Family Matters
a talent management blog focused on the family business
by Kevin Logterman

Creating Competitive Compensation Plans for Family Business

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Stay tuned for more postings from Kevin Logterman!

A colleague of mine, Neil Lappley, recently helped in writing an article (Creating Competitive Executive Compensation Plans for Family & Privately Owned Businesses) on the three primary areas for creating a competitive compensation plan for family businesses.  While salary and annual bonus have been the top two factors for as long as anyone can recall, a third area is growing in importance and position – long term incentives.

I believe companies are realizing that it’s very helpful and productive to tie incentive into the long term strategy.  If growth in revenue is the top priority, incentivizing senior executives on growing revenue places everyone’s priorities in the same place.  The same goes for return on capital, margins, acquisitions, etc…

In the past year, most every senior management search I’ve worked on has included a long term incentive, typically in the form of phantom equity.

Attracting and retaining your top talent never lets up and, in fact, is likely to heat up with our economy beginning to thaw from its deep freeze.  It’s important to review compensation and benefits regularly and be certain your programs are fair and competitive.