Compensation drives vision
By adding metrics to the performance plans, Klayko took the
next step in further defining his performance expectations for
employees, and then he put even more emphasis on the message
by tying employee bonus compensation to company performance. Formerly, employees’ bonuses were predicated on individual performance, now employees also earn bonuses when
the team is successful.
“We aligned metric measurements to the performance plan
and employees share in bonus compensation when corporate
objectives are met,” Klayko says. “In addition, their individual
bonus plans are now tied to meeting total corporate objectives.
For example engineering earns a bonus when they deliver new
products on time because achieving that affects the entire
company, and we have a per-employee, revenue-performance
metric that’s included in each individual performance plan. We
set a new target for companywide performance expectations
twice a year.”
Klayko says that he expects managers who are at a high level
in the organization to earn more of their total compensation
from variable bonus structures, so he favors senior leaders
having as much as 15 to 20 percent of their total compensation
at risk. He also prefers using objective performance measurements over subjective ones, not only because employees will
be clearly focused on what they need to achieve but because
performance clarity eliminates potential discrepancies and
that engenders trust.
“Through performance plans that are reinforced via compensation structures, everyone understands their role and how it
all ties together and everyone knows what they need to do as
individuals in order for the company to be successful,” Klayko
says. “There are no entitlements; it’s purely a capitalistic environment. We further reinforce our team performance goals at
weekly staff meetings. If one area is falling behind, we call
them out, and everybody looks at what they can do to help that
part of the team meet their objectives. By keeping everyone
apprised of the results, there are no surprises.”
