Comments on: A New Approach to Small Business Management

By: David J. Weiner

David J. Weiner — Sun, 23 Aug 2009 13:39:09 +0000

Terrific article that really presents keen insight.
i enjoyed it and plan to reread it several more times as well.

By: Glen Townsend

Glen Townsend — Sat, 22 Aug 2009 07:46:29 +0000

Mike,

This is a great post. I have seen very good results using performance based compensation plans. The keys have always been…

1) Clearly defined benchmarks and expectations.
2) Individual performance objectives tied to the overall objectives if the group, or company.
3) Consistent, frequent measurement and feedback.

Question: Have you used Verne Harnish’s format to communicate your strategic plan? Gazelle’s system of a one page strategic plan, combined with their structured meeting schedule provides a very effective way to keep teams on course and communicating.

You have presented some effective ideas. Thank you again for the quality posting.

By: Mike Clough

Mike Clough — Fri, 21 Aug 2009 19:39:28 +0000

Jeri, I am guessing you work in HR or payroll (if not I apologize). When I saw your comment, I had to laugh as this would not be the first time I have heard this and from my own employees in payroll and HR. And yes, it is a little more complex than straight salary and for that reason most small business owners do not make the change. However, it is my opinion that my past successes have come from not taking the easy way out but rather from getting everyone on the same page with the same objectives and a strong desire to excel and make as much money as possible. Once the game is laid out for them and they understand the rules, everyone plays the game just like you would any game – they play to win! It is much more exciting to make 125% of your variable income than 75%.

Nonetheless, I would agree with you that it is better to keep it as simple as possible. This makes it easier to explain, easier to understand, easier to remember and easier for those handling payroll to process. The key is to make the objectives based upon quantitative rather than qualitative key factors. And the bottom line is whether or not it is working. Much of the time it depends upon how it is presented as well as continued communication.

By: Jeri

Jeri — Fri, 21 Aug 2009 18:51:54 +0000

I found your idea of performance interesting, but what about the burden this places on HR and Payroll. This could slow your numbers for the month? If you have a few different %. It can be bad enough if every sales person is on a different scale. Have you seen this work? The best way I see this to work is to keep it simple, but Sales people love to through in a twist.

By: Mary H Ruth

Mary H Ruth — Thu, 20 Aug 2009 20:41:35 +0000

Thank you for a clear and detailed examination of these changes. Very helpful post, so to the point for many businesses right now, I’m sure.