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It’s all about incentive alignment…

Most companies screw up compensation design.

They struggle to balance base pay, bonus pay, and sales commissions – either making things too complex (you need a PHD to understand your comp plan), or too simple (there’s not enough skin in the game). 

But most criminally, they fail to understand that compensation design is one of the most powerful tools a company has to create alignment between the company and every employee.

Do not forget this simple point: compensation drives behavior. Your compensation design  incentivizes someone to act a certain way, to focus on certain things, to make certain tradeoffs. The way you design compensation will lead to either strong incentive alignment, or weak incentive alignment. And in the worst cases, a complete misalignment of incentives!

Here’s what Ray Dalio said about this recently:

100% – yet most companies get this dead wrong. Here’s the scenario that’s much more common: 

The employee’s compensation has nothing to do with the company’s goals at all! 

People are given raises, bonuses, or promoted for doing things on a day-to-day basis that are deemed favorable by their manager. But these “things” have no correlation to the company’s goals or success. So, you end up in a situation where the company could be failing, yet individuals are rewarded anyway. Or, the company is crushing it, but the individuals on the team aren’t allowed to participate in the upside. 

Here are the most common mistakes I see companies making when it comes to aligning individual and company incentives: 

  • Employee compensation isn’t tied to company goals
  • Employee compensation isn’t tied to employee goals
  • Employee goals don’t align to company goals
  • Company has weak or poorly understood goals
  • Company has goals, but employees don’t

You can avoid all of these issues with the right compensation design. And I believe that a company-wide bonus program is THE BEST tool at your disposal to align individual and company incentives. 

Related side note: OKR enthusiasts completely miss this incentive alignment point as well. They insist that the OKRs should not be tied to compensation or promotion. This always seemed insane to me. Why would you put so much effort into a goal system meant for alignment, and then make compensation decisions based on a completely different set of criteria? 🤷‍♀️

Three tools to align incentives

Incentive alignment isn’t a “nice-to-have”, it’s essential for any organization that’s serious about high performance. When the company wins, each person on the team wins – and this is a beautiful thing. 

There are three main tools for aligning financial incentives:

  1. Equity Plans (long-term alignment)
  2. Profit Sharing Plans (short-term alignment)
  3. Bonus Plans (short-term alignment)

This article focuses on the company bonus plan, but a quick thought about the other two. 

Equity aligns incentives over the long-term (many years). The reward can be huge, but the risk of making nothing is also high. On the other hand, profit sharing and bonus plans align incentives over the short term (one-year periods). 

I’ve found that using a combination of long-term and short-term tools leads to the best alignment across the team. However, not every company is in a position to grant equity. And a profit share program is inherently complex to manage (more on this in a separate post). So, I strongly favor the company-wide bonus plan. It can work for any company, of any size, in any industry. And if it’s designed well, it’s easy to understand for both the company and each person on the team. 

Developing the perfect bonus plan took me years of trial and error. But in this article I’m going to share with you exactly where I landed after nearly 20 years of trying. 

But first, some quick recognition: While the bonus structure in this post comes from my own experience, I scoured books, articles, blogs, public company filings, etc. as a source of inspiration. One company’s incentive structure that I found particularly helpful was ServiceNow. So, I want to give them some props for inspiring me to work so hard on getting this right! 

Now let’s get into it!

The Bonus Plan Overview

First the basics. A bonus should not be confused with a base salary. These are two separate forms of compensation. The bonus is above and beyond a person’s base salary. You can think of a person’s compensation package like this: 

Total compensation = Base Salary + Bonus 

Most are familiar with base salary – the fixed amount that an employee gets paid for their work. This is typically paid every-other-week or monthly by the company, and is a guaranteed payment (unless the person leaves the company). 

But the bonus portion is not guaranteed. You have to earn the bonus through performance. Sometimes bonus plans are weighted heavily (or entirely) against company performance; and, sometimes they are weighted heavily (or entirely) against individual performance. As you’ll see below, this company bonus plan design includes both company and individual performance and weighs them both equally. In other words, the company needs to achieve its annual goals, and the individual needs to achieve their own annual goals to unlock the full bonus (more on this later). 

