I recently became CEO of an association where employees are compensated in the top quartile on the surveys I've seen. Plus they get fixed "performance" bonuses every year. Unfortunately, no one performs impressively. I don't want to cut the salaries people rely on, but I don't
Top compensation is an excellent way to attract and retain top performers, but it can be justified only by outstanding work. As a new CEO, you are in an excellent position to set the performance standards you expect and to support your staff in achieving them.
Share your findings about the compensation levels in your organization with your senior team. You might even bring in a compensation expert to vet your observations and join in the discussion about what high-earners are expected to produce. Performance is the focus; you're not threatening to reduce salaries; you're demanding that they do their part in making compensation is fair.
Review job descriptions to make certain you and your staff understand what everyone is expected to do. If senior team members don't already have individual plans and goals for the year, ask for them. Then negotiate goals—and means of reaching them—with each member of the team until you and they agree on the outcomes the organization will see.
"Performance" bonuses should never be a given; from now on they will be tied to real performance for both individuals and for teams. If you are concerned that it's too near bonus time to take away something people may be relying on, you may want to offer half the usual bonus, but next year's bonus should be based on their contribution to the organization. Don't forget to include yourself in that formula; it's critical that you model the behavior you expect from others.
Published in Associations Now, December 2006.