May 31, 2012 08:55 ET

Second Annual PALAZZO Incentive Compensation Survey Reveals Agencies Not Linking Performance With Bonuses

Findings Show Missed Opportunities, Especially at Digital Shops

NEW YORK, NY--(Marketwire - May 31, 2012) - Building on the success two years ago of the first ever survey on incentive compensation PALAZZO, an investment bank serving the marketing services industry, today issued the results from its second survey.

Reaching more than 4,000 C-level executives in marketing services, the results show that, while overall industry performance is improving, the use of incentive compensation plans as a strategic tool to drive profit is not.

According to Philip Palazzo, founder and president of PALAZZO, "Too many bonus plans are arbitrary and ad hoc, with little attention being paid to linking corporate objectives with individual goals. The result is bonus plans aren't being used to drive profitability, when in reality they should be. "

The survey results reveal that while most shops pay their employees cash bonuses at year end, bonus payments did not keep pace with revenue and profit growth, with agencies allocating fewer dollars to incentives than in the past. The results also indicate there is little communication by management with their staffs about bonus plans. "Those on the receiving end have no point of reference about their bonus," said Palazzo, "other than what they received last year. The result is little or no alignment between corporate goals and individual goals, a missed opportunity if ever there was one."

"Digital shops in particular can benefit from taking a fresh look at their plans," Palazzo continued. "Our results show strong top line performance that is not being translated into bottom line results. While several factors could be at work here -- an emphasis on growth, investments in technology -- digital shops that shift to strategically focused incentive programs will be better able to motivate their staffs to control cost and increase revenue. That's a win for everyone."

For detailed findings, visit the website below to request the complete study.


PALAZZO is an investment bank with a singular focus on creating value and wealth for owners and stakeholders of marketing services, interactive, digital, information, and new media companies. PALAZZO's suite of advisory and acquisition services, combined with our ability to deliver superior results, makes us the partner of choice for agencies intent on improving performance, or considering an M&A transaction. For more information, visit

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