Compensation Plan Design
Challenge
A leading U.S.-based Private Bank had weak sales, high client attrition and a high cost of sales.
After a leading strategy consulting firm’s compensation plan recommendations did not achieve the targeted cost savings, McLagan was asked to review client team compensation.
Solution
McLagan assessed client team compensation funding rates by function to determine the appropriate levels of compensation spend and identify areas to target for cost savings.
Staffing and pay levels were also evaluated for each function and position to further specify drivers of compensation funding variances.
Business Development Officer productivity was benchmarked and payouts for each BDO were benchmarked versus what they would earn at competitor firms for their particular level and mix of sales to identify BDOs that were over- and underpaid.
McLagan then developed incentive plans that supported the team cross-selling behaviors required for the new business model, and provided greater incentives for growth while achieving targeted cost savings.
Results
In its first year, the new plans:
- Increased sales by 30% with an increase in cash awards by about 10% and an increase in total incentive expense including equity by 16%
- Increased self sourced production of BDOs by about 20%
- Resulted in 70% more $1 million+ producers compared to the prior year
