Human Resources: The Key to Success or Failure of Any Business Enterprise: Retention and Compensation
"Money is a great motivator," said Paul Dorf, Managing Director of Compensation Resources and veteran consultant in all areas of executive compensation. A good compensation package will help a company attract and retain the best talent. He cautioned the audience against complex plans "with too many bells and whistles," and suggested instead, that they keep their compensation packages "simple in design with clear-cut objectives."
Executive compensation packages, Dorf noted, are coming under increased scrutiny as companies focus on cost containment. Compensation strategy, he suggested, should include increased accountability and should be tied to the business plan and linked to results. "you pay for performance… you should not pay someone for being there," he added. Strategic issues that will help get the "biggest bang out of the buck," he said, include:
- Clarifying the company's business needs.
- Indentifying what executives/owners want and what funds are available.
- Determining what the company can afford and how family members versus non-family members should be compensated.
- Identifying which compensation elements may be used. Is the family business willing to share the equity?
- Quantifying results achieved versus money spent.
All compensation packages should reflect market value, Dorf said.
