Does variable compensation work for IT professionals?

Dear Bob …

Your compensation model is just fine (see “Poor Joe,” and “Comp logic,” Keep the Joint Running 10/22/2007 and 10/29/2007) … except that some of the folks who migrate to IT see variable and spot bonuses as insults.

In a firm founded by a salesman, the comp model followed your four components [base, variable, promotions and spot bonuses – Bob]. The technical staff were just fine with base and promotional compensation.

When the subject of variable comp and “spifs” (especially spifs) came up, the tech staff turned ugly. Most were uncomfortable with the variable comp and some attempted to negotiate a higher base without the variable. (“we are professionals not prostitutes” was one recurring remark).

The founder was confounded. He had never dealt with such a unreasonable group. The spifs were seen as an embarrassment and/or insult (“we aren’t used car salesmen”). One turned down a spif awarded in an “all hands” meeting. This really torqued the boss.

Comp has to also fit the nature of those receiving the comp. Even if it is Joe Torre.

– Comp’ed

Dear Comp’ed

I have to wonder if the tech staff was insulted or worried. Pay for performance entails risk as well as reward.

Probably, the CEO explained it in salesforce terms, which compounded the felony. Many sales professionals are more strongly motivated by the chance of additional money than most other employees, so the communication with them is about their opportunity to earn more commission.

Tech staff tend to be more motivated by a sense of achievement. Explaining the comp program in engineering terms is a more sensible choice for them.

At the end of the conversation, it comes down to this: If you perform well this year, should I pay you for it this year, or should I pay you for it forever?

When you phrase the question like this, the answer seems pretty clear.

– Bob

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