Since then, Intecom has gone on an ambitious structuring campaign -- so ambitious, in fact, that Hillgren has found he has had to break rules almost as fast as he has made them. "We've probably tried to be too definitive," he says, "too attached to toowell-defined goals.
"There is a desire sometimes to make structure work for you, I think, instead of the skills of management. You rely too heavily on it, and the more structure you impose, the more you seem to have to tailor around it."
The trick to designing the best executive-compensation system for your company, says Peat Marwick's Chingos, is to strike a balance between too much discretion and too little. "You can't get by with one performance standard for the entire company, and you can't get carried away and devise so many structures that departments end up working against one another. There has to be a mixture."
He also advises meshing short-term thinking with longer-term strategic plans, with an eye toward linking compensation programs to a set of corporate goals, be they financial or cultural. But the most important thing, he says, is to "do what's right for you." Just because other companies are tilting toward certain kinds of capital-accumulation devices or incentive techniques doesn't mean either option is right for your company. "There's a tendency to look for cookbook solutions," Chingos says, summing up, "and it's just not that simple. There really are no cookbook solutions."
Sweetening the pot: What companies did to improve compensation
Salary increases 72%
Additional benefits/
prerequisites 39%
New annual-
incentive plan 25%
New long-term
incentive plan 14%
Special recognition/
awards 13%
Other 9%
Note: Total exceeds 100% because of multiple responses.
OFFERS THEY CAN'T REFUSE
"It's always 32 for 32," groans David Corbett, vice-president/partner of Korn Ferry International, an executive-search firm based in Los Angeles." Small companies are always asking me to find them a young tiger of 32 who'll come to work for $32,000." Either they haven't priced MBAs lately, he says or they have an inflated notion of their company's attractiveness to job-seekers. He suspects the latter.
"They're entrepreneurs in heat. They're building a company, and having a lot of fun doing it, so they think all the hotshots naturally want to work for them." Corbett laughs ruefully. "They don't realize there are 10 other companies that want that same guy." And many of them, particularly the larger ones, he says, may be offering far better deals.
The success or failure of a small, growing company depends in no small measure on its ability to attract and retain good executive talent. Even companies that are committed to promoting from within sometimes find themselves chasing executives from other, often larger, corporations with better-structured compensation plans. Yet, many of these smaller companies seem to operate on the assumption that they can recruit the talent without offering a generous, tax-effective -- in other words, competitive -- combination of direct and indirect compensation.
"I believe in doing only what I feel I can comfortably do for my employees," says the CEO of a southern steel distributing company. "I can't worry about what other companies are doing. Of course, if they took all my people, then I'd have to start worrying." But that isn't likely to happen, he says, because "this is a great place to work."
"You don't need to put together as fancy a package when you're offering people the opportunity to work in an entrepreneurial environment," agrees an East Coast furnishings supplier. "Give them what they can't get at a larger company -- responsibility and a chance to affect some of the decisions, mainly -- and they're happy."
There's certainly truth in that, says John Cooke, founder of The London Group Inc., a Spring Lake, N.J., management consulting firm. "You see almost a Svengali-like influence on those who work for an entrepreneur," he explains. There are indeed second-tier executives who gladly accept the unstructured, reactive policies of the smaller company -- policies that are generally set and shaped not by the employment market, but by what is best for the entrepreneur -- just to be free of the larger corporate structure they knew before. But, as many companies are learning, there are also quite a few other good prospects who, while tantalized by the opportunity to work for a young, growing company, just can't bring themselves to make the sacrifice.
"They participate in a variety of short- and long-term incentive plans, not to mention capital accumulation, supplemental retirement, deferred compensation, and everything else," says Peat Marwick's Peter Chingos. "So, if you want an executive from a larger company, you've got to first make that person whole [match the prospect's current compensation package], and then make it interesting on top of that." And that is no mean task for a lot of small companies, Chingos says, because designing an attractive compensation package often requires the use of techniques and vehicles that small organizations can't -- or won't -- put on the table.
Because they are often cash-poor, small companies on a recruiting job simply may not have the option of paying huge salaries. Nor can companies simply dangle a long list of perks. They have come to be gun-shy in that area, since Congress and the IRS have been cracking down on cars, clubs, and the other goodies that once were the favored tools of small companies seeking to maximize their executives' income.
