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Motivating the Middle
By Bennett Voyles
http://meetingsnet.com/corporatemeetingsincentives/

When T-Mobile began its “Get More” campaign four years ago, executives at the Deutsche Telekom's U.S. subsidiary knew that it would take more than flashy commercials with Catherine Zeta-Jones for the cellular provider to build a strong brand.

At the time, the Bellevue, Wash. — based cell-phone operator was ranked last for customer service among the large mobile-phone brands. To turn that around, executives realized, they would need to work harder at motivating their front-line employees, the people who “hold our brand in their hands every day in their interactions with customers,” says Greg Perotto, director of operations communications, reward and recognition.

An initial step for the company was to create an incentive program that targeted all its call center agents — not just the best of the bunch. By making that change, along with many others, T-Mobile USA climbed to the top of J.D. Power and Associates' charts for providing the best wireless customer care, and, at the same time, call agent attrition rates dropped in half.

Structuring a program to motivate the middle is part art, part science. But T-Mobile and others have found that by applying a variety of methodologies, they can boost sales and customer service.

Third Prize Is — “You're Fired!”

“We're adding something to this month's sales contest. As you all know, first prize is a Cadillac Eldorado. Second prize is a set of steak knives. Third prize is — you're fired.”

That was the threat of an angry sales manager kicking off a staff meeting in the 1992 film of David Mamet's play “Glengarry Glen Ross.” As exaggerated as it sounds, that attitude has been embraced by many management gurus of the past few years, who advise putting all the focus on caring for “the talent.” Those in the middle are pretty much ignored, and those at the left side of the curve are told in no uncertain terms to get lost. In his 20 years as CEO at General Electric Co., Jack Welch, for example, swore by his policy of firing the bottom 10 percent at the end of every year, even as he lavished bonuses and attention on the top 20 percent. “Love 'em, hug 'em, kiss 'em, don't lose them!” gushed Welch in his 2001 autobiography.

Yet focusing only on top performers can have a huge negative effect on an organization, says Rodger Stotz, vice president and management consultant at Maritz Inc., a Fenton, Mo., incentives company. The math, he says, is solidly behind using incentives to create incremental gains in the middle of the organization, rather than relying solely on improvements among top performers. A 10 percent improvement of the middle 70 percent of performers can improve an organization's performance overall by 7 percent, Stotz notes, while the top 10 percent would have to improve by 70 percent to have the same impact.

It's All in the Design

So how do you structure a program that gives every-one something to aspire to? We asked several incentive industry experts for their advice.

• Judge People Against a Variety of Metrics
  At T-Mobile, executives settled on a campaign that rewards three tiers of customer-service employees: the top 1 percent, the top 10 percent, and then every employee who performs well on a variety of call-center metrics, such as average amount of time to resolve a call. Once a year, top performers are given a trip and hosted at a recognition dinner. That third level — the employees who perform well against a the key metrics — is able to accumulate points redeemable for gift certificates at major retailers such as Best Buy or Circuit City.
  
• Add Another Level of Winners
  Stotz suggests keeping the standard top-performing slots, such as a President's Club, while adding a layer of rewards and recognition below existing programs for top performers — a “Par Club,” for example, for people who exceeded their quota by a modest amount, such as 5 percent.
  
• Create Reachable Goals
  Michelle Smith, vice president of business development for OC Tanner Co., a Salt Lake City — based incentives company, says keeping goals manageable is important. Many times, at the beginning of the year, “Everyone knows who's going to win the trip, who's going to join the Chairman's Club,” says Smith — and those who are out of the running won't really try. At the same time, warns Stotz, winning an incentive reward should not be something that everyone gets simply by showing up. It has to reflect exceptional performance, or it turns into an entitlement.
  
• Change the Yardstick
  Most traditional programs focus on top performers' production, but in any given year, there may be a greater number of smaller improvements in the midtier. Rather than looking at group performance, a contest targeted toward the middle should focus on people exceeding their personal bests. Most experts agree that setting such individual goals can be an excellent way to improve the group average.
  
• Shorten the Cycle
  Others say that short-term contests work best for midrange performers. T-Mobile settled on a one-month period for accumulating awards, and other program designers report having success with one- to three-month programs.

The Psychology of the Middle

Overall, midrange performers respond to prizes and recognition the same way as other employees, but there are a few differences. For example, Smith warns that programs targeted at middle performers need to be explained more thoroughly than those designed for the high achiever. “The group tends to need a little bit more direction with their incentive programs than just, ‘Here are the instructions and here are the rules,’” she says.

