Feld Thoughts | No More MBOs
I am so very tired of MBO-based bonuses in startups. I knew the concept of MBOs pre-dated my time in business school, but I couldn’t remember where they came from. Wikipedia reminded me – it’s another Peter Drucker creation from The Practice of Management.
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I’ve only worked in what could be considered a “big” company for 18 months (1993 – 1995) and that was the company (AmeriData) that bought my first company (Feld Technologies). When they acquired us, they weren’t big (probably 200 people) and when I left they still weren’t really big (2,000 people) but were “big enough.” So the joy, and experience, of working in a 50,000 or even 100,000 person company eludes me.
As we enter Q4, I’m starting to see discussions about annual performance – often in the context of gearing up for 2014 plans. This often comes in the form of long emails or tedious board discussions about compensation and bonus programs. And inevitably, discussions of MBOs and qualitative performance bonuses quickly enter the discussion.
Now, I’m not a huge fan of programatic bonuses. I spend way to much time reviewing comp plans and trying to help CEOs get a decent alignment between an elusive and inaccurate “plan” (which – especially in a rapidly growing company is never anywhere close to correct), bonuses driven off of company performance, and then bonuses driven off of individual performance. It’s just really hard to get right and feels like an enormous misallocation of time for a young company.