Compensation and the Recession

The Seven Imperatives

Growth companies understand that economies are cyclical. Times of surge and prosperity are countered by periods of contraction and downturn. Great companies plan accordingly. To flourish during difficult economic periods, business leaders in growth oriented companies must strategically address the role of their human capital and reward systems in meeting the challenges they face. The following Seven Imperatives should guide any business leaders thinking in such times.

1. Assess Your Talent Pool--

Know who your best people are and make sure they know what their role is in the future of your company, especially at this time.

2. Create a Pay for Performance Philosophy and Strategy--

Now is the best and most critical time to align pay with performance. This starts with identifying a philosophy that defines how the company will address rewards issues in good economic times and bad.

3. Focus on Strategy not Just Tactics--

Your long‐term vision for growth hasn’t changed just because the economy is hurting. Strategies drive growth, tactical changes manage costs.

4. Define Clear Performance Expectations--

Star performers want a clear understanding of the key results indicators they are responsible for and what their stewardship will impact.

5. Nurture an Ownership Mentality--

An ownership mindset permeates an organization when there is “line of sight” between the shareholders’ vision and strategy, the roles and expectations of key people, how those individuals are rewarded for generating those results and how well those rewards align with personal goals and objectives.

6. Build a Value Statement--

The best way for a key people to visualize their financial future with your company is to receive a statement that summarizes and projects forward the total value of that relationship if performance expectations are met--salary, short-term incentives, long-term incentives, 401(k), etc.

7. Cut Business Expenses First, Incentives Last--

Reward performers and reinforce the results you need to continue to achieve—don’t try to resolve the company’s financial woes on the backs of your best people.

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