…Follow His Comp Plan

A half a lifetime ago, someone once told me a truth that has made a world of difference to my understanding of corporate behavior. I was working as the financial admin / everything-else-department for a director in the professional services side of a high-tech company. There was something we needed the sales side to do for us to be able to do our jobs, and there was a manager or director over on the sales side who kept throwing roadblocks in our way. I was getting frustrated, and I was mouthing off to my boss the consulting director about this sales clown being an anti-social and anti-company moron who was probably single-handedly destroying our stock price – I sometimes get excited. And the director said to me, “If you want to know why he’s being a jerk, just follow his comp plan.”

He went on to explain to me that this sales manager was being compensated for a certain metric. What we needed wasn’t on his plan, or it might have even been diametrically opposed to something that was on his plan. Further, what we needed wasn’t something his boss needed or wanted either. So in order to get his bonus, he was better off ignoring or interfering with what we needed.

Now, being young and idealistic at the time, and not being on a variable comp plan at the time, I thought the sales manager should have done what we needed just for the obvious benefit it would provide for the company. But if the manager’s comp plan was well-written (and I don’t know whether it was or not), then his lack of team spirit was good for the company. Now, if it wasn’t well-written, then the other truth my director told me around the same time came into play as well: “He, who lives by the comp plan, dies by the comp plan.”

This story goes back to an earlier post about comp plans potentially being in conflict with each other. If an organization is complex enough, it might not be possible to eliminate these conflicts. But understanding that there will be conflicts based on plan participants demonstrating enlightened self-interest and optimizing their payouts by behaving as their plans dictate, then it can be much clearer why people seem to be standing in your way (and therefore, the company’s way) for no good reason. They are doing it because that’s how their plans are written, or because that’s what their manager wants them to do.

Or they’re just jerks. That’s possible too.

Interesting sideline – the consulting director went on to become Callidus Software’s first CTO. I’m not sure if that’s ironic or not…