Irvine, CA, August 05, 2012 --(PR.com
)-- According to a recent study, since 2007 short-term incentive plan usage in private companies has increased from 79% to 95%. Even more dramatic has been the increase in prevalence of long-term value sharing, rising from 35% to 61%. This trend reflects the desire that most companies have to align key producers with the growth goals of the business, says Tom Miller, president of The VisionLink Advisory Group, based in Irvine, CA.
The study cited was conducted by World at Work in conjunction with Vivient Consulting. “The survey confirmed what we have been preaching for a long-time,” Miller said. “If companies want to thrive in this ‘new economy,’ more and more compensation needs to be ‘at risk.’ This allows companies to share value with those who create it. And in the long-run, this approach attracts the right kind of people to the organization and keeps them there. People relate to the idea of participating in the value they help generate.”
With such statistics in mind, VisionLink plans to broadcast two webinars addressing compensation issues for key people in private companies. Both are open to the public and free of charge. The first, entitled “How to Build Long-Term Value for Key Producers,” will be held on August 28, 2012. Registration can be accessed at: http://www.vladvisors.com/business-growth-strategies/event-details.aspx?ID=100. The second event is called “How High-Growth Companies Pay their Top Producers” and will be held on September 18, 2012. It is being co-sponsored by Chief Executive Magazine. Registration for that broadcast is available online at: http://chiefexecutive.net/TopProducers.
“Businesses are hungry for ways to create more productivity in their people,” Miller added. “Productivity comes at the intersection of effectiveness and efficiency at all levels of the organization. It is both ineffective and inefficient to pay people strictly through salaries and discretionary bonus plans—and therefore unproductive. If companies want to grow, they need to align compensation with their business models and pay for the effective and efficient reinforcement of the virtuous cycles of those models.”
Miller went on to say that the study conducted by World at Work confirms that most companies are recognizing the need to apply a value sharing strategy to compensation. Then they need to approach that task in the most effective manner possible. Of particular concern is what kind of long-term value sharing plan makes the most sense for an organization—stock, phantom equity, stock appreciation rights (SAR), performance unit plans, profit pool or something else.
“Most companies need help navigating that decision making process,” offered Craig Rutledge, leader of VisionLink’s design implementation team. “And they need to be able to model what a plan will look like once it’s implemented. That’s the kind of thing we can help them with.”
The trend towards “at risk” pay is leading companies to think more deeply about their compensation programs in general, says Miller. They are searching for the right balance between guaranteed and incentive compensation and short-term versus long-term value sharing. Getting this right can mean the difference between a pay strategy that fuels growth and one that diminishes it.