Some companies, for example, are seeking to devise criteria for recognition programs that are more like achievement awards than hard-number performance incentives. Others have noted that they can get four times the psychological benefit from their bonus plans simply by paying them out in quarterly distributions. But not all of the self-examination that Bratkovich favors has to do merely with which compensation vehicle, or which compensation policy, works best. Gradually, companies are coming to realize that they can -- and often inadvertently do -- make corporateculture statements in their design of a compensation package. Here and there, executives are recognizing what those statements are -- and either they are capitalizing on them, or are designing them out.
One of the more interesting trends Bratkovich has noticed is a tendency among high-growth, high-tech companies -- particularly on the West Coast -- to veer away from status perks. "Clubs, cars, first-class air travel -- many of them won't touch any of those perquisites with a 10-foot pole," he says. "They distinguish between people too much. They want their people to work together, survive together, and grow together."
Data I/O Corp., a computer-component programmer manufacturer in Redmond, Wash., is one example. The 500-employee, $36-million company has adopted a series of executive-compensation policies designed to draw as few lines as possible between employees of various levels. There are company cars for some managers, but no assigned parking spots. There are bonuses, but they aren't discretionary; they are based on a formula related to pay grade. There are stock options, but the criteria for allocation is open for all to see and strive toward.
"We have lots of engineers here," explains Pamela Alexandra, Data I/O's manager of compensation and benefits, "and their education makes them very rational and very egalitarian. They like to be in the kind of atmosphere where everybody is treated fairly, and having a lot of perks doesn't give that impression." By making what perks there are open and apparently attainable, Alexandra maintains, Data 1/0 has prevented walls from developing between different layers of personnel and threatening the team atmosphere the company has tried to foster. In fact, the company has chosen to literally tear down what few walls there are within the plant. "We don't want to have a business where people hide in their glass offices and never mingle," asserts Alexandra.
On the other hand, there is the example of a 1,000-employee, $50-million conference-center operator that has instituted policies that have had the effect of separating the top brass even more from the rest of the managerial work force.
With the goal of better compensation for his most valued executives, the CEO-owner devised a special cash incentive, payable to only 6 of his 25 top managers. He did it through the establishment of an S corporation (formerly called a Subchapter-S corporation) -- a management-company subsidiary that, on paper at least, sells services to the parent organization. Its "profits" provide cash payments that, unlike equity -- the value of which can fluctuate with sales and earnings -- remain dependably lucrative over time. Some executives, in fact, are doubling their salaries through the plan.
The company's CEO-owner believes that there is sound reasoning behind his decision to reward so richly so few. "My feeling is that the top 6 employees have an enormous impact on the other 994, so that's where I put my emphasis. Funds are not unlimited, you know." He also defends his not-inconsiderable efforts to keep the existence of the plan under wraps. "Everybody wants to be a vice-president anyway," he explains. "Describing the economic elements of that position would only accelerate the interest. There's no benefit for me to try to motivate in that way, and, frankly, I'm convinced that compensation knowledge can be a demotivator."
This CEO-owner bases his conclusion on a conversation he had with his chief financial officer shortly after the S corporation was formed. The CFO, a most-trusted employee, was insistent that he know how his cut of the spoils compared with those of his colleagues.
"I always thought the comparisons went on only at the lower echelons," the CEO-owner says. He found it "a real eye-opener" that a man so high on the corporate heap would be brooding over such an issue. So, perhaps he can't be accused of creating a work atmosphere that is predicated on openness and egalitarianism, but, "it is dedicated to harmony," declares the CEO-owner. "From what I've seen, public knowledge of compensation information simply doesn't create harmony."
EQUITY, THE SECRET WEAPON
Gus Constantino would sooner sell out than offer his executives stock in his company. He relishs the flexibility, the discretion -- the control -- that comes with being CEO and sole owner of $3.5-million Wilson Feed Co., in Richmond, Va. "I'm a hard person when it comes to sharing all of this," he says. Stockholders are stockholders, he reasons -- whether they hold 8% or 8O% -- "and when you give them any piece of the company at all, they automatically think they deserve some authority." To his way of thinking Constantino says running his feed, seed, fertilizer, and chemical distribution business is a solo act, and he is not about to do anything that would let his employees upstage him. "Either I'm the show, or I'm not the show," he shrugs.
But the pressure is on to share the spotlight. Ownership, and the right to participate in the growth of a company has rather suddenly become something that many senior executives desire -- if not demand. They have seen the risks and rewards of entrepreneurship, and they want to experience them for themselves. They have watched as companies have gone public in record numbers -- there were close to 1,000 initial public offerings in 1983 alone -- and they have seen their bosses, the founders, get rich. If they have devoted the time, the energy, and the talent to make a risky venture a success, they figure they have earned the right to share in the pride -- and the payoff.
