When CEO Andrew Ostro co-founded PolicyMe in 2018 alongside Laura and Jeff McKay, they were a small, tight-knit team. They shared a common ambition of simplifying insurance for Canadians by making it more affordable and cutting approval wait times. Working together at the same desk, it was easy to stay on the same page. 

However, by the end of 2023, the company had grown to 80 employees, many of whom were working fully remote outside of Toronto, where the company leased an office. During the expansion, some employees began to lose sight of a common goal. 

The biggest divide was between the commission-driven sales team and those in charge of marketing, product engineering and customer support. Since these teams weren’t directly involved in sales, customer satisfaction and revenues were becoming increasingly less of a priority for them. Instead, they focused on website traffic, product launches and software deployments. 

Last year, PolicyMe started to address the mounting disharmony and boost sales at the same time by rolling out an incentive model rarely seen at startups—a company-wide compensation pool, directly tied to hitting sales goals.

Financial advisors often warn younger start-ups against incentive-based compensation models: because their financial forecasts can be shaky, it makes it risky to promise payouts based on uncertain metrics. Ostro understood the concerns. “It’s really difficult to tie your compensation to a target when you don’t really have a ton of confidence that it’s even the right target,” he says. Alternatively, a company pays out too much and it negatively impacts their bottom line, eating up money needed to grow the company.

But with five years of solid growth under their belts, Ostro and his team felt ready to make a bold move. The plan was to tie bonuses not to profit or revenue, but to the number of insurance policies sold. “We didn’t want to do something related to revenues as we didn’t want to put any sort of incentive in place for our teams to ‘over-insure’ or ‘over-sell,’” says Ostro.

Instead of a binary “hit or miss” bonus model for their annual sales target, PolicyMe designed a sliding scale for compensation. If the company hit its goal exactly, the bonus pool would equal 10 per cent of total payroll. If the company didn’t hit its exact target, payout adjusted up or down linearly. 

For example, if the target was 50,000 policy sales and the company hit 49,000, the pool would be nine per cent of payroll. If it hit 51,000, the pool would rise to 11 per cent. The floor was set at five per cent and the ceiling at 20 per cent. To reflect individual contributions, the compensation pool wouldn’t be divided equally—it was allocated based on assessments of each employee’s performance. And lastly, employees could choose whether to receive their bonus in cash, equity, or a mix of both.

Even if the company narrowly missed its target, employees were still rewarded, and every additional policy sold made a measurable difference. The compensation model structure also allowed for flexibility in the face of setbacks that were out of employees’ control: a regulatory change that delayed a new product launch or an economic downturn due to an unexpected tariff war with the U.S., perhaps.

Will Bradley, PolicyMe’s vice president of growth, was one of the company’s earliest hires in 2019. While he was optimistic about the new compensation pool, he had reservations, particularly with the variable component of the model. “I came from the finance world, where the word ‘variable’ has negative connotations when it comes to bonuses,” he says. Bonuses in the finance world often lacked transparency and were entirely at the discretion of management—so in a down year, it wasn’t unusual for employees to receive nothing at all.

Ostro’s first priority when launching the system was building employees’ trust in the compensation model. To hold themselves fully accountable, PolicyMe built a real-time dashboard using Looker, a data analytics platform. It showed current sales numbers, projected sales and the estimated bonus percentage if that projected target was met. 

In its first year of the compensation pool’s implementation, PolicyMe exceeded its annual sales target. On average, employees received a 14 per cent bonus on top of their base salaries for 2024. Bradley says the positive gains have extended beyond financial rewards; the pool has fundamentally shifted the way departments work together.

Now able to conceptualize and visualize the well-being of the company and their impact as individuals, employees check in on the metrics regularly. Competing initiatives became simpler to assess and compare. 

“People aren’t coming to meetings with their own separate agendas anymore,” says Bradley. “Everyone is thinking about how to achieve our sales target and how they can contribute to that in their role.” That focus, he adds, helps reduce distractions and eliminate “shiny object syndrome”—a common pitfall for fast-growing companies.

The compensation pool’s implementation wasn’t without stumbling blocks. One issue PolicyMe encountered was whether new hires who joined partway through the year should qualify for the full annual bonus. The company ultimately refined the program for 2025 to better reflect employee tenure and contribution windows, and to offer clearer guidance around mid-year hires. 

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Ostro also acknowledges that the company was fortunate to launch the new system during a productive year. “That definitely allowed people to feel like they’re directly rewarded for the company’s success,” he says. Looking ahead, he believes the system’s mix of motivation and transparency will help PolicyMe weather potential lean years in the future.

Bradley agrees—and sees the compensation model as a powerful recruiting tool. “Companies with variable compensation will likely be associated with greater growth and more high-performing individuals, because the compensation structure is reflective of that culture,” he says.