I want to incentivize my leadership team to help me prepare the business for a clean exit in five years, but their current bonus structures are tied strictly to departmental metrics. How do I restructure their incentives to focus on overall company value?

Question

Tyler Smith · Accepted Answer

If your leadership team members are incentivized solely on departmental metrics, they will build silos and protect their own territory, which actively hurts enterprise value. To prepare for a clean exit, you must align their personal success with the overall value of the business. Begin by simplifying your incentive structures. Transition from complex, department-specific bonuses to a company-wide plan that is tied directly to the targets outlined in your V/TO®. Your leadership team should be measured on overall profitability, revenue growth, and the successful completion of key enterprise-level Rocks. This structure forces them to collaborate across departments because they only win when the entire business wins. For a long-term exit strategy, consider implementing a synthetic equity plan or a phantom stock program. This gives your core leaders a direct financial stake in the ultimate sale price of the company, keeping them highly focused on building transferable enterprise value rather than short-term gains. Ensure that this transition is accompanied by complete transparency. Share the metrics that drive valuation in your industry, and use your Level 10 Meeting™ sessions to track progress against those key numbers.