Example cases:

Learn valuable lessons from these organisations:

UK Chorus Direct Ltd

Incentive Plans reduce attrition. 

Incentives systems at Chorus helped to motivate call centre agents to meet performance targets and also made their work more enjoyable. New agents who took no more than three sick days in three months could earn £300 in vouchers to go towards a vacation, they could also earn £300 in vacation vouchers per year. In an area were it was difficult to attract, and keep, staff the incentive system helped to differentiate Chorus from its competitors. Vacations also enhanced the quality of life for staff by ensuring that they took a good break. A committee for new hires met monthly to develop new incentives e.g. the opportunity for teams of agents to earn a night out, or to use the company Mini Cooper. It was estimated that the scheme had reduced attrition by up to 60%.[18]

Jamba Juice Co, U.S.

Pay directly related to performance ratings. 

Jamaba Juice's annual merit pay increases were related to the following performance rating categories:

• Outstanding
• Exceeding requirements
• Meeting requirements
• Falling below requirements

Employees receiving higher ratings received higher payments. Any employee with a rating of "falling below requirements," did not receive a merit increase nor did they qualify for bonus payments. Payments also increased as ratings increased. Jamba management believed that it made no sense to devote dollars to under-performers since this effectively reduced payments to the organisation's over-performers. Team members understood how they would be evaluated and that overall performance related to merit increases. Through this it was believed employees became more accountable for the results achieved. [19]

 Certicom Canada

Reward and recognition strategy builds team culture. 

To create a `family` atmosphere Certicom, a Canadian supplier of electronic security technology, built recognition into their total rewards strategy and supported the recognition programme with team-building activities and communications programmes and created a culture that recognised each staff member was an individual, with individual strengths, weaknesses, goals and needs. The programme included communicating all good and bad news to staff and:

• The introduction of the annual Certicom Academy Awards, where employees are nominated by their peers for having significantly improved products or processes by creating, managing or assisting others;
• An Innovation Award programme that rewarded ideas for which patents were filed;
• A Spot Award programme that awarded gift certificates, dinners out, theatre tickets and cash to reward a staff member or teams that contributed in a significant way;
• Reinvented the firm`s bonus programme to ensure bonus payments were made against achievement of individual and/or corporate goals;

From being in a very poor position in the late 1990`s, Certicom became a success story and in 2005 closed a deal with the US National security Agency to license 26 patents for encryption technology. [20]

Procter & Gamble, USA

Reward and recognition strategy builds team culture. 

Procter & Gamble wanted its Long Term Incentive (LTI) plans to support the following:

• Business and organisational strategies;
• Talent retention and attraction;
• Values and principles which were fair for participants and shareholders and;
• Financial practices that maintained responsibility towards shareholders.

A balanced scorecard was used to provide a holistic view of the LTI planning process and this also helped clarify trade-off's in decision making processes. P&G's final LTI design was aligned with its business and people strategies, responsive to its specific talent needs, consistent with organisational values, and financially responsible to shareholders. P&G also tracked external trends in its desire to develop compensation plans which were designed to create competitive advantage. This enabled P&G to deliver shareholder returns of 81%, achieve EPS growth of 125%, and to increase net sales from $40 billion to $51 billion. [21]  

 Big Communications

Flexible Benefits online. 

Big Communications introduced a flexible benefits scheme to replace existing ad hoc arrangements. The organisation wished to promote the use of benefits, their associated tax advantages, and a positive work-life balance for its employees. A Web-based flexible benefit provider was engaged for a fee of £3 per staff member per month. The largest expenses were incurred at the outset although much of the consultation, design and implementation costs were covered by the online provider through the commission it received from the various benefit providers. All the technology costs were included in the scheme management charge. A focus group was used to consult with staff members and this resulted in the scheme being amended to include new options such as lump sum payments instead of a salary for critical illnesses, and extra time off at Christmas.[22 ]

Alpharma Inc., USA

Gainsharing helps to educate employees. 

Gainsharing and Six Sigma methodologies were used to achieve continuous day-to-day improvements by an engaged workforce. Key measures supporting initiatives were posted on team bulletin boards showing the accompanying gain, loss and bonus results. The charts led to a greater level of awareness and clearer focus on results. AI managers believed that because the plant had already made significant improvements that gainsharing would have minimal impact, however the following first quarter gains delighted them:

• People productivity $136,000 (34% of total)
• Material efficiency $ 73,000 (18.3% of total)
• Inventory Control $ 69 000 (17.2% of total)
• Spending $122,000 (30.5% of total)
• Total gains $400,000

The concept of gainsharing helped team members to personally identify how various projects impacted upon the organisation's performance. Consequently there were improvements in all gainsharing measures with employees each receiving an average of US$825 for the first quarter's performance. [23]

Anonymous large US high-tech Company

Sales incentive plans and sales representative gaming.

12 month sales cycles gave opportunity for sales plan "gaming" by sales representatives who were being compensated on a quarterly basis. To maximise their payouts the reps held poor performing accounts until the last quarter of the financial year. This resulted in 70% of the reps being paid above target earnings when some 25% of them were actually performing below target. The plan was subsequently adjusted so that quarterly payments were based on year-to-date measures, and accelerated above-target earnings were paid at year end thus tying total compensation with total performance payments. It was no longer easy to hold losses, high performers earned appropriate annual payouts, and quarterly payments provided adequate cash-flow for the reps. Analysis one year later revealed that 60% of the reps had earned above target pay all of whom also achieved above-target performance. Quarterly volatility was 10% between the best and the worst quarters. [24]

Barclays Bank, UK

Flexible Benefits of many parts.

Barclays offered a flexible benefits scheme which comprised of six parts; money, health, flexibility, development, discounts and community. The bank offered some 60 benefits and had launched the following:

• "Exclusively ours" involving a range of its own products and services which were made available to staff.
• Barclays' home computers,
• "Youatwork", an electronic shopping channel, and
• A discounted car scheme.
  

Barclays won 11 awards for its pension and benefits schemes, including Employee Benefits magazine's Most Effective Pensions Strategy 2004. Barclays reported that their investment in flexible benefits helped to attract and retain key talent. The flexible benefits schemes also generated savings through reduced employer national insurance contributions, and high-quality private medical insurance cut down sickness absences.[25]

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