November 1, 2011

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Compensation Innovation

Utah Companies Find Unique Ways to Reward Employees

Josh McFadden

November 1, 2011

When it comes to one’s job, money isn’t everything—but it sure is nice. Two Utah companies know this, and their unique compensation models have proven to be popular and effective.

Personal Milestones

Draper-based Metasource, which opened in 2007 after a two-company merger, grants yearly bonuses to its employees. The company, which provides outsourcing to call centers, among other things, certainly isn’t the only one that offers bonuses. But the conditions on which the bonuses are given are unique.

Metasource employees meet quarterly with managers to set personal goals. The goals differ depending on the employee’s role and position within the company. At the end of the year, the employee will receive a bonus based on how successful he or she was in achieving the goals.

“It’s a really good program,” says Mike Schmutz, manager of marketing and sales operations. “It gives the employee a little bit of self-leadership. It keeps you accountable.”

Schmutz says yearly bonuses of $4,000 can be given to those employees who sufficiently accomplish their goals.

To keep employees on track throughout the year, quarterly meetings are held with management to review the goals and discuss whether proper progress is being made. Management provides direction and feedback, ensuring there are no surprises at the end of the year when the bonus payouts are made.

Additionally, milestones and achievement toward the goals are recorded to give clear evidence of how close the employee is to realizing the goals. Schmutz also says these meetings help keep employees and management “on the same page.”

After some uncertainty at the outset of the program, Schmutz says following the goal-oriented bonus structure has been a positive experience.

“At first I was concerned [about the bonus program] but it strengthened me to set the milestones,” he says. “There are so many things to do. It’s nice to know you’re doing what you should.”

While he speaks glowingly about the program, Schmutz does caution that less-motivated employees will struggle in the system. He also says managers who don’t take the program seriously and provide follow-up could negatively affect their employees.

“It helps keep you focused,” he says. “It helps you to know what is expected. But if you’re not focused, you could be lost with your goals. If managers don’t use the goals, there’s no way of keeping the employees motivated.”

Corporate Goals

New Dawn Technologies has a similar system of providing yearly bonuses.

New Dawn, which develops case management software for the justice department, has been in business for 15 years. For more than two years, the company has practiced its Profit Incentive Program—or PIP. Much like Metasource, New Dawn’s yearly bonuses are given depending on successes and achieved goals. However, in New Dawn’s case, the bonus structure centers on company goals, rather than individual ones.

“Each year we identify a specific profit margin target as a percent of revenue. In order to reach our target, we must increase sales and receivables as well as keep expenses as low as possible,” says Travis Fluckiger, New Dawn Technologies human resource manager. “When the company hits profit goals, there is a payout.”

The payouts vary somewhat based on one’s salary. Fluckiger says the yearly bonuses range between several hundred dollars and more than $1,000.

The program has helped bring employees together to work toward making the company stronger. “This aligns employees with company goals,” he says. “Everyone plays a role in this. It creates ownership within the job they’re doing.”

New Dawn has reached its PIP goal the past two years. Because of this success, management and employees are pleased with the program and intend on continuing it.

“Overall, I’m happy with it,” Fluckiger says. “The employees really enjoy it. It has guided our business decisions in spending and growth.”

Management has gone to considerable effort to make sure PIP goals are simple and easy to understand. When the bonuses are given, employees receive actual checks; the money isn’t simply directly deposited into a bank account. Fluckiger says doing this makes the bonuses feel more tangible.

And though he doesn’t have actual data, Fluckiger is certain the PIP structure plays a part in the company’s retention of its employees.

“It plays a role in people staying here,” he says. “It helps them feel like they’re playing a role in the success of the company.”

Because of the success of these bonus programs, both Schmutz and Fluckiger recommend similar compensation strategies for other companies.

“All businesses set goals, but not all follow up and reward their employees,” Schmutz says.

“Everyone likes to make more money,” Fluckiger says. “I would encourage others to take a look at [a bonus] structure.”

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