VisionLink Blog

Ken Gibson

What Does Your Compensation Program Cost?

Most business leaders are cost conscious, because they know that all expenses impact the proverbial bottom line.  As a result, when they consider compensation issues, they commonly think in terms of “managing costs.”  This perspective is revealed to us through statements or questions such as the following:

Cost is a large part of our focus when we are engaged to work with clients.  However, we try to help the business leaders we work with to look at costs in two potential contexts:

  1. What are the “structural” costs associated with your rewards strategies?  This would include understanding and evaluating all of the known as well as hidden costs across the range of compensation and benefits strategies currently being offered. For example, hidden costs associated with welfare plan utilization, unclear fee sharing associated with 401(k) plan investment offerings and administrative services, and so on.
  2. What are the “performance” costs associated with your rewards strategies?  Humm.  What do we mean by performance costs?  Read on.

One of the most costly issues a company can face is under performance.  This occurs when a business isn’t able to achieve sustained results because it either is attracting only good people when what it needs is great talent, or the people it has in key positions are not working in full alignment with the core business model and strategy of the company.  We see this over and over again. 

Too often CEOs are making cost containment decisions about rewards strategies that they believe are saving the company thousands of dollars.  Unfortunately, the issue is being evaluated in a silo and is not being measured against the performance standard that needs to be met.  The question shouldn’t be “how much” compensation are we or should we be paying?  The question needs to be “how” should we pay compensation; meaning, what forms of rewards should be included in our mix and what weight should they each be given to: a) attract the kind of talent we need for the performance level we are seeking, and, b) keep those people properly focused and achieving once they’re here.

So while we’re big proponents of evaluating and measuring structural costs, we believe bigger losses occur when companies don’t properly evaluate the performance costs associated with their compensation game plan.

To read more about this concept, click here.

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"VisionLink has helped us successfully navigate a number of complex issues regarding our rewards programs. It has dealt with all facets of these varied issues with a high degree of competence, integrity, and straight forward advice. VisionLink's experienced team has consistently delivered first class results in a timely, professional manner and has become a valued Storm partner."

Thomas K. Grzywacz
President/Chief Executive Officer
Storm Industries, Inc.

"VisionLink has helped us successfully engineer a long-term incentive plan that has empowered our company to reward and retain key talent while increasing shareholder value. The knowledge, patience and deep experience of its team members helped us navigate a road that was unfamiliar to us. Ultimately, VisionLink designed a plan that met the high standards of both stockholders and key management employees. We have further engaged VisionLink to address our business succession and transition planning needs."

Reggie Dupre'
Chief Executive Officer
Dupre Logistics

"Over the past several years, National Technical Systems has engaged VisionLink to provide insight and direction on a number of executive compensation issues, as well as a performance evaluation of our 401(k) plan. Under its direction, NTS completely revamped executive level rewards to align with our business growth objectives and the strategic plan of the company. VisionLink's insight and direction have been invaluable. NTS has achieved its growth objectives and our executives feel appropriately rewarded for their performance."

Bill McGinnis
President/Chief Executive Officer
National Technical Systems

"VisionLink arrived on the scene just in time for us. We needed a new framework for our short-term and long-term incentive plans. VisionLink's modeling and forecasting process broadened our horizons and expanded our view of how to use a good incentive system to build, retain and strengthen our senior management team. We remain impressed by their expertise, professionalism and great service."

James Keng
Jimway, Inc.

"Our firm has had a long-term incentive plan for over eight years but we never quite felt like it was firing on all cylinders. We hired VisionLink to re-energize our plan, and they did it! We now have a cohesive awards strategy that's fair to shareholders and valued by our employees. VisionLink's team is technically skilled and very creative. We're happy to recommend VisionLink to firms looking to upgrade their management incentive programs."

John M
FTO Inc.

"Our company was like VisionLink's typical clients. We were great at sales and haphazard at how we compensated our people. VisionLink's process brings great clarity and confidence to our growth planning - and makes compensation a great growth capability."

Dan Sullivan
Founder and President
Strategic Coach ©

"The team at VisionLink helped our company structure a long-term incentive plan that parallels the company's strategy for continued growth as a global market leader within our industry. Their approach resulted in a program that our corporate team and executives embraced on both a professional and personal basis. Through VisionLink's guidance and execution, we were able to create both a motivational tool for current team members and a recruiting device to attract future executive level associates. Well done!"

Mark Rhoades
Fluidmaster, Inc.

"As a leading direct seller of scrapbook photo albums and supplies, Creative Memories has independent consultants across the country. And for over six years now, VisionLink has helped us to stay connected and administer a voluntary 409A non-qualified plan for them. VisionLink has provided support for all aspects of our plan from notification of eligibility through registration and distribution. The VisionLink support team has offered suggestions for improving processes and provided us with outstanding service year after year."

Guy Walker
Creative Memories North America

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