Businesses Wonder How Much Incentive Pay is Acceptable

IRVINE, Calif. - Oct. 1, 2013 - PRLog -- Owners and CEOs of businesses today would like to move towards more incentive compensation and away from an emphasis on high salaries, according to Tom Miller, president of The VisionLink Advisory Group, a compensation consulting firm headquartered in Irvine, CA.  The problem is, they don’t know what guidelines to follow in determining the balance between guaranteed paid and value sharing, the firm leader said.

“Company leaders frequently call us about where they should be relative to market pay on salaries and how much incentive compensation is appropriate,” Miller explained.  “And when it comes to value sharing, they wonder how much should be in short-term plans like annual bonuses and how much should go towards programs that reward for performance over a longer period of time.”

Given the relevance of this issue to so many businesses, VisionLink will be broadcasting a free webinar on October 22, 2013 entitled, “Salaries and Incentives: What’s the Right Balance?” (More information and registration for this event can be accessed at: http://www.vladvisors.com/compensation-knowledge-center/webinars/e-118-salaries-and-incentives-whats-the-right-balance.aspx.)

According to Miller, the financial turmoil that followed the downturn of 2008 has forced business leaders to look at salaries, incentives and benefits differently—and with an extra measure of caution. Owners and CEOs are reluctant to lock key producers into high, guaranteed compensation but still need to attract and retain the best people. Premier talent that has been sitting on the sidelines is concerned about coming back into the labor force and getting locked into salaries that are below what it earned at its peak. While all this is being considered, the media looks on and concerns itself with what’s “fair.”  Such conditions leave business leaders looking for answers.

“Ultimately, most companies are going to need to transition to higher levels of variable pay,” the VisionLink founder said. “It’s just a fiscal reality and it’s good for business in my opinion. You want key producers to share the risk and develop more of an ownership mindset as they approach their roles. Variable pay helps achieve that.”

Miller went on to say that while there are some general rules of thumb in setting incentive levels, every company really has to determine what the right mix is for them. “A company that has no incentive plan at all right now is going to look at the balance between salary and value sharing differently than a company that has been paying an annual bonus for years.  Same with companies that already have a long-term incentive in place like phantom stock versus those that haven’t gone down that road yet.”

The firm leader explained that the webinar broadcast on October 22 will help companies sort through these issues. “We’ll talk about how a company can begin sorting through the decisions that have to be made in this regard and how to set priorities.  We’ve helped hundreds of companies deal with this issue and we’ll share what some of them have done in constructing an effective blend between guaranteed and variable pay.”