We are restructuring our Accountability Chart to prepare for a clean exit, and one of our long-term leaders is moving from a high-level strategic seat to a lower-level specialist seat where they actually GWC. How do we handle the compensation adjustment without triggering a toxic response or a resignation?

Question

Tyler Smith · Accepted Answer

Moving a long-term leader from a strategic seat to a lower-level specialist seat where they actually GWC™ (Get It, Want It, Capacity To Do It) is a tough structural move, but it is often necessary for the business to scale, especially when preparing for an exit. The real friction arises when their current compensation does not match the market rate for their new, smaller seat.

Separate Structure from Compensation

To handle this transition without causing a toxic response, you must separate structure from compensation conversations.

1. Establish the correct structure first: Focus solely on the Accountability Chart. Help the leader understand that their current seat might be holding the business back, and that the new seat is where they can truly shine and deliver maximum value to the organization. This conversation should emphasize the business's needs for growth and efficiency, and how this new role aligns with their strengths. Consider how this impacts the overall [Accountability Chart design for an exit](/qa/thinking-time-accountability-chart-exit-prep).
2. Gain acceptance for the new seat: Only once they accept the new role and its responsibilities should you address the compensation details.

Compensation Adjustment Strategies

Once the leader has accepted their new seat, you have a few options for adjusting their compensation. These strategies aim to keep your payroll healthy while minimizing negative impact on the individual.

• Grandfathering with a Transition Period: You can grandfather their current salary for a specific transition period, such as six months. This provides them with financial stability as they adjust to their new role and responsibilities.
• Restructured Compensation: Implement a compensation package that includes:
• A base pay that matches the market rate for their new, specialist seat.
• A performance-based bonus directly linked to the measurable outcomes of their new role. This approach allows them an opportunity to earn back their previous income through high performance in their new position.

This approach maintains your company's financial health while offering a path for the leader to achieve their desired income through clear performance metrics. Be honest, direct, and empathetic throughout this process. Do not compromise the financial stability of the business to avoid a difficult conversation, as this could have long-term negative consequences, particularly when considering your [business exit readiness](/qa/business-exit-readiness-vs-founder-burnout). This type of conversation is critical for ensuring that everyone on the team is in a seat they GWC, which is vital for building a strong [leadership team](/qa/loyalty-versus-capability-leadership-team).

Related questions

• [How should an owner use Thinking Time to design the next iteration of the Accountability Chart for an exit?](/qa/thinking-time-accountability-chart-exit-prep)
• [How do I know if my business is actually ready for a clean exit, or if I am just burning out and need to fix my internal operations first?](/qa/business-exit-readiness-vs-founder-burnout)
• [My COO is an incredibly loyal execution machine who has been with me for ten years, but they lack the strategic capability to build the next layer of management. How do I resolve this without firing them?](/qa/loyalty-versus-capability-leadership-team)
• [How do we design a specialist seat on our Accountability Chart for a legacy leader who has hit their management ceiling, so we retain their expertise without stalling our growth?](/qa/restructuring-seat-for-legacy-leader-hitting-ceiling)