Using the right bonus plan terminology

Given that the bonus is not guaranteed, it’s important to use the right terminology when describing a person’s compensation package that includes a bonus plan. The wording needs to reflect the fact that the bonus is something you earn, not receive automatically. Here’s how to describe it:  

Total earning potential (TEP) = Base salary + Target bonus 

With the following definition:

Total earning potential = the maximum compensation the person can earn in a fiscal year
Base salary = the fixed amount that’s guaranteed for payment
Target bonus = the maximum dollar amount the person can earn through the bonus plan

Notice I replaced “total compensation” with “total earning potential”. And put the word “target” in front of the word “bonus”. These might seem like minor points, but the chosen words are important for setting clear expectations. You don’t want any miscommunication when you roll out the bonus plan. 

Target bonus by role  

The target bonus is the maximum bonus that a person can earn in any given year. The dollar size of the target bonus will vary based on role. For example, one person might have a $5,000 target bonus, and another person might have a $10,000 target bonus. There are two reasons for this: 

  1. Seniority (entry level vs. manager vs. executive) 
  2. Function (product, marketing, engineering, etc.)

One way to determine the the target bonus is to first determine the Total Earning Potential (TEP) for each type of role at your company. To do this, you need to establish a compensation philosophy (i.e. how do you want to pay your people compared to market rates for your industry, company size and geography). Then you can use the following guidance to determine the base salary vs. bonus split for each role. And, ultimately the dollar size of the target bonus for each person. 

There are a couple things to notice from the above tables. 

  1. Executive compensation: Execs have a higher percentage coming from the target bonus (vs. base salary). The logic here is that these leaders have more influence and control over the results. They also bear more of the risk. So there is more risk/reward designed into their compensation. This design also mitigates overpaying for under-performing executives. You pay for performance, and it starts at the top. 
  1. Non-executive compensation: Non-execs have a higher percentage coming from base salary (vs. target bonus). In other words, more of their compensation is guaranteed. They have less influence and control over the company’s results, so they should have less risk designed into their compensation.
  1. Sales team: Sales management (executives, VPs, sales management ) are tied into the company bonus plan; but in this design, individual sales reps are not. This is to keep sales reps laser focused on selling and not overcomplicate their world. However, it’s important to keep the leaders tied into the company bonus plan so they are aligned and accountable to the non-sales related company priorities as well. Some people REALLY want their sales reps tied in too. If you are one of these people, you can mirror the sales leadership recommendation of 50% base, 10% target bonus, 40% sales commission. But I would not lower sales commission any further than this.

Bonus payout by role 

Here’s the simple part. The methodology for calculating the bonus payout (what % of the target bonus each person earns) is exactly the same across every person in the company – from the CEO down. So, if you take those same two people as an example, the process you follow to determine how much they earn (out of a $5,000 target bonus and a $10,000 target bonus) is the same. 

The next section(s) focus on the bonus payout methodology. Then, at the end of the article, I provide a series of frequently asked questions about implementing and managing the bonus plan.  

Determining The Bonus Payout

As we discussed in the above section, the size of the target bonus varies by role. However, the methodology for calculating the bonus payout is the exact same across every person in the company.

Here is the formula to calculate dollar bonus payouts:

Bonus Payout ($) = Company Payout ($) + Individual Payout ($)

Where Bonus Payout ($) = the total dollar amount that is paid out to each person at the end of the fiscal year. Now breaking this formula down further:

Bonus Payout ($) = 

Target Bonus x [50%] x Company Payout % 
+

Target Bonus x [50%] x Individual Payout %

Where Target Bonus is the full dollar amount the person can earn.

The Company Payout % is the percent payout of the company portion of the bonus, based on the level of achievement of company goals.

Similarly, the Individual Payout % is the percent payout of the individual portion of the bonus, based on the achievement level of individual goals. 

For example, a 100% Company Payout % would mean that the company achieved 100% of its goals for the fiscal year. A 100% Individual Payout % would mean that the individual achieved 100% of their personal goals for the fiscal year. 

Also notice the 50% in brackets. This is the weighting between company performance and individual performance. I put it in brackets because you can technically change these weightings to fit your leadership style. However, I’d strongly recommend keeping them evenly weighted at 50-50. Equal weighting promotes a team-first environment while still fairly rewarding high performers. It’s the best of both worlds.The company performance (%) is the percent achievement of the company’s annual goals. For example, a 100% would mean that the company achieved 100% of its annual goals. 

A Simple Bonus Payout Example

Now let’s look at an example: 

Let’s say an employee has a $10,000 target bonus. If the company achieves 100% of its goals (and therefore has a Company Payout % of 100%), the employee earns a “Company Payout” of $5,000. 

Then, if the employee achieves 100% of their individual goals, they earn an “Individual Payout” of another $5,000. 

