Really focus on how you recognize and celebrate exceptional performance in your compensation program

by on June 26, 2009 · 0 Comment POSTED IN: HR Info Center

A good compensation program rewards people in a way they value, both intrinsically and with dollars

Slim Fast, the well-known diet product company, had a simple program of trying to implement what they call, 20/20/20. Their objective was to grow their revenues 20% a year. Now, in the consumer products industry, 20% growth is pretty phenomenal. To do that, they had to have a business model that supported it. So, in addition to growing sales, they focused on the marketing spending. Everyone has to spend 20 cents on every dollar in marketing spin to keep that growth happening. They also wanted to make sure that their growth was highly profitable, so the third 20 was to try and hit 20% net income in terms of what’s out there. So, that’s the 20/20/20.

An amazing thing happened though, is they were able to grow far beyond the 20%. In 2001, they’d actually grown 35% from the year before.

So, with speaking with their Chief Operating Officer, Art Peters, I said, how in the world did you do that? I thought the target was only 20%.

Rewards in an exceptional compensation program
And Art shared with me a valuable lesson about compensation program. He said, ‘Steve, we really — when we grew 35%, we got everybody together. We had a big party. We celebrated. We congratulated everybody. And then we asked, what kept us from growing faster than that? What kept us from growing? It was great that we grew 35, what held us back from growing 40?’

So, they celebrated with the people with exceptional performance, but in the end, they immediately challenged themselves.

Give them a challenge in their compensation program
From a competitive point of view, they were far and above into their competition. What they were competing against was the market limitations, the self-imposed thinking, if you will, that 20% was good enough. And they were challenging themselves, what could we have done to grow faster, to do better?

And that’s what spurt — it was an unbelievably energized company to talk to, where the real intrinsic motivation, I guess, you’d say, kicked in terms of, they were just excited about what they will do and really, you’ve got the feeling that everybody there was on a winning team, because they were all moving forward and really sharing in ideas and sharing in the environment of how we can continue to grow faster.

So, again, don’t forget to recognize and celebrate exceptional performance with your compensation program. Some of that’s monetary because you’ve won a fair share of reward, but a lot of it is just in how you recognize and celebrate people.

Edited remarks from the Rapid Learning Institute webinar: “How to Avoid Incentive Pay Plan Disasters” by Steve Player

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