Where Good Ideas Come From (Chance Favors the Connected Mind)

 

I am regularly amazed at the ideas Chief Executive Boards International members take away from a meeting. I recently heard an eloquent explanation for why that happens.  Specifically, why that happens for people who have external sources of "slow hunches", together with an active forum for the "collision of smaller hunches" which then incubate (subconsciously, mostly) and connect with other hunches (perhaps of other people). That's where fully-developed, great ideas come from. I see this happen all the time in CEBI meetings.  Have a look: 

It's little wonder CEBI members are more successful than their non-member peers.  They've chosen to put themselves regularly in a place where business owners can connect as each other's catalysts -- providing the missing piece -- so that, in Steven Johnson's words,  "Chance Favors the Connected Mind."

Do you have a Connected Mind, or are you trying to come up with good ideas all by yourself?  Chief Executive Boards International could be a great resource for you, as it has been for thousands of others.  

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Tailor Employee Incentives to Their Wish Lists

 

I heard a remarkable idea for employee incentive compensation in a recent Chief Executive Boards International meeting. A member said that instead of cash bonuses, she rewards employees with things they specifically want. She scales the required accomplishment to the scale of the wish. She bought one guy hubcaps. Sometimes it's a round of golf (perhaps with a customer) at a high-end golf club. One of her employees is working on earning a trip to Denmark.

I'm regularly impressed with the ingenuity of business owners, and this is no exception. Here's an employer who's really in touch with her people, and personalizing their rewards to their own wish lists.
 
There are, of course, some potential tax considerations of this strategy. To be fully compliant, you'd need to include this compensation as W-2 income, and also include FICA. The way to do that would be to "gross up" the fair market value of the award and issue a payroll check for the amount of the gross-up, less the appropriate withholdings, resulting in a $0 check. Or not.

If you've invented some creative and effective ways of providing incentives to employees, please click on "Comments" below and share them with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Want to Know if a New Employee is Committed? Offer Her Money to Leave

 
Part of what I love about meetings of Chief Executive Boards International are the counter-intuitive, innovative ideas our members come up with. In a discussion about recruiting and selection, one member again emphasized his insistence that he wants only employees who are passionate about what they and the company are doing.

How does he test that? At the end of 1 year (or perhaps sooner, depending on the learning curve of the job) he offers a $2,000 bonus for leaving. Yes, you heard right. He offers people $2,000 if they want to leave the company -- no harm, no foul. It's a curiously inverse way of testing to see whether they think the company and the job is right for them. And he's had people (not many) take him up on it. He says he's happy to incentivize turnover that he believes inevitable, and get on with finding a person who really wants the job.

Please click "comments' below and share your innovative hiring/selection ideas with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Robots Have Babies

 
"Robots have babies", one Chief Executive Boards International, member told another at a recent meeting. This was during a discussion where a member mentioned he had an employee unloading parts from one process and stacking them in a particular orientation for the next process. "What you need is a robot", said the member with a lot of experience replacing people with automation over the past several years. The objection, "I can't afford a robot" was met with "Yes, you probably can, when you figure that a robot 2 generations old could do that simple operation, and that there are people refurbishing those old robots and selling them for a fraction of what a new one costs."

The member with the parts-handling process looked like he'd been hit in the forehead with a 2x4. Another one of those ideas he would likely never have had on his own without the benefit of another business owner's experience. And then the automation-savvy member went on to say, "After you've watched that robot do that operation flawlessly for several thousand cycles with no benefits, no sick leave, no drama and no whining, you'll understand why robots have babies." I'm betting some robot refurbisher is in the process of getting an order.

Are you looking for ways to take repetitive, non-value-added activities and teach machines to do them rather than people?   It's probably something you need to be working on.  By the way, stop worrying about persistent national unemployment statistics. A huge number of those jobs aren't coming back because they've been eliminated by automation. Other companies have figured out how to do more with fewer people, mostly due to factory automation or IT systems. Those people won't be back to work until they've figured that out and retooled themselves to do something that can only be done by a human.

If you've figured out how to produce more output with fewer people, please click "comments' below and share your experience with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

8 Questions to Ask if Your Incentive Comp Plan Isn't Working

Some business owners believe incentive compensation plans don't work. Many don't, and the reasons vary.  In some cases, employees are just not money-motivated. In most cases, however, an incentive plan that isn't working is a poorly-designed incentive plan.  In a recent meeting of Chief Executive Boards International, one member said his "discretionary bonus" had become a Christmas season entitlement. Several members contributed good ideas on how to construct an incentive plan that works, whether for sales, operations, shipping/receiving, etc.

If you want to redesign or install an incentive plan for your business, it's important to get it right -- the first time, if possible. To help you with that, here are 8 key questions to ask about your plan design:

• Is it Meaningful? -- If the employees do what you want them to do, is the reward at stake enough to get their attention? This is a failing of many incentive programs. Employers put microscopic incentives on top of comfortable base salaries. Employees quickly conclude, "So, if I show up I get paid well. If I knock myself out I get paid scarcely more." If you want more variable pay, you may have to reduce base pay.  Here's an article on one way to fix that "not meaningful" problem...
   
• Is it Achievable? -- If Superman couldn't ring the bell, your employees won't try to, either. The moment they figure out the goal is unachievable (at least by ordinary humans), the incentive value is lost. Design in some flexibility, such as reward thresholds that are set annually, in response to market conditions. Then you can move the carrot within reach.
   
• Is it in sight? -- Business owners love annual payouts -- they're simpler, happen only once, and smooth out ups and downs over the year. Few employees can keep their eye on a reward a year away. Most are living paycheck-to-paycheck, and the idea of an annual payout is simply beyond their attention span -- perhaps beyond what they visualize as their future with your company. The carrot is so far away, it's beyond the horizon. Think quarterly, even monthly or project-by-project in your plan design.
    
• Is it clear what you want? -- Can they connect the dots between the result you want (the measure/metric of performance) and specifically what you want them to do? The connections between their actions and cost reduction, waste reduction and productivity improvement are clear to you. Don't expect those connections to be clear to them.  You might test this by asking exactly what they're doing to get to the goal.
   
• Is it within their control? -- More importantly, do they see exactly how their own behavior, effort and accomplishment directly connects to the incentive? I contend that incentive comp plans tied to "overall results" or "company profitability" or even "department performance", if the department is big, hardly ever work. The average employee just can't connect the dots between what they do and the overall result -- it's just a big squishy idea that they can't get a hold of.
  Instead, tie incentive pay to something they can relate to -- units produced, cycle time, inventory reduction (turns), Accounts Receivable (DSO), etc. depending on what's within the workgroup's direct control & visibility.
   
• Is it fair? -- Can the good things I do be undermined by poor performance on the part of others? Sales compensation, for example, that ignores market conditions causes sales people to get rich when things are booming and starve to death when demand slows. A commission structure with annually-adjusted quotas is a lot more flexible than something cast in stone. Here's a way to incorporate that idea...
   
• Does it pass the Martini Rule? -- Can the employee explain it to their spouse over only 1 martini?
   
• Is the reward something they want? -- Perhaps money isn't their objective (believe it or not). For many people, time off is a lot bigger motivator than money. Here's an article on that topic...

Once you design the best incentive comp plan of all time, lay it out on the desk, and move to the chair on the other side. Then, put on your employee hat and figure out how you would game the system to get the maximum reward with the least amount of effort. That done, rework the plan with caveats, adjustments, etc. to head those games off at the pass. Rinse, lather, repeat.


If you have some views on incentive compensation, please click "Comments" below and share those with others. 

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com