The Total Bonus Payout ($) in this scenario would be $5,000 + $5,000, or $10,000. In other words, they earned 100% of their target bonus!

Now, you might be wondering, how do you calculate the company and individual payout if its not 100%? Let’s dive in… 

Calculating Company Payout ($)

In this section we’ll explain how to calculate the Company Payout portion of the bonus plan formula (highlighted below in blue). This includes grading the company’s performance for the fiscal year. As a reminder, the formula is: 

Bonus Payout ($) = Company Payout + Individual Payout

And, breaking this down further: 

Company Payout ($) =  (Target Bonus x [50%] x Company Payout %) 

________

Step 1: Create strong company goals

Company performance is graded against the company’s top 3 goals for the year. If you don’t have measurable company goals, then you can’t grade performance. So, the first step is to make sure you have really strong company goals. The Northstar Operating System (that we teach in my community, Highland) uses a simple goal system called WhyGos. WhyGo stands for: 

  • Why – why the goal exists
  • Goal – what we are trying to achieve
  • Outcome – how we measure success

Note: This bonus plan structure can still work with other goal systems, like OKRs or EOS.

Regardless of the system you’re using, company goals are set by the CEO and leadership team, and approved by the Board of Directors (if you have one). Less is more here! You should focus on just 3 (or less) goals, and 3 (or less) measurable outcomes per goal. Company goals are not meant to cover everything the company does throughout the year – only the most important things!

Your goals should be challenging but realistic in a 12-month period – do not use extreme stretch goals. Lastly, it’s imperative that each goal is measurable through its outcomes. You need to know with 100% certainty if the goal was achieved or not at the end of the fiscal year. And, if it wasn’t achieved, how close were you?

________

Step 2: Assign weighting to each goal

Each of the three company goals is then weighted based on priority. The weighting determines the payout per goal. The most common set up is to weigh them equally since the goals usually represent the top three company priorities in no particular order. This looks like: 

  • Goal 1: 33% weighting
  • Goal 2: 33% weighting
  • Goal 3: 33% weighting

But, some companies take that extra step and prioritize the top 3 and then weigh accordingly. Here’s what this could look like:

  • Goal 1: 50% weighting
  • Goal 2: 25% weighting
  • Goal 3: 25% weighting 

________

Step 3: Determine the company payout percent (%) 

In step 3, I explain how to calculate the Company Performance %, or the percent achievement against the company’s annual goals. 

Here’s a reminder of the formula. In this section, we are talking about the part highlighted in blue.

Company Payout ($) =  (Target Bonus x [50%] x Company Payout %

Since there are three goals, we need to determine the percent achievement, and then the percent payout, for each one. Then we just add them up to get the total Company Payout %. 

Here’s how you determine the percent payout for each goal based on percent achievement:

The 70% threshold protects the company from paying bonuses for subpar results. But the pro rata payout between 70-99% allows you to reward people even if the company doesn’t hit 100% of the goal. 

Calculating the Pro Rata Payout

So, how do you calculate the pro rata payout if the goal achievement falls between 70-99%?

Let’s assume the company achieved 82% of its goal. Here’s how you calculate the prorated payout for that goal:  

(82% – 70%) / 30% = 40% payout 

Just to make sure this part is crystal clear, let’s pick another number. Assume the company achieves 99% of its goal; then it would look like this:

(99% – 70%) / 30% = 96% payout

Now putting it all together, let’s say the company sets these 3 goals for the year:

  1. Add $1M in new ARR (33% weight)
  2. Launch 10 new features (33% weight) 
  3. Improve NPS from 20 to 40 (33% weight)

If the company achieves the following at the end of the year: 

  1. Adds $9M ARR (90% goal achievement) 🟡
  2. Launches 8 new features (80% goal achievement) 🔴
  3. Improves NPS to 40 (100% goal achievement) 🟢

You’d calculate the pro rata payouts as follows:

  1. (90% – 70%) / 30% = 67% payout
  2. (80% – 70%) / 30% = 33% payout
  3. (100% – 70%) / 30% = 100% payout

From here, you’d calculate the total Company Payout % like this:

Company Payout % = (67% x 33%) + (33% x 33%) + (100% x 33%) 
= 22% + 11% + 33%
= 66% 

So in this case every employee would earn 66% of the company portion of their bonus. At first glance, this can look harsh. But remember, in this example the company only achieved one of its top three priority goals for the year. That’s average performance and the payouts should reflect this reality. 

So the company should not be paying out enormous sums of money for underperformance. That would be like handing out participation trophies just for showing up. That type of thing is the enemy of high-performance teams!

