Marlin Steel and the Six Features of a Great Employee Bonus Program

On, October 24, the Aspen Institute’s Economic Opportunities Program held an event titled “Beyond Great Places to Work: The Business Case for Investing in Front-Line Workers” at their headquarters in Washington D.C. At this event, three separate companies from the Hitachi Foundation’s Pioneer Employer Initiative were asked to discuss their methods for “securing a sustainable competitive advantage… by creating genuine opportunities for employees to thrive in the workplace and move up the economic ladder.”

Which companies spoke at the event? The participants were:

• David Owen, primary care medical director of the South Jordan Health Center.
• Kelly Wolske, senior trainer at Zappos Insights.
• Drew Greenblatt, president of Marlin Steel.

During the event, each speaker gave his or her own insights into how to get employees to a state where they’re motivated, engaged, and empowered to maximize their productivity. If you missed the event, don’t worry, as you can watch the panel discussion in its entirety in the video embedded below:

After the panel, Marlin Steel’s president, Drew Greenblatt, wrote an Inc.com column highlighting some of his points about the hallmarks of a great employee bonus program, and how they help to improve productivity, drive employee engagement, and improve the bottom line for a manufacturer.

Six Features of a Great Employee Bonus Program

As pointed out in the panel discussion and the Inc.com article, a bonus program should be motivational in order to improve employee engagement and secure better performance. However, there are many different ways in which a company may try to achieve that goal.

For some companies, the “bonuses” in their bonus programs are intangible or involve a mere pat on the back when goals are met. In such “bonus” programs, there is little to no real reward for going above and beyond the call of duty to smash goals and keep going. That’s a little bit like calling a breath mint a meal: it’s something, at least, but don’t expect it to satisfy for long.

So, if motivational pats on the back aren’t a great employee bonus program, what is? What separates a high-quality bonus program with high-quality results from a lesser program? To give you a basic idea of what makes a great employee bonus program, here are the examples from the Inc.com post drawn from Marlin Steel’s own employee bonus model for you to consider:

1. Frequency of Bonuses. Workers who aren’t in the “C-suite” often live from paycheck to paycheck. Everyday workers rely on having money in the short term to cover their immediate bills and expenses as they come up. Big yearly goals are typically too large, difficult, and far away to motivate in the short term. With bonuses that can be earned in the short term, such as every pay period, workers have a chance for an “instant gratification” reward that can help them with their living expenses now.
2. Micro Cell Bonus Groups. Great bonus programs make productivity targets for the smallest possible team of employees. Co-workers are motivated to help the people who are struggling with them meet goals because they know these people. Company-wide goals can foster disengagement since they take the control over whether or not a bonus can be earned from an employee’s hands. Keeping bonus goals focused on a team-by-team basis makes sure everyone knows that they have skin in the game and a chance to make their goals.
3. Objective, Easily Definable Targets/Goals. Setting a specific number of custom metal form orders to be completed in a week is a clear, black and white, pass or fail goal that workers can understand. Proficiency at basic housekeeping tasks or smiling is not. Goals that are not objective in nature or lack clear, understandable criteria for passing or failing should be avoided.
4. Attainability of Targets. While goals shouldn’t be a “slam-dunk” number that will be hit every time, they should still be realistic enough that teams that put in the effort hit them frequently. At Marlin Steel, the average is roughly 14 times per year (out of 26 pay periods). Some cells hit their goals more frequently, and some hit them less frequently. If teams are struggling to hit goals at all, that means there’s a problem. In such a case, the goals and the team’s performance should be reviewed to see if the goal needs tweaking, or if the team leader needs replacing.
5. Big Payouts. You get what you give. When you pay minimal, blue collar bonuses, workers will keep thinking of themselves as such. When you pay big bonuses for entrepreneurial effort, your workers start acting like entrepreneurs. Recently, one of Marlin Steel’s “blue-collar” workers managed to earn an $800 bonus check on top of his regular pay for exceptional performance. That’s money in the bank for a worker who earned it by being focused, productive, and innovative. Big rewards produce big effort.
6. No More Middle Managers. When employees are motivated and engaged, businesses can do away with the clip board-wielding, henpecking layer of middle managers whose sole job is to bully employees into productivity. Motivated employees don’t waste time talking about their favorite sports teams and lazing about, they work because they know there’s an achievable reward waiting for them, and they have that entrepreneur’s spirit that keeps them going.

To learn more about how you can motivate employees to work harder, better, faster, and safer, check out the Inc.com article or watch the video of the Aspen Institute panel discussion embedded above.