Who's Holding the Cards?
Business was booming at Clean Cut Inc., a landscape-design, construction, and maintenance company based in Austin, Tex. Sales had more than tripled in three years, and co-owners Dennis Dautel and Rex Gore were hiring quite a few new managers -- five in just the past two years. Dautel and Gore knew that if the new hires were to succeed, they'd need help from veterans who already knew the ropes. "We wanted to encourage people to help one another and to share information," says Dautel. "We asked ourselves how we could motivate an employee who had been here five years to help train someone new."
To give long-established employees a stake in the success of new managers, Dautel and Gore created a set of 1,000 blank "stock cards" for distribution to all new employees who are clearly on the partnership track. When an experienced employee takes extra trouble to help a newcomer understand the company's inner workings and policies, the rookie records the name of his or her benefactor on a card. At the end of each week, the finance department collects all those cards. After 10 months to three years, when the new hire attains partnership with responsibility for a division and eligibility for profit sharing, his or her stock cards are tallied. If, say, Carmen in personnel has her name on 10% of the new partner's stock cards, the company writes her a check for the equivalent of 10% of that partner's profit sharing every year. "It's like owning stock," says Dautel. "It rewards people who aren't necessarily in the partnership area for long-term employment."
To give the program longevity, Dautel and Gore will continue to distribute 100 cards a year to their partners. That gives employees an incentive to continue earning cards; if they don't, their share of the bonus pool becomes diluted. Built into the system is another powerful incentive to encourage employees to stay with the company: at retirement they'll be able to "sell" their stock-card percentages to their coworkers.
In 1994, the system's first year, Clean Cut distributed approximately $10,000 in "stock card" money among 15 of its seasoned people. That's a small fraction of the company's 175 employees, but Dautel notes that last year only two partners were in a position to earn profit sharing. As the company's newer partners get up to speed, he says, there will be more to go around. Dautel doesn't kid himself that stock cards will transform Clean Cut. "Financial rewards alone won't change behavior," he says, "but they do help keep people long term."
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.