By Jim Houghton, partner, Results International.
As an agency manager, you’re at that turning point in the market. Whilst the macro economics aren’t yet filling you with euphoria, there’s no hiding from the fact that everyone in the agency has been pulling very hard for the last two years and they’re feeling it.
And if you think you’re conscious of the fact they’ve not had a pay rise or a bonus to write home about over that period, don’t think for a second that they’re not feeling it much more acutely than you.
The infamous ‘war for talent’ is an ever-present in our industry for obvious reasons although the heat has subsided during the worst of the world economic crisis. The heat is already returning in patches across the industry, however, and if the indicators are proven right then this will translate into fierce competition later this year.
2010 is probably not going to be a bumper bonus year for many agencies, but there’s every reason for making this the year that you set out the future direction of remuneration and incentives in your business.
Financial reward is only a part of your team’s total value from working with you. But let’s not kid ourselves, it’s pretty much up there.
There are some hard and fast rules for setting incentive structures that agencies would be well advised to take on board:
DO: measure staff satisfaction through a formal and anonymous satisfaction survey; you need to know where you’re starting from and it gives out the message that you are taking things seriously.
DON’T: assume that putting in place a good incentive scheme is going to hammer your profitability and cashflow; we all know that staff motivation directly drives profitability.
DO: demand genuine performance from your teams for meaningful incentives; demand performance and reward in equal measure.
DON’T: apply the same performance objectives to all staff; get creative – account handlers add different value compared to financial accountants and so on. It’s important to target and reward them accordingly.
DO: make any incentive scheme conditional upon the business as a whole being sufficiently in profit to afford it.
DON’T: use incentives as a lopsided way to make up for below market salaries; the overall package has to work.
DO: be transparent and bring introduce some rigour by setting SMART objectives at the start of the financial year; incentivise future performance rather than hand out cash bungs at the end of the year after the event without any linkage to specific behaviours or results.
DON’T: give away your equity for the wrong reasons; most of your staff really won’t value it anywhere nearly as much as you do or as much as an equivalent cash scheme.
DO: only use equity incentives for team members who you seriously see as partners or future partners
DO: match the incentive with the required behaviour; if the objective is three year growth of a new practice area then build a three year vesting reward with some annual instalment payments along the way.
DON’T: ever change the goal posts on your bonus criteria midway through a year; even if you recut this for perfectly valid commercial reasons it will have a lasting impact on your credibility and even levels of trust.
DO: use non financial rewards as part of a balanced scheme; time in particular is immensely valued. A great incentive scheme is an essential part of a great agency. Make 2010 the year that you put the right structures in place to secure the future prosperity of yours.
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