If you still doubt the power of incentive compensation, you might want to talk with Alex Chachere, president of Creole Foods of Opelousas (La.) Inc. When he took over the business in 1981, he found a lethargic work force content to ship fewer than 3,500 cases per month, far below the company's potential. So he devised a bonus plan. Every month that shipments topped 7,000 cases, workers would divide up an additional 25? per case. If cost of sales stayed under 50%, they'd get another dime. Chachere expected them to reach these targets in a year or so. The first month they shipped about 8,000 cases.
Last year, the company's 28 employees averaged 30,000 cases per month, and Chachere paid out $77,000 in bonuses. "That's a lot of money," he admits. "But the day we discontinue the bonuses is the day I quit."