Rewarding Greatness

If you are basketball fan, then last night you witnessed a 22 year old named LeBron James make the move from potential to a previously unseen blend of genius, talent, leadership and physical gifts.

Are there instances when you witnessed an employee as s/he experienced a "defining moment"?

How do you reward an employee who has a "defining moment"?

I had an employee who had a defining moment. This person went beyond anything I ever thought this individual was capable of. Once this employee crossed this threshold, there was no turning back. This person became a leader, out of nowhere, at a completely unexpected moment in time.

The latter portion of that sentence is what causes struggle in companies.

I immediately wanted to promote this person. And I immediately became demoralized.

I could not promote the individual, because there were "x" leadership positions available. We would need one person to leave the company, or be promoted, in order to open up another leadership position.

I could not give this person a salary increase, because the grading system utilized by our compensation department indicated this person was properly classified, and properly compensated. Furthermore, salary increases were tied to annual performance reviews, which weren't due for six months. Even worse, a future salary increase for this individual would require that another person not receive as big an increase, in order to balance the "salary increase" budget.

And I was a Vice President. I should have been able to do more than I did.

We do odd things in companies. We won't reward an employee at his/her moment of greatness. We will reward an employee when a brand has a need. We quickly seek leaders when sales are in a free fall, purging those we previously thought highly of in favor of a "new regime".

All too often, the employee, having achieved an unexpected level of professional growth, looks outside the company for a reward. There are plenty of brands who will take a chance on this individual.

What are examples of businesses that have properly rewarded greatness, and what examples have you observed where greatness hasn't been rewarded? Have the companies you have worked for recognized your greatest moments?

Orvis Rewards --- Is It Rewarding For Orvis?

DMNews reported that Orvis began a new Rewards Visa program for Orvis cardholders. The program offers free standard shipping, as well as a $25 reward for every $500 spent at Orvis (or $2,500 spent on the card at other retailers).

Rewards programs are tricky to manage. From the standpoint of a business, program managers need to give away just enough merchandise to increase customer spend --- yielding more profit than expense. From the standpoint of the customer, the business needs to provide a genuine incentive that sets it apart from the competition.

The numbers at the end of this article are not specific to Orvis. But they clearly illustrate a challenge with Rewards programs. Using simulated sales, margin and expense metrics, the simulated example indicates customers need to spend at least forty percent more in order to cover the costs of a rewards program. Again, the numbers are not specific to Orvis, they are for illustrative purposes only.

Another interesting quandary with rewards programs --- the better the business manages line items in the profit and loss statement, the easier it is to generate profit, and therefore, it is easier to pay for a rewards program. Businesses that mis-manage the profit and loss statement require a greater increase in customer loyalty to pay for the rewards program.

		Current	Rewards
Orders		3.0	4.4
Average Order Size		$167.00	$167.00
Demand		$501.00	$734.80
Net Sales	80.0%	$400.80	$587.84
Gross Margin	50.0%	$200.40	$293.92
Less Marketing Cost		$0.00	$12.50
Less Pick/Pack/Ship	20.7%	$82.94	$121.65
Add Shipping/Handling	$12.95	$38.85	$0.00
Variable Operating Profit		$156.31	$159.77