Employees who excel at their jobs often get promoted to jobs for which they're less well suited. Their performance drops,they're not happy, and the company suffers. So how do you motivate and compensate employees you can't -- orshouldn't -- promote? "I had always assumed people wanted to move up the ladder," says Tom Lied, CEO of Lied's LandscapeDesign and Development, in Sussex, Wis. He discovered this isn't always true after he talked an exceptional worker intoaccepting a managerial promotion. The employee quit three weeks later because he didn't like bossing others around.

Now Lied's company, which had revenues of $13 million in 1998, rewards valuable employees in other ways. By creatingmultitiered job categories, Lied has enabled employees to increase their salaries by adding responsibilities, such as teachingothers, without changing their basic jobs. He also removed salary caps on jobs, so workers wouldn't hit a wage ceiling. Andthe staff is compensated for other contributions, such as devising more efficient ways to do work. "It's equally as important todo a job faster and more efficiently as it is to take on a management role," says Lied.