does, the better the company does overall.”
How to reach: CDC Software Corp., (770) 351-9600 or www.cdcsoftware.com
Story feedback: Kristy J. O’Hara, [email protected]