________

Step 4: Determining the final company payout ($)

Again, a reminder on the formula for the company payout side of the bonus plan equation:

Company Payout ($) =  (Target Bonus x 50% x Company Payout %) 

So, you simply plug in the target bonus and multiply by the weighting (50%) and the Company Payout % (66%) 

As an example, if the person’s target bonus for the year was $10,000, and the weighting between company and individual payout was 50/50, then the company portion would look like this:

$10,000 x 50% x 66% = $3,300 Company Payout 

Now onto the other half of the equation, individual performance. 

Calculating Individual Payout ($)

In this section we’ll explain how to calculate the Individual Payout portion of the bonus plan formula (highlighted below in orange, or is it red?). This section includes grading the individual’s performance for the fiscal year. Luckily, it’s nearly identical to how we did the company portion of the formula.

As a reminder, the formula is: 

Bonus Payout ($) = Company Payout + Individual Payout

And, breaking this down further: 

Individual Payout ($) =  (Target Bonus x [50%] x Individual Payout %)

________

Step 1: Create strong individual goals

Similar to the company level goals, each employee should create their own individual goals (or WhyGos) for the fiscal year. Three or less goals, and three or less outcomes under each goal. Less is more. 

Just like the company’ goals’s, each individual goal must be challenging but realistic. And they must align with their team’s goals and the company’s goals.

They also need to include measurable outcomes that determine the success of the goal. Once again, this is key. If they aren’t measurable, then the entire bonus plan formula will break down. We can’t stress this enough. 

After the individual drafts their goals following the above criteria, they should meet with their manager for review and approval. This step ensures the goals are aligned and aren’t too easy or too hard to accomplish in a 12 month period.

________ 

Step 2: Assign weighting to each goal

The individual and their manager can decide to add weighting to each individual goal (in the same way we did with the company’s). However, this is rarely done. The default is to simply weigh them equally.

If the individual has three goals for the year, each would be weighted 33%.

If the individual only has two goals for the year, each would be weighted 50%.

________

Step 3: Determine the company performance percent (%) 

At year-end, the manager grades the achievement of each individual goal. And they use the exact same table as the company goals. 

Everything here is the same as the Company Payout % that we discussed in the last section. So for example, if an individual had the following results, and all three goals were weighted the same: 

  1. 95% achievement of goal 1 (33% weight)
  2. 90% achievement of goal 2 (33% weight)
  3. 60% achievement of goal 3 (33% weight)

You’d calculate the Individual Payout % as follows:

Individual Payout % = (((95% – 70%) / 30%) x 33%) + (((90% – 70%) / 30%) x 33%) + (((60% – 70%) / 30%) x 33%)

= 28% + 22% + 0%
= 50%
 

________

Step 4: Determining the final Individual Payout

Again, a reminder on the formula for the individual payout side of the bonus plan equation:

Individual Payout ($) =  (Target Bonus x 50% x Individual Payout %) 

So, you simply plug in the target bonus and multiply by the weighting (50%) and the Individual Payout % (50%) 

As an example, if the person’s target bonus for the year was $10,000, and the weighting between company and individual payout e was 50/50, then the company portion would look like this:

$10,000 x 50% x 50% = $2,500 Individual Payout 

Putting it all together 

Now let’s bring this full circle and calculate the full bonus payout! 

Bonus Payout = Company Payout + Individual Payout

________

Using our example above:

  • Employee has a $10,000 target bonus
  • Weighting between company and individual payout is 50/50
  • Weighting of both company and individual goals is equal (33% each)

We calculated the payouts for each side of the equation to be:

Company Payout = $3,300
Individual Payout = $2,500

Then the Total Bonus Payout in this scenario is simply: 

Bonus payout = $3,300 + $2,500 = $5,800

In this scenario, the employee earned 58% of their target bonus for the year. Not bad considering the company only achieved 1 out of 3 of its top goals; and the individual only achieved 1 out 3 of their own top goals (even if they were close). For a performance-based bonus plan, this payout should feel fair to both parties. 

Frequently Asked Questions

When do you recommend paying out bonuses?

Assuming you operate on a calendar year (Jan 1 – Dec 31), you should expect to pay all bonuses by March 1st of the following year. I usually paid mine out during the last week in February. 

Why? Because you need time to close the year, grade company performance and have each manager grade individual performances. 

It takes less time to grade company performance, so I would usually communicate this earlier in the year (first two weeks of January). Then the managers grade the individual performance of each person on their team, and communicate the total bonus payout during a one-on-one or annual review. 

