Compensation Structure for General Manager

April 29, 2025

by a searcher from Columbia University - Columbia Business School in Rumson, NJ 07760, USA

Would you say the following compensation package for a General Manager for a $1M revenue business in the Northeast makes sense in terms of structure? Company does field testing services. I know the total is enough to get the candidate I'm looking at. I'm not looking to offer phantom equity and am debating whether or not to have the bonus at all. Should I just do base salary and profit sharing and increase the % of profit sharing? I'm tying to incentive growing volumes but focusing on profitable growth. This person has 10 years professional experience in a small business (9 employees, less than $1.5M revenue Philadelphia suburbs). The candidate is about 34 years old but is high potential. Base: $65,000 Bonus: 20% paid quarterly based on hitting certain unit volume goals each quarter (to incentive top line growth). $13,000 Profit Sharing: 5% of net profits (to incentive bottom line). $6,500-$10,000 TOTAL = $84,500-$88,000 on target earnings

Reply by an intermediary
from Vanderbilt University in Chicago, IL, USA

I suggest looking at industry comps/norms for such a position. You want to make sure you are commensurate with your industry to make sure you get a quality candidate while not overpaying either.

Reply by a professional
from Bentley College in Miami, FL, USA

Broadly, this structure is reasonable for a $1M revenue business, especially considering the size, industry, and experience level of the candidate. You’re trying to balance incentives between growing top-line revenue (via the volume-based bonus) and bottom-line profitability (via profit sharing). A few thoughts: - Base Salary: $65K is appropriate given the company size and the candidate's background. It also leaves meaningful room for variable upside. - Bonus: Tying a quarterly bonus to volume can motivate urgency and short-term performance, but beware of unintended incentives where volume grows at the expense of profitability. You could consider making volume and gross margin thresholds both part of the bonus trigger to keep alignment. - Profit Sharing: 5% of net profits is a good incentive for a small business GM. If you want to simplify, you could roll the volume bonus into a slightly higher profit share (say, 7–8%) — but you'd lose the immediate quarterly "pulse" of volume incentives. If you believe profitable growth is your #1 goal, leaning more heavily on profit sharing could make sense. But if you're worried about maintaining sales momentum early, keeping the volume bonus in place (even with a gross margin qualifier) might be safer.

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