APRIL 1989

Sometimes the more complicated an employee incentive system gets, the less rewarding it can seem. When Prime Technology Inc., a Grand Rapids, Mich., machine-tool distributor, wanted to reward nonsales employees and encourage them to stay with the company, CEO Phil Pachulski implemented a bonus plan that's as simple as they come.

For every hour employees work, Prime puts a dollar in their year-end bonuses. Each year's bonus includes the amount from previous years plus the current year's total, up to $5,000 in all. Normally an employee works about 2,000 hours per year. If a worker did so for two years, he or she would rake in a $4,000 bonus. In year three the employee would receive $5,000. The bonuses are built into the annual budget, and the company awards bonuses only in profitable years.

"It's easy to track, easy to explain, and easy to understand," Pachulski says. "We're trying to motivate people in advance -- not look back on the year and say thanks."