When managers become de facto compensation officers, productivity explodes. Of course not every CEO is on board. So managers sometimes have to go out on a limb and appoint themselves to the compensation team, if you know what I mean. But you don’t always have to do this covertly. Instead, you could do it like Mr. K, another true hero of performance based rewards. Faced with insufficient rewards to motivate his team, Mr. K went to senior management and negotiated for the necessary resources.
Mr. K was there to lead a team project focused on developing a microchip for telephony competitive with the solutions from companies that at the time dominated the wired telephony market. After a quick feasibility study, he proposed a revolutionary approach that would change the landscape of the marketplace and put his company’s competition on the ropes. He knew full well that speed to market of the new technology would be everything with this project, as with most high-tech projects.
“To focus the whole team on the time schedules,” says Mr. K, “I requested a bonus scheme which included everyone involved with the product from marketing to test and product engineer.” After some serious lobbying, top management agreed to the bonus scheme, but they added a clause that every week of delay on the transfer to production would mean a 10% reduction in the proposed bonus. That was fine with Mr. K, but if the market value of time on this project was 10% of the bonus per week, he figured, then for every week the team came in ahead of schedule, that market value should also be reflected in the deal. So Mr. K cajoled the top management until they agreed to match the potential 10% per week bonus reductions on the late side of the deal with 10% per week increases on the early side. What do you think happened?
Mr. K continues, “The project transferred to production eight weeks ahead of schedule to the delight of all those involved.” Did you hear that? Eight weeks ahead of schedule. Speed to market was worth a fortune to the company. And it was worth an 80% premium on the bonus for every member of the team. “Having seen the results, the management were keen for me to educate others to use the same techniques in carrying through projects. Soon after I was given my own section with five engineers but I quickly expanded it to fifteen by using seven external engineers.” To Mr. K, it didn’t matter whether his engineers were internal or external, he treated them all like independent contractors, with short-term pay for performance agreements on every project. When necessary, he negotiated with senior management for institutional support. He has since applied his “record time” approach to project completion with every team in every company smart enough to hire him.
Stay strong!
Bruce