It’s also a good idea to show them exactly how you calculated the payout using the formula in this article. This adds transparency and trust to the whole process. 

________ 

What are the recommended eligibility requirements for participating in the bonus plan?

It’s important to clearly define who is eligible to participate in the company’s bonus plan. I recommend the following requirements: 

  1. Must be an employee for at least six months to participate 
  2. Must have manager-approved annual goals to participate 
  3. Must be an active employee of the company to receive bonus payout. (ie. if you leave the company – for any reason – you forfeit your bonus). 

Based on rule #1,  new hires are eligible for the current year’s bonus plan if they start with the company between Jan 1 and June 30th (first six months). If they start in the second half of the year, they’d have to wait until the next fiscal year to be eligible. 

Eligible new hires get prorated bonuses based on their start date. This keeps things clean and fair. For example, if a new employee starts with the company in May, and they have a target bonus of $10,000 for the year, the prorated amount would look like this:

Prorated target bonus by start date = $10,000 x (7/12) = $5,833

Where the number seven represents the number of months left in the year, and the number twelve represents the total number of months in the year. The following fiscal year they would be able to earn the full $10,000 since they would be at the company for all 12 months. 

________ 

How do I set the right expectations with my team?

It’s extremely important to set the right expectations with your team. Namely, base salary is guaranteed, bonuses are not.

But what should an employee expect to receive (on average) in any given year?

In a typical year, mid-tier to top-tier performers should earn between 75-100% of their target bonus. And, in the best years, the top 10% of employees could actually earn over 100% with manager discretion (see below). 

Mid-tier to low-tier performers typically earn a payout of 25-75%. And, there is always a chance (albeit small) that no bonuses get paid in any given fiscal year. This would only happen in an extreme case, where both the company and the individual significantly miss all of their goals (achieve less than 70% on every goal).

You should also make sure that the timeline and eligibility requirements are clear with the team. They need to take the goal creation process seriously and seek the approval of their manager to participate. Clear and measurable goals are the key to making the bonus process objective and fair for everyone involved. 

Lastly, you should explain how the bonuses are calculated at least twice per year. Once when you roll out the new plan each year (usually at a Company Kick Off). And a second time when you sit down with each person and explain their bonus plan payout. We would also give a “bonus plan” update quarterly, where we explained how we were doing as a company against the performance criteria. This adds transparency and trust to the whole process. 

________ 

Do managers have discretion to adjust the final payout amount up or down?  

I typically give managers discretion to adjust the individual portion of the bonus payout up or down by 10% without approval. A manager might add this qualitative assessment into the calculation to factor things like:

  • Performance against other tasks (outside of their top three goals)
  • Adherence to company mission & values
  • Any major behavioral issues that might arise

Anything larger than 10% requires approval from an executive to uphold the integrity of the system. You don’t want managers picking favorites, or retaliating against someone, by significantly increasing or decreasing their bonus payout. That’s not cool.

But, I’ve found that giving managers discretion to adjust within a 10% band is actually helpful, and scalable. You let the decision remain with the manager, who is closest to the situation.

Adjusting the payout down

It’s rare to adjust the bonus payout down (especially more than 10%), but it does happen if there is a real performance or behavioral issue with someone on the team. Examples might include not completing projects, acting against company values, or somehow acting in a destructive fashion to the team. It’s also best practice to pair the lowering of a bonus payout with a performance improvement plan. Together this sends a very clear message to the employee that such behavior will not be tolerated, and they must improve it immediately. 

Adjusting the payout up

It’s more common to increase the individual payout for your highest performers. Typically I advise managers to identify their top 10% and increase each person’s payout by 10% (and sometimes more if its a special situation). This is reserved for your very top tier performers, and sends them a clear message that you not only recognize, but reward excellence.  

________ 

How do you budget for the bonus plan in your annual financial plan?

Your bonus plan (or sometimes called “bonus pool”) needs to be added to your annual financial plan in two places:

  1. Bonus plan total should be added to the expense forecast as compensation expense; 
  2. Last year’s cash payout should be added to the cash forecast in Q1. 

