The important lesson from yesterday’s Advisor was to view incentive compensation as a way to drive business results. Determine what is important to your customers, and then create incentive goals to support that.
Divide your employees into business groups, advises Mark Mitchell, managing director of American’s Customer Experience area. Let the employees have a voice in determining what really matters to your customers, he says. You might be surprised by their suggestions.
“What we were looking for with the CE rewards program was an opportunity for our employees to earn beyond their base compensation,” says Mary Kay Gribbons, managing director of Compensation and Retirement at American Airlines.
“Clearly, we’ve been through some hard times in the airline. Our employees have taken pay cuts through the years, and this is a way for them to try to earn some back.
“But it was important for us to do that in a way that is impactful and meaningful to us as a company.
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“One of the difficulties we’ve had through the years is trying to find the right line of sight, to tie any additional compensation to what is important overall. We found that the customer experience is a way for employees to latch onto something.”
Gribbons admits that there was some initial skepticism about the program. “It’s a gradual buy-in,” she says. “The first check for $50 doesn’t mean that much. But then you get another check and you start realizing you’re getting $150 every quarter. It starts developing meaning.”
Rhonda Rathje from American’s Corporate Communications adds, “We continue to get feedback from employees about how much they like the program.”
And Mitchell says, “We hear from large segments of our employees who see that their work is being recognized, and the money gets back into their pockets. They are very much appreciative that we’re moving in that direction. It’s a work in progress and a long journey, but nonetheless, we are very encouraged by this kind of short-term success in the eyes of our customers and employees.”
Set Reasonable Standards, and Communicate
Gribbons says it is important to set reasonable standards in an incentive program. “We didn’t set the standards so high that we were never going to achieve them,” she says. “We tried to set the standards to continuously improve. We didn’t expect to reach our ultimate goals overnight. The standards will continue to get tougher. That goes back to raising the bar of what we need to be doing for our customers.”
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And once you’ve created an incentive program, your work is just beginning. Rathje cautions that you can’t neglect the communications piece. “It’s a challenge, because our workforce is really untethered. They don’t sit in front of a computer all day to read the great stuff we send out from corporate communications.
“They’re serving our customers; they’re putting bags on planes. It can be hard to reach them, so we try to think of as many different ways as possible to communicate with them. That’s why we have celebration days every quarter. We want people to stop what they’re doing, take the time to be handed their check, and be thanked for the work they did.”
While the group is pleased with employee performance, there is still room for improvement.
“The CE program is paying nicely, but we’re still not paying the maximum amounts,” Mitchell says. “There is some upside. The $10 million we recently paid out is about half of what it could be. We’re excited that we’re part way there.”
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