As printed in Radio Ink in February 2010
By: Jon Erdahl, VP/Digital Strategy, McVay New Media
I don’t know about you but last year seemed like the year for new and innovative ways to re-structure the way in which we compensate our top performing account executives. The mantra seemed to be (in every group I worked with at any rate) cost of sales were off, budgets were out of whack, and we needed to change our incentive programs to reward the kinds of sales behaviors that we wanted to achieve. That made for a difficult, often confusing, set of dynamics since the environment was changing daily. In the face of all that change and innovation on the sales side of things, a glaring problem surfaced for me that served to underscore the need for us, as an industry, to re-think how we compensate our programming teams.
It has always bothered me that we judge programming performance almost solely on the monthly ratings game; that’s how we are paid after all right? We tend to get so myopic that we lose focus on other key components of our brand such as online. Companies simply add the online tasks to the PD’s plate…and move on. We claim to be in the online space when in fact we are mostly paying lip-service.
Recently, I was involved with a broadcasting group that wanted to change the model but was struggling for a solution to judge a Program Directors performance. Several key PD’s had experienced flat books (typical sample issues) and management knew the on-air products were solid. However, the online component year to year, was stagnant and online sales were flat to down. When the group launched their web program a few years ago, programming was fully engaged and online was part of every client pitch. However, along the way, something was lost….engagement. Once the systems were up, the team went on to other corporate initiatives; the web became wall-paper. No one was watching day to day. After a team meeting, we realized we needed to change the compensation model if we were going to get serious about online growth expectations. Here’s how the plan worked:
- 1/3 Online
- 1/3 Ratings
- 1/3 Online Sales Growth
Of course two of the critical challenges we faced were being able to launch this mid-year (after compensation models were already in place) and to put this new performance incentive program in place without changing our overall opex budgets for the year. As you can plainly see, the changes were made easily AND welcomed by the team. By simply shifting money out of the ratings line in the budget (the only metric that PD’s were compensated under the older plans), we were able to spread that original budget across two other performance areas (online and sales) without adding one dime to the pre-approved budgets. Plus, since some of the markets had recently had flat books, the PD’s were more than happy to have a chance at achieving some of that budget money that they would have already lost IF they were only being paid on ratings performance.
By outlining clear expectations and changing the compensation model, these programmers were judged on performance in a number of areas that added to the success of the cluster. The result was that they hit their market goals in all metrics AND made more money based on behavior that was going to move the needle. Oh, and the ratings piece for that year…two up and two flat books with the usual In-Tab/Sample issues. Imagine what would have happened if nothing changed?