In the early 1990s I learned how to present a pay plan that will likely be accepted by watching one of my very first clients present pay plans to my candidates. I sat in on several presentations from John Lance who was the owner of John Lance Ford in Westlake, Ohio. Mr. Lance later sold his large Ford dealership to Autonation and went on to become a very important executive to Autonation.
Mr. Lance summarized all the aspects of the offer on a sheet of paper for the candidates. In addition to the normal title, hours and salary Mr. Lance would break down the variable to make it clear to the candidate what they might expect. Over the years I added to this presentation to include 3 levels of performance and 3 possible incomes they would yield. Without this information, I found that candidates often didn’t understand or worse misunderstood the variable and would often plug in the wrong numbers based on their current position. Once a candidate makes this mistake and comes up with the wrong numbers and perhaps talk to their spouse, it becomes very difficult to change their thinking. Especially if you have to also change the spouses thinking too.
Here is our formula to present a pay plan that will get accepted:
- Duties / Responsibilities / Authority
- Expected start date
- Days / Hours of work
- Exempt or non-exempt
- Paid time off
- Benefits begin
- Base salary or Hourly wage
- Variable / bonuses / commissions based on ….(example: Line T7406 of the Toyota Service DOC)
- Underperform: If your work produces no change from company’s performance last year’s your variable compensation will be $________
- Perform at target: We are looking for a 10% increase in (performance, sales, profit, etc.) and your variable compensation will be $__________
- Perform above target: Reach a 15% increase in (performance, sales, profit, etc.) and your variable compensation will be $__________
I encourage my clients to use a presentation like this to make it crystal clear what the candidate can expect. Note, I have found high performers always feel that they will be “above target range”. Many ask what will a 20% improvement pay them?
An added plus, with this pay plan presentation the majority of your offer letter is written!
Founder and CEO of Automotive Personnel, LLC
[email protected] 216-226-8190