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Designing a Performance Pay Strategy For Your Business

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Citigroup investors last week let the Board of Directors know that they would not approve executive pay when the company’s performance was less than stellar; last month Citigroup failed the Federal Reserve’s latest stress tests. Further, investors saw an inequity between shareholder value and executive pay. In short, they wanted performance pay.

Whether executive pay on Wall Street, sales incentives, or company-wide bonuses for performance, incentive packages can be tricky business. I’ve learned the hard way that rewarding the performance you want more is not as simple as it seems. Here are my top five tips to designing performance pay plan that your employees are excited about and that increases your bottom line.

  1. Understand and incent for the behavior or performance you truly want. Creating marketing materials within a tim eframe may be a goal, but if no one remembers it or picks it up, you haven’t achieved anything. Another desirable goal is to increase client loyalty, but never lose sight that the bottom line objective is revenue. While it could make sense to reward for repeat appointments, incorporating a pay component based on increasing revenue is also critical.
  2. Understand that by rewarding one behavior, you may discourage other behavior. By rewarding the retention of customers, you may inadvertently incent employees to avoid marketing and building the customer base. It’s about balance.
  3. Engage the employees in the process to make sure your goals are in alignment. Incorporating the employee’s goals is a win-win; if they’re enthusiastic about meeting or exceeding the goals the company more easily meets its goals. Understand what rewards are valued by the employee; not everyone is motivated by financial reward. Ask what motivates them and incorporate their goals and motivators.
  4. The behavior or performance being rewarded needs to be measurable. If systems need to be built just for the purpose of calculating incentive pay, think again. You are either not incenting a behavior directly in line with your goal, which are generally simple (increase revenue, decrease inventory levels), or you need to break it down into smaller, simpler components.
  5. The employee ought to be able to easily calculate where they stand during the performance period. Performance pay strategies should be so simply designed that whenever a sale is made, an appointment booked, or customer payment received, the employee can quickly calculate the associated pay.

If you don’t see the desired results from your performance pay plan, get ideas from employees and adjust. When incentive pay is done well, it’s easy and you’ll see your desired outcome quickly.


 – Helen Dutton, Business Coach

Facebook’s Acquisition of Instagram and Small Businesses Value

Facebook announced earlier this week that it is buying the photo-sharing application Instagram for $1 billion. My mind went straight to calculating the value per employee; too many zeroes to do in my head. Turns out to be around $83 million dollars of value per employee. Intrigued to say the least, I started digging to see what made Instagram so special and how small business owners could apply the same principles to build value.fbinstagram

The first thing I learned is that Instagram customers are incredibly loyal, almost cult-like.  The application is easy to use, works very well and adds functionality that didn’t otherwise exist (cool filters).

Lesson: Give your customers ease – whether in using your service or in product functionality; excellence; and provide unique products or services, not the same old thing they can find around the corner (today, around the corner means anywhere around the globe).

The photo sharing app fills a void – the mobile market. Facebook is often criticized for its mobile interface; Instagram recognized that hole and filled it.

Lesson: Look for voids in your marketplace; walk through your industry’s typical customer experience from the customer’s viewpoint; what elements are missing? Where does the customer need to make a leap, or do some extra work? Fill the void and make your customers’ lives easier. You’ll increase loyalty and become that “why didn’t someone think of this sooner?” company, which increases company value.

Instagram founders decided early on (a whopping two years ago!) to be really good at one thing: mobile photo sharing. They stripped productivity out of a previous application to focus solely on a cool app allowing mobile users to share and edit photos.

Lesson: Make a conscious decision about what your company is all about and do it with excellence. Instagram is a one-product company but you can have many products or services focused on an experience; Wal-Mart has millions of products but the focus is the same for all:  low prices, wide selection. Decide and act in line with that decision.

30 million users have chosen Instagram and now Facebook has chosen them, as well. They must be doing something right; select at least one lesson to apply to your business. Let me know how it grows.



 – Helen Dutton, Business Coach

The Big Picture in Small Business Competition

Car sales is an interesting business. One dealer sells the exact same large ticket item as the next, yet most of us have strong preferences for one dealer over another; small business competition is high.  Since it’s not the product that makes the difference, it has to be everything else. Interesting, when the investment in the product is so high.


Every business has “competition”; on the other hand, none of us has competition, because no one else provides the exact same experience as we do. Those nuances in how we provide our product or service are our strengths; they are the reasons our customers and clients will choose us over alternatives. Understand your strengths and you’ll attract more ideal customers more easily. Here’s a simple exercise to help you get a clear picture in your mind, which you can then translate into your marketing and branding:

  1. Who do you think of when you think “small business competition”? Go to their website and look at the pictures; what’s the overall impression you get from the pictures? Who is the customer they portray? Write down one or two words or short phrases.
  2. As objectively as you can, now go to your own site and view the pictures. What story do your pictures tell about your business and your customers? If you don’t have pictures (fix that!), read customer testimonials you’ve received and look for oft-repeated words, phrases, or ideas. Write down what your pictures say about your business.
  3. Compare the two.

The differences are what makes you stand apart and are the reason your ideal customers and clients selected you. Your pictures tell a story, they tell readers how you are different. A client was stressing about new competition the other day, so I did this exercise. The pictures told me that these two businesses were night and day! The “competition” pictures were of individuals; my client’s pictures almost all had several of his customers in the picture, his customers were high-fiving, laughing, enjoying being with each other. Clearly, one of my client’s strengths is the community built amongst his customers.

Rather than reacting to your competitors’ messages, identify what separates you from them. By doing so, you will clarify your strengths and you will never suffer at the hands of so-called competition again.


 – Helen Dutton, Business Coach

Helen Dutton, A Vision of Your Own, has provided business and personal coaching for small business owners since 2000, providing online and face to face coaching for entrepreneurs, small business owners, start-up businesses as well as established businesses across the country. Clients come from New Hampshire, her home state, but she has also acted as a mentor to business owners in Atlanta, Chicago, Los Angeles, the Denver area, and closer to home in the Boston area. Helen helps her clients develop their small business ideas, create marketing plans, improve operation efficiency, build customer service systems, build management and leadership skills, and develop confidence as a business owner. Helen provides business tips and resources through her blog and her newsletter, where you can also find business templates to help your business prosper.