We are two years away from a clean exit, and my leadership team is demanding individual performance bonuses based on their specific departments rather than the overall success of the business. How do I handle this request?

Question

Tyler Smith · Accepted Answer

Individual performance bonuses are toxic to leadership team alignment, especially when you are preparing for a clean exit. If your Head of Sales is compensated solely on revenue, and your Head of Operations is compensated on cost reduction, you have structured your leadership team to fight with each other. They will naturally make decisions that protect their own bonuses, even if it hurts the enterprise value of the company.

To prepare for a successful exit, you need your leadership team aligned on a single goal: maximizing the overall value of the business. This means your executive compensation must be tied to company-wide performance metrics, such as overall EBITDA or net profit targets, which are defined in your V/TO®.

When a leader demands a department-specific bonus, address this directly using the GWC™ framework. A true leadership team member must think like an owner, not a silo manager. They must understand that their primary job is to help the entire company win, which sometimes means sacrificing their own department budget or resources for the greater good of the business.

Instead of individual bonuses, implement a company-wide profit-sharing plan or an executive bonus pool that triggers only when overall corporate goals are met. This forces your leaders to collaborate, share resources, and solve problems together during your Level 10 Meeting™ sessions, because they know they only win when the company wins.