A friend who read some of my Blogs told me that they would certainly appeal to people in large, public firms. After thanking him, I realized I had not been including as many of the stories, found in my book, about private firms. In fact, a unique thing about my background, and the book, is that in many Chapters, I compare and contrast what private companies versus public firms do on subjects like this one-Incentives.

You see, smaller private firms can be more ingenious and expansive in their reward choices and eligibility to receive them then larger, public firms. Part of this is due to their smaller size, but part is due to a lack of standardization enforced by those famous Human Resource types.

Whether good or bad, Incentives and Rewards, like everything, reflect the culture of a company and its leadership style. At my private company, Donn Corporation, many of its unique rewards where invented by its founder, Don Brown, who understood human nature and what motivates people more than most. So what Donn did was, at times, brilliant and ahead of its time, and at times, … well let’s look at a couple and you decide.

$1 Bills:

Each January, Donn had an Annual Review for all its workers. A unique feature, at the time, was to list and manually add up all the employee’s costs. (Nowadays this is all computerized and done by outside firms like Benefacts.) So an office person making $40,000 with pension, benefits, social security etc. could add up as a cost to Donn of say $50,000 a year. A manager level person with a base salary of $60,000, a $15,000 bonus, expenses, pension, benefits and social security could add up to $100,000.

The Annual Review book went one step further and showed that, based on 50 working weeks a year this $100,0000 person cost Donn $400 a day. In the early years, Mr. Brown did most of these Annual Reviews himself. And to really emphasize what this really meant to his Company, Mr. Brown added some of his dramatic flair. He would have hidden, in his desk, a stack of, in this case, 400 $1 bills. Mr. Brown would Slap them down in front of his employee and say that this was the amount of money it cost the company for every day that employee came to work! The first time or two this happened was impressive to a new employee. In later years, the theory was, the employee would see the stack of $1 bills get larger and larger as he made more money and cost the company more. At the end of each Annual Review, both the employee and Mr. Brown would sign the compensation book and Mr. Brown would scoop up the $1 bills and recount them for his next employee meeting.

Then one year something happened. Apparently, Mr. Brown was in a hurry to leave and left a relatively new employee to finish reading and signing his Annual Review book. Mr. Brown forgot to collect the $1 bills. The employee thought the $1 bills were for him, so he took them! From that day on, every employee got to take the $1 bills. This created some new issues.

For one, more employees now looked forward to these Annual Reviews knowing they would leave with a stack of money. Some of the employees took the money home to share with their spouses and families. Some employees, including some of the top managers I knew, would keep this new found cash a secret, (until now if they read this), from their spouses and use the money for other hobbies or interests.  And these $1 bills, as you will learn in my book, were not the only form of “soft” currency managers were capable of receiving from Donn.

But this new practice created problems for Donn’s payroll lady, Opal. Each January she would have to order the dollar bills in advance from our local bank branch. At the peak, I recall Opal going to pick up $50,000 in $1 bills from the bank. We sent along a couple of husky accounting kids to guard her and the money. We even had to buy her a large safe.

After USG Corporation acquired Donn, the $1 bills were over. This is probably a good thing as current U.S. banking laws might have an issue with a one time cash withdrawal of $50,000 in $1 bills; it just does not look or sound good.

Donn also had specific incentives for its plant workers, one of which we will cover next week.

Meanwhile, thanks to all for reading the blog. We are still in the process of working to get The Business Zoo published  so please stay tuned!