Our leadership team members are still compensated on departmental bonuses which is reinforcing siloed behaviors. How do we restructure our leadership compensation to align with our overall V/TO goals?

Question

Tyler Smith · Accepted Answer

If your leadership team members are compensated based on their individual department performance, you are paying them to build silos. A sales leader with a revenue-based bonus will always push for deals that operations cannot deliver, and an operations leader judged solely on cost-cutting will starve sales of necessary resources. To build a unified team that runs the company as a single cohesive unit, you must align their incentives with your V/TO.

Start by restructuring your executive compensation model so that a significant portion of their bonus is tied to overall company net profit and the achievement of corporate Rocks. When everyone's financial success is directly linked to the same company-wide numbers on your Scorecard, their perspective shifts immediately. They will stop treating resource negotiations as a zero-sum game and start asking how they can help other departments succeed.

During your Level 10 Meeting, you will see a dramatic drop in status management behaviors and a rise in peer-to-peer accountability. Leaders will naturally begin to help each other solve issues because they understand that a failure in one department hurts the entire company and affects their own compensation. This alignment is critical if you are preparing for a clean exit, as buyers look for a cohesive leadership team focused on enterprise value.