About ten months ago, Quontic moved to a performance-based incentive compensation model. Now, before you form your opinions on this strategy, hear me out—the switch has been overwhelmingly positive, not only for sales positions but across all departments at Quontic. Here’s why.
At its core, performance-based compensation takes control of compensation and puts it in the hands of employees. Your pay is based on how hard you work and how productive you are.
Admittedly, I recognize that it’s unusual to implement this model across an entire organization. But it works because each department at Quontic has a different incentive and all of them tie into our bigger goals. Then, all KPIs (Key Performance Indicators) are designed according to what each position can accomplish.
Coming up with the KPIs was a huge task on its own. We looked at each department individually, and we tried to figure out what their primary purpose was. We asked, “What are the main responsibilities, and what does success look like?” and took that and tried to make sure every KPI for an individual fed into that top goal.
An mortgage underwriter’s KPIs, for example, are based on loan decisions they make every month and speed with whey they are made; The closing department is based on how many closing packages they prepare. At the end of the day, what this does is create motivation for the employees to push themselves, as opposed to higher-ups pushing them. In turn, when one department is successful, it pushes another department to be successful. In this environment, because they all feed into each other, it pushes them to be successful together.
Compensation-wise, everyone has a base salary, and bonuses are based on those KPIs. Here at Quontic, there are three tiers: “Minimum,” “Primary,” and “Visionary.” We’ve set a standard for each department. So, that underwriter whose KPIs are based on decisions every month? We have a decision standard for them. If you achieve the Minimum standard, you get your base salary. If you achieve the Primary standard, which is our target area, you get a bonus every single month that you reach that standard. If you achieve the Visionary standard, you’re a rock star who knocked it out of the park and exceeded our expectations, and we’re going to reward you for that.
Everyone is being rewarded for individual, team, and overall division success. When each person on a manager’s team ties into their bonus, the manager is naturally more enticed to train and to help staff to hit their goals so that the manager can hit their goals. Overall, the division goals are tied to everything—if all the departments are hitting primary or visionary standards, it’s impossible for the division to fail.
On the flip side, managers are able to quickly see who is struggling and needs support. This model works as a great tool to identify potential issues. I can jump in early in the month and offer help.
So, from a management perspective, instead of pushing people to work, I’m now managing expectations and making sure employees have the tools they need to be successful.
This has also been an asset during the hiring process. Most people react really well to incentive-based compensation. People, in general, like to have that control over their pay – and the ability to earn more for producing great results. It helps highlight the people that want to push themselves and hit that Visionary goal. Those are the people that naturally excel, and those are the people Quontic looks for. In an old-fashioned environment, you get your salary no matter how hard you work. In this environment, your salary is just a starting point. At Quontic, you can increase your pay every year depending on how much you want to push yourself. And job applicants really like to hear that.
When many of Quontic employees pivoted to working remotely (which, by the way, we migrated to in under a week), I was curious to see how that change would impact performance. Like Steve said in his blog post about remote teams, everyone has been MORE productive. That’s where our KPIs come into play. The nice thing about KPIs, especially in a remote environment, is that you don’t have to worry about any individual. I pull the numbers every week, I know how productive they are. This makes it much easier to manage people, even when you’re not able to visually see if someone is working.
Now, employees at Quontic have the ability to not only hit their numbers, but also give a rock star performance while working remotely (whether that person wants to work from 1pm to 3 am, or whatever—as long as they’re hitting numbers) while taking care of their family and staying safe. And that, in my humble opinion, should be every business’s goal.