Bill Canady, a CEO, explains why three salespeople quit after his company changed its compensation plan. When you shift the pay structure, employees who optimized for the old one leave, and that's often fine because it refocuses the team on new priorities. Canady advises announcing changes a full quarter ahead and treating people like intelligent adults.
I want to talk about that honestly, because this is where CEOs lose their nerve and it deserves better than a slogan. We designed the compensation plan. They optimized against it exactly as designed. We got what we were paying for. When we changed what we paid for, the economics of their job changed and 3 of them left. It changed enough because they left. Now that is the trade and it's a good trade. You lose 3 sellers and you get a sales force pointed at Quad 1. But run it like an adult. Do it at quarter boundary, not mid-quarter, right? Make sure that people know this is coming. Tell them a full quarter ahead. Don't pretend it isn't a pay cut for some of them. They can keep doing arithmetic. They're smart people. And the moment you insult their intelligence, you lose the ones you wanted to keep.
