Calvert's employees receive bonuses through an annual distribution of the company profits, and in a "recognition" bonus funded by 2% of payroll and meted out to outstanding performers. Last year the managers' distribution bonus totaled 15% of salary; the staff's bonus, 10%. That percentage gap is closing, and employees applaud the system for its fairness and clarity. "We all know the things we have to do to make more money," says Butler Perkins, a microcomputer-support analyst.
Perkins defines Calvert's approach as a "proactive emphasis on taking care of people," and adds that the company tries to make up for employees' hidden costs by providing free running shoes to employees who walk to work or by dropping the dress code so employees can come to work in more casual clothes (and save a bundle on dry cleaning).
Others take a more customized approach. At ESP Software Services, a consultancy in Minneapolis, the company's knowledge workers can choose from a menu of three pay plans: a base salary with no hourly pay; hourly pay, with compensation only for the hours spent on assignment; or a "blend plan," with base salary plus an hourly rate. "Right now my wife isn't working, so I need some security with the base salary," says consultant and manager Scott Tonjes, who's chosen the blend plan. "Once my wife has a job and has benefits, I may reevaluate going hourly."
The plan depends on and fosters a mutual risk and reliance that Tonjes endorses. He says he would never choose straight salary because "ESP shouldn't have to pay me when I'm not generating income. It's important that ESP grows, and I'm willing to bear some of the risks."
Of course, a good pay plan can be pegged purely to performance measures. At Aspect Telecommunications, for instance, customer satisfaction is that peg. CEO Jim Carreker decided to tie every employee's bonus to qualitative rather than quantitative results because he didn't want to damage his customer base to maximize short-term profits. "Focus on customer service, and the profits will follow," he says.
Aspect's plan uses two measures: Aggregate System Availability Factor (ASAF), which gauges how much of the time the company's product is operational; and an annual customer survey addressing all aspects of customer satisfaction. Employees have evidently bought into the plan. "The big talk at lunch is, 'What's the ASAF this quarter?' or 'Did you see the new survey?' " says software engineer Tim Bean. He credits the plan with his increased emphasis on customer service.
When it comes to substantial wealth sharing, Phelps County Bank's ESOP is one of the most striking examples. Eighty-seven percent of the employees are now vested in the 13-year-old plan, with a typical balance of more than $70,000. Ten employees have balances in the six figures. And yet this advanced ownership program speaks to employee ownership in the broader sense of the term.
Like other small companies that are great to work for, Phelps walks the talk by encouraging and rewarding employee participation and autonomy. Employees are rewarded for their ideas (the year's best idea merits $1,500) and for the ways they "add value" to their job. "The ESOP is a way of getting people to think about this as a career -- not a job," says CEO Brent.
Teller Connie Beddoe would agree. Though pay raises and the money growing in her ESOP are good incentives, she loves working at Phelps for a more important reason: she calls most of the shots on what she does. Would she work elsewhere? "Not even for a higher salary," she says.
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Additional reporting by Christopher Caggiano.
BEST COMPENSATION
Ashton Photo
Salem, Oreg.
Photo-image printer
110 employees, $5 million in sales
Lets employees decide the skills needed for jobs and grade themselves on their proficiency. Rewards not just mastery but also the ability to teach others.
Aspect Telecommunications
San Jose, Calif.
Communications-equipment maker
400 employees, $71 million in sales
Pegs every employee's pay to customer satisfaction. Uses two measures: annual customer survey, and Aggregate System Availability Factor -- a gauge of how often the company's product is operational.
Calvert Group
Bethesda, Md.
Financial-management company
190 employees, $44 million in sales
Acknowledges employees' hidden costs by providing, for example, free running shoes for walking commuters. Offers profit-sharing bonuses with a special "recognition" bonus for outstanding performers.
ESP Software Services
Minneapolis
Computer consultancy
72 employees, $4.9 million in sales
Offers customized approach in which employees select from a menu of three pay plans: annual salary, hourly salary, or a blend. Plan fosters mutual risk and reliance between employer and employee.
Phelps County Bank
Rolla, Mo.
Commercial bank
55 employees, $100 million in assets
Features advanced employee stock ownership plan that rapidly enriches employees and symbolizes the deeper "ownership" expected of them.
Rogan
Northbrook, Ill.
Manufacturer of plastic knobs
107 employees, $9.6 million in sales
Uses gain-sharing program to reward employees for producing a premium-quality product and for labor-cost reductions. Encourages employees' ideas in "Gainsharing News" newsletter. n
