CEO's Discuss Incentive CompensationWritten by Al Weide
The following are highlights of Executive Briefing on Incentive Compensation for Small to Mid Sized Companies James Kaitz, CEO of The Association For Financial Professionals shared that his organization has exceeded their annual targets using an incentive plan and described how plan has encouraged teamwork through shared goals. "At AFP, CEO's objectives, as set by Board of Directors, are published and known by all employees," said Kaitz. "We were very excited when employees voted - on their own- to post their goals on intranet. It was a great step. Everyone can see everyone else's goals so it encourages better goals - no one wants to be seen as having "weak" goals." Their plan has three major organizational objectives that establish incentive pool level, and then performance against individual goals determines specific award each employee receives. All employees have performance goals, usually 3 to 5 goals each. "Each year goal setting process gets easier. These are bottom up goals that are oriented toward CEO's objectives and core values of organization. They are all consolidated and ultimately reviewed by senior management. This process is taking less time each year. A really great outcome of this process is that employees begin to realize that to be successful, they have to work with other people, which has lead to an increased number of shared goals," explained Jim Kaitz. "Our results in incentive plan have exceeded my expectations." Dr. Laurence McCarthy, Chairman of Focus Technologies, Inc., described how his scientists and employees are getting right results and making a profit in a tough market. He described evolution of Focus and challenges organization faced over time an associated concerns in designing incentive plans. Focus was formed around a 1988 acquisition of a small privately held company located in West. A change in culture was needed after acquisition "Sales people were hated because new sales meant more work!" A lost has changed since then. Initially incentive plan for Western location was mainly tied to sales revenue, but over past two years has been broadened to include quality and cost-based metrics. An Eastern location was established in 1994 to develop an online database and value-added laboratory services to pharmaceutical companies engaged in development of anti-infective drugs. Incentive compensation for this group was, until recently, focused on sales growth and market penetration. Cost management and profit goals now are a part of this organization’s incentives. "Our growth has been 15% per year and our success has been due to efforts of our gifted employees who have responded to changes in strategies needed sustain company’s growth," said Dr. McCarthy.
| | Incentives and Customer SatisfactionWritten by Al Weide
Improving Customer Satisfaction Through Incentive CompensationHalifax Electric Membership Corporation, in Enfield North Carolina, wanted to make sure they were meeting needs of its 12,000 customers, who also happen to be its owners. They designed an incentive plan in 1999, with help of HURECO, INC., of Vienna, VA, to focus employees on improving customer satisfaction. During ensuing years, satisfaction ratings have moved up from 8.58 to 9.08 in 2004, a record that others are unlikely to match. What do employees think of program? “The major contributor for Halifax EMC is a group of employees who are already connected to members they serve. When survey process began and results and member comments were shared by management, employees took initiative to adjust and implement changes…even sharing suggestions on how to improve between each other and throughout organization. I don’t believe there are many organizations whose employees have a better feel of their customer’s pulse than here at Halifax EMC.” Brady Martin “The incentive plan has employees taking pride in their work and assisting our fellow employees with their duties to be more efficient as a company. We try to keep outages as short as possible. We go out and beyond to give our new and old members best service possible.” Roger Chappell “The incentive plan has made us conscious of communication with members and talking with members about what we are doing on their property and just being nice in general.” Danny Pendergrass “The key has been incentive compensation program. As Member Services Representative at Halifax EMC for 42 years, my public relations with members has been extensive, and I think survey gives members a feeling of ownership and of having an active voice in their cooperative. Also, since employees know that survey is being conducted, each one is aware that any member can be called at any time. With an ongoing survey, there is an overwhelming feeling of togetherness between employees and members as we are a team working together for improved welfare for all concerned.” Kathryne K. Hamill The incentive compensation program has been primary tool used to focus employee efforts on member satisfaction. It took time for some employees to warm up to this approach. Some are still uncomfortable with it. However incentive program has gained overwhelming support over last few years as employees were able to realize gains when member satisfaction increased.
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