Brooks Mitchell, a University of Wyoming management professor and president of Snowfly, a Laramie, Wyo., incentive program developer, says behavioral psychologists have long known that it also helps if incentives are intermittent and somewhat random. With Snowfly, employees who do something the employer wants (such as getting someone to fill out a credit card application) are rewarded with the chance to play a short game of chance in which everyone wins a few points but occasionally someone wins a larger number. People accumulate points over time, which can be traded in, eventually or almost immediately, for pre-loaded gift or debit cards.

Sharleen Castle, branch manager of the West Laramie, Wyo., branch of First Interstate Bank, says that the Snowfly program has helped to generate a lot of new business from her midperformers. Between March and November of last year, she says, her staff brought in more than double the amount of business the bank had projected: New investment accounts were up 124 percent; mortgage applications grew by 317 percent; and credit card applications increased 178 percent.

Snowfly's program works especially well with the younger generation of employees because it's fun and there can be many small rewards over time. Rather than offer a $500 payoff for meeting sales goals after six months, says Mitchell, you would get better results from these employees “if you gave people $5 every time they met a daily goal.”

The reason is likely a combination of many younger workers' preference for immediate gratification and the level of personal investment they have in their work. In designing the incentive system for T-Mobile's call centers, consultants at Marketing Innovators of Rosemont, Ill., found in a survey of its 13,000 employees that the average employee had a shorter-term outlook than the top performer, which made sense because they tended to be younger and often stayed at T-Mobile for a shorter time. “They're thinking about tonight — what they're going to do tonight,” explains Diane Gillespie, director of marketing and communications for Marketing Innovators.

Eyes off the Prize

Before you invest in designing goals and developing a reward system for midrange performers, T-Mobile's Perotto emphasizes that you must make sure your plans mesh with the corporate culture. His company's drive to improve its customer-service ratings went far beyond the incentive plan and included a wider range of changes, all of which focused on “making those front-line employees No. 1 in all that they do.” The biggest change: making sure that managers are exhibiting the same values employees are being asked to practice.

However, Perotto is not sure that his solutions would work for everyone. “You can't really just look at best practices in another company and implement them in your own company,” he warns.

Finally, incentive experts say that incentive programs will not work unless they are backed by continuous positive encouragement that makes employees feel appreciated. First Interstate Bank's Castle says she finds that the bank's online reward system works best when rewards are supplemented with some verbal encouragement. “You have to have involvement. It can't just be all about the computer.”

No matter how well-designed the incentive and enticing the reward, employees — midlevel or top performers — will not perform to their potential if they are treated badly in other respects, warns Aubrey Daniels, a behavioral management consultant based in Atlanta. As one oil company executive once told him, “It's hard to celebrate when you've been beat up on the way to the party.”

Merchandise for the Middle

While everyone agrees that it's best to stay away from the diamond-logo fountain pen set and the dreaded company watch, identifying rewards that will really matter to individual winners can be difficult.

Shlomo Kantrowitz, vice president of sales and marketing for Epic Menswear in New Haven, Conn., and manager of a five-person sales team, tries to tailor his gifts to each person — a custom-tailored shirt for someone who is concerned about prestige, for example — and makes sure they are always high quality. “You want to give something they'll keep and that will always make them remember the job they did to get it.”

But figuring out exactly what that something is can be difficult. Many managers and incentive experts agree that a range of prizes is important. Michelle Smith, vice president of business development for OC Tanner Co., a Salt Lake City — based employee recognition solutions company, says that asking employees for their advice on what would be a great prize can be part of the benefit because it can make them feel included.

Most programs — sales and nonsales — geared to the midperformer are based on a point system; people earn points for results against key performance indicators, which are redeemed for a variety of prizes. At Bellevue, Wash. — based cell phone operator T-Mobile USA, electronics, toys, and restaurant gift certificates tend to top the most-requested awards, according to Greg Perotto, director of operations communications, reward and recognition.

What were the hottest merchandise incentives overall in 2005? For that, we went to incentive firm Hinda Incentives, Chicago, for its 10 most-redeemed rewards:

1. Royal Paper Shredder
2. Cuisinart Mini-Prep Food Processor
3. Chicago Cutlery Knife Set
4. Callaway Putter
5. Krups Convection Select Digital Toaster Oven
6. Panasonic DVD Player
7. Coach Signature Mini Skinny Bag
8. Wagan Heavy Duty 300psi Compressor
9. Apple iPod
10. Back to Basics Blender

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