For #1 – Bonus Pool: , the “bonus pool” is the total dollars that you anticipate spending on bonuses across the entire company for the fiscal year. Here’s how to calculate the bonus pool correctly:

  • Add up the target bonuses of every person in the company. 
  • Add up the expected target bonuses for anyone you plan to hire (prorated by start date). 
  • Add an assumption for the total bonus payout (see below) 
  • Use this number as the bonus plan number in your expense forecast  

Here are the three most common ways to forecast the total bonus payout: 

  1. Assume 100% payout (the most conservative approach)
  2. Assume 75% payout (average payout across most companies)
  3. Use a historical average for your company 

We recommend the most conservative approach. 

For #2 – Prior Year Payout:  By early January, you should be able to make a fairly accurate estimate for the cash payout from last year’s bonus plan. At that point, you’ll know how the company performed and what the final grading was. So, 50% of the bonus payout equation will be fully accurate. 

Then, you can assume that everyone earns 100% of their individual bonus portion to stay conservative. This way, you know you’ll beat your cash estimate in Q1 (since all bonuses should be paid by March 1). 

________ 

What about sales roles?

Sales positions already have a variable piece to their compensation in the form of sales commissions. Their compensation formula typically looks like this:

Total earning potential = base salary + sales commissions 

So, do you add a bonus plan too?  

For sales reps and sales development reps (SDR, BDR, etc.), the answer is no. Most sales leaders would agree that they should be 100% focused on their sales comp plan only. Since they already have a strong risk/reward compensation design, there isn’t a strong need to add a bonus on top.  

However, the sales leadership SHOULD be tied into the bonus plan program. Why? Because it keeps them aligned with other leaders across the company, and ensures they don’t prioritize the sales number over other company priorities. 

But how could a sales number be in conflict with the company’s priorities? Consider this scenario:

One of the company’s top 3 goals for the year is to increase customer retention. It knows that small customers tend to churn at higher rates, so it wants to exclude small prospects from the sales funnel. But this will make it harder for the sales leader to hit their number. If the sales leader wasn’t tied into the bonus plan, the leader might fight this decision. However, since they will get compensated for increasing retention, they are now financially incentivized to make the harder choice and do what’s best for the company (not just the sale team). 

________ 

How do I price Total Earning Potential vs. market rates

So how does this compensation design compare to the market? And how do you communicate this to employees and potential hires? 

There’s no “right” way to do this, since every company has its own compensation philosophy. However, here’s what’s worked for me:  

  1. Total Earning Potential should be above market for each role.
  2. Base salary can be at market or slightly below market. 

This means that the total compensation that your employees can earn should be above the average compensation for others in similar positions at different companies. However, since you’re compensation strategy includes a salary and a bonus, the base salary might be slightly below market.

Since the average total payout of the bonus pool is around 75% for the whole company, this will tip their Total Earning Potential slightly above market on average. But, in the event of a really bad year, this design protects the company from a cash perspective so its not over its skis. Then, in great years, it can pay out closer to 100% of the total bonus pool, and everyone is doing back flips and high fiveing.

This design says: we pay well for showing up and doing a good job; but we pay REALLY WELL for high performance. 

You’ll want to track your own historical data around this too, so you can back up your payout rates for potential hires. With a proven track record, potential new hires will view the bonus portion as bankable, even if it’s not technically guaranteed. 

This becomes significant when you’re battling another company for a great person. The total earning potential of your package may be higher than the competitive offer, but you need to prove that the structure isn’t just smoke and mirrors. If you can get them comfortable with how the bonus has paid out in the past, then you’re golden. This structure will only help you win great people, since they have no problem taking on a bit of risk for higher reward! 

________ 

There you have it—a battle-tested bonus program that aligns your team and allows them to participate in the upside. It’s simple, transparent, and a win-win for all.

Suddenly, every employee has a stake in the game. They start thinking and acting like owners. And this is the hallmark of a high-performance culture. 

If you have any additional questions about this plan, feel free to reach out to me via my newsletter, or on social.

How I can help you… 

Are you a founder, executive, or manager? I’d love to support your professional growth. 

Here are three ways: 

  1. Connect on LinkedIn and Instagram – where I post practical tips about leadership and startups every day.
  1. Subscribe to my free newsletter – where I dive deep into a variety of management and operations topics that will make you a better leader & operator. 
  2. Join Highland – my executive coaching program for founders, where we help you become a top-tier CEO who can scale into the tens of millions & beyond.

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How to scale your company in founder-mode by Scot Chisholm

Founders | October 13, 2024

How to Scale Your Company in Founder Mode

What does this transition from startup founder to scale up CEO look like? The way I describe it to Highland members is this - you need to transition from working on all the details all the time, to working on the right details at the right time. There is a massive difference here. This means spending your time on two things: guardrails and checkpoints.

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