Pro Tip: Performance Based Compensation

Performance based compensation structures for management teams can be highly effective at improving financial performance for companies. Owners have the tendency to try and base these on corporate profits, because they think it protects them from paying bonuses they don’t benefit from. What really makes bonuses matter though, is that they are based on readily available and reliable data, and that the recipients feel like they can control the outcomes based on their own skills and efforts. Structures like this empower teams to align on corporate objectives. Ambiguous structures do the opposite.