Paddling For Profits
Salespeople get commissions. Everyone else just gets raises. Whether they like it or not, these are facts of life that nonsales employees usually learn to accept.
But at Delta Business Systems Inc., the facts of life have changed.
Delta, a $23-million Orlando company that sells, leases, and services office equipment, offers some 20 different incentive programs to its 315 employees -- and a baker's dozen of them apply to the 215 people in nonsales positions. For example:
* Secretaries and administrative assistants compete for a $50 award in a monthly contest, judged by managers, for "Most Valuable Associate."
* Field-service technicians can add from 3% to 25% to their annual salaries by retaining their customer base -- renewing maintenance agreements, persuading customers to recondition machines, or giving salespeople leads.
* Each dispatcher can earn up to $40 a month by scheduling preventive-maintenance calls.
* Delta's four corporate warehouse workers can divide up to $400 every two months if they function smoothly as a team. They are rewarded for filling orders promptly, filing invoices in time to receive cash discounts, and keeping the facility well stocked, secure, and orderly.
A former educational materials salesman and general manager of an automobile dealership, Delta co-founder and president Bryan King has long been convinced of the power of a bonus. But since starting the privately held company seven years ago, he has taken the concent of pay-for-performance to extremes. King has built an interconnected web of individual and companywide bonus programs, along with an employee stock ownership plan. He has tried to structure Delta so that managers' salaries are tied to the profitability of their respective divisions. Service department managers' salaries are also based on customer satisfaction surveys. As the staff has grown and sales have climbed (from $1.9 million in 1979), King has continued to expand the options.
"We take the incentive plans down to the lowest level possible," he says, even if there is no way to measure a performance in terms of revenue. "If we can see how fast someone's canoe moves in the water, we provide an incentive."
Often, of course, the payoff to Delta is directly measurable. When King wanted to speed up collection of receivables, for instance, he offered staffers up to $200 a quarter to reduce the outstanding bills. Within six months, total long-term receivables had been cut by 50%, a $20,000 annual saving to the business.
"I'm very goal oriented," says collections administrator Carrier Pirrotta, who joined Delta last year partly because she liked the company's incentive system. "The idea of earning a bonus tied to my productivity and not to anyone else's appealed to me."
Ironically, employees sometimes resist incentives. Over in the accounts-payable department, clerk Virginia Gant balked at the chance to earn up to $50 a month for taking advantage of prompt-payment discounts. "I didn't like it," she remembers, explaining that she feared she would be penalized for overlooking a possible discount. "I thought they would charge it back to me." It took loads of reassurance from her supervisor, Allan Woodlief -- and a few bonus-padded paychecks -- before Gant saw the plan's merit.
Talking up the system, says Woodlief, is crucial to its success. "What we are trying to do," he explains, "is convince a group of skeptical people who are used to working their 40 hours and going home . . . that management is sincerely trying to offer equitable incentives."
But all this cheerleading can be wearing -- and there are other problems with the bonus programs as well. Just keeping up with the paperwork can be an enormous task. And with managers' bonuses largely dependent on the profitability of their divisions, interdepartmental clashes are common. King says he constantly has to play referee, reminding employees that while they might have to give up a bonus now, they will recoup it in the form of a year-end bonus based on a percentage of gross sales, equally divided among all employees. He is now writing an employee-policy handbook to spell out the plans more clearly.
Still, King insists, Delta's bonus system has been worth every bit of the effort. It makes employees accountable for their own performance, he says, and "that's important if you want to unleash their entrepreneurial spirit."