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How to design variable comp for employees??

    • 355 posts
    September 17, 2008 6:01 PM EDT
    Use a commission of 5 or 10 % for each new account brought in.  An insurance salesman I know for example, gets 20% commission each time a customer takes out a policy.  I would also take the commission in cash rather than stock in the company.  The company may do well or it could flop.  Then your stock would be worth nothing.  Instead, take your commission and in vest half in a blue chip stock of your choice. 

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    The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

    • 2 posts
    September 15, 2008 10:18 AM EDT
    Hi,

    I`m new to the site and think it`s great.

    Anyway, I`m working in a software development start-up with 4 employees and have been loosely termed ` business development manager`. The title is kinda up to me really, as is my `fit` with the company in terms of work requirements and job description, etc., etc.

    My boss has told me to:
    1. Define my position clearly, in terms of exact title
    2. Decide performance metrics for my BD position that he can evaluate quarterly
    3.  Decide how to be paid via variable compensation, starting with a base salary of 40000.

    I`ve been in the job a week and foresee myself building client relationships, doing a lot of marketing, analyzing the industry trends, etc.  I`ve come into the position with a PhD in Economics and approx 3 years experience in project management, albeit in the non-corporate world.

    So I suppose, I`m asking, what is the best way to design my variable compensation? Should it be bonus or stock option based? If it`s based on bringing in accounts,  what percentage would I ask for? I really have zero experience in this area and would love some direction on it!

    Also, any advice on performance metrics to use and what are feasible, realistic, fair ways to measure them?

    Thanks so much!   
    • 2 posts
    September 17, 2008 8:56 PM EDT
    Cool, thanks for that. Fair point on the stock options!