Rewards and Recognition

When retailers gather, a recurring topic of discussion is how to motivate the sales force. There’s no argument a staff with vitality performs better on the sales floor, but the methods to spark that enthusiasm vary widely.

Several successful retailers shared their views on this topic during seminars presented at the JCK International Jewelry Show in Las Vegas. Each had individual techniques for identifying, nurturing and rewarding outstanding employees so they can – and better yet, want to – perform their best.

These retailers put their ideas and policies into practical use every day, and their styles range from aiming for common-sense store sales goals to specific incentive programs.

The Lee Michaels Mission

Our mission is to be “The Jeweler of Choice” by building a legacy of integrity, trust and pride in the communities we serve. This legacy will be built on a foundation of providing the finest-quality products at the best possible value and rendering unparalleled customer service through knowledgeable and dedicated associates. Operating profitably and progressively will assure growth opportunities for the company and associates who share our Passion for Excellence.

It all starts with the Mission Statement for Lee Michaels Fine Jewelry, a seven-store chain based in Baton Rouge, La. While such a statement is not unusual in business, it’s rarely the source of as much motivation as it is at Lee Michaels. For a simple yet profound reason. Company owner Lee Berg didn’t write it; his staff did.

At Lee Michaels, employee involvement forms the basis for motivation, says Jane Widas, who heads the retailer’s People Department (often called “human resources” at other companies).

To start, the company sponsors a comprehensive training program called Lee Michaels University. During a week of training, held three times each year, employees not only learn about company benefits and policies, but work to build a team spirit that resonates throughout the corporate culture.

Similarly, the company sponsors a regular series of retreats, taking employees out of the store to share sales insights and – not at all incidentally – enjoy themselves.

Being a team, rather than a disparate group of individual “stars,” is important, says Berg. To reinforce the idea, each new employee is assigned a mentor. The mentoring program teaches skills and policies while on the job.

Build a team

To encourage employees to act as a team, Berg suggests using the following components:

Pay for performance: This doesn’t mean employees work for a high commission. All Lee Michaels sales associates work on a straight 1% commission across the board.

Paying for performance incorporates additional payment and bonus methods to increase incentive and productivity.

Four years ago, the company froze managers’ salaries and started a compensation plan. At the end of each fiscal year, bonuses go to each store manager based on the increased sales of his or her store. The increases are based on factors the manager controls, not on costs controlled at headquarters, such as the store lease. Because of the plan’s success, with several managers earning up to 50% of their base salary in bonus, an assistant manager program began last year. The assistant manager bonuses are awarded each month based on net and gross sales of the particular store.

Sales associates also are eligible for bonuses. Those who exceed their monthly quotas receive a $75 bonus. Those who double it earn $125 and those who triple it earn $175.

Keep your people: To keep employees from looking elsewhere, provide a place where good work is recognized, opportunities to advance are clear and the job is enjoyable. “For a company to move to a higher level, it has to be able to keep good associates,” says Widas.

A bonus pay program is part of that effort. So is creating challenges.

Studies show higher base pay is not a primary motivator in the workplace, Widas claims. Jobs supplying the opportunity for recognition and a challenging work environment are key.

“The need for personal growth is, I think, one of the most difficult needs for a company to meet,” says Widas. “When an associate makes his or her monthly quota, we could say ‘That was your goal in the first place,’” she says. To satisfy an individual’s quest for growth, Lee Michaels clears a path for continuing education.

Berg encourages employees to take advantage of educational resources in the jewelry industry. Employees who take courses offered by the Gemological Institute of America, American Gem Society, Diamond Promotion Service and others are not only reimbursed for the costs of the courses, they receive a cash bonus. Those who complete any of the list of courses receive a $250 bonus. When an employee earns a diploma or degree (graduate gemologist, for instance), he or she receives an additional $750 bonus. Another map down the career path is being developed in-house: Lee Michaels’ “manager in training” program is under construction.

A novel employee perk links overall store shrinkage – the rate of lost, stolen or missing merchandise – to an individual’s bonus payment. In all stores, whenever shrinkage dips below 1% of total inventory, the difference expressed in dollars is added up. Half that total is divided equally among all Lee Michaels employees and deposited in the individual 401(k) plans. As an added gesture of goodwill, Berg also donates money toward the 401(k) plans.

Other incentives that directly reach the employee’s need for recognition include companywide sales contests. “We design the contests so everyone has a chance to win, not just the top producers,” says Widas. At least seven contests are developed during the year.

Service awards were created several years ago to reward outstanding work. The awards, chosen from a list developed by the company’s associates, are presented by the store managers in front of the employee’s peers.

Bringing fine work to the attention of the entire organization is often done via the company newsletter. The most recent newsletter included stories on the top 10 sales associates for 1996, a profile of the Lafayette store manager, Jeweler’s Appreciation Day, GIA accomplishments and other items. “Our employees like to see their names in a headline or print,” says Widas. Finally, if the performance of an employee has caught the attention of Berg, he will write a letter to him or her.

Promote from within: It can be disheartening for an employee to work within an organization’s set steps on the upward ladder and then see someone from another organization come in above. Not only does the employee next in the promotion line feel the effect, but the organization’s teamwork can be disrupted if it seems working within the organization’s course toward promotion doesn’t really matter.

Lead by example: Berg is active in his community and encourages employees to follow their interests in local civic, arts, educational and other organizations. To encourage such activity, employees can receive flexible work schedules to attend meetings or help an organization. The company generally helps to pay membership fees to community organizations.

Open the books: Employees have access to company financial information so they know how store sales compare with those of previous months, previous years and with other stores. While these figures may start the competitive juices flowing, they also unleash important and innovative suggestions. If corporate health sags, so does the future and fortunes of each player in the company.

At Samuel Gordon in Oklahoma City, Okla., President Gary Gordon stresses the need to meet and discuss store activities regularly. Employee motivation is strongly linked with participation in the decisions made regarding store policies, merchandise and directions.

“When we discuss store topics together, everyone is involved and their opinions are seriously regarded,” he says. He meets regularly with his staff to discuss sales trends, new merchandise and in-store events and to hear suggestions about any topic. Gordon tells all employees about any compliments he has received regarding the store, from telephone conversations to written letters.

Unlike some business owners who are tied to their offices, Gordon feels it’s necessary to visit every employee each day. Even if it’s just to say “hello,” an appearance relieves any impression that management doesn’t notice or care about its staff.

Rule of tens

Financially, Gordon’s payment methods double as motivators. In addition to a standard 1.5% to 2% commission, he adds bonuses using the method originated by Morris Zale and taught to him by Lee Berg. Called the “rule of tens,” he multiplies the base salary of each sales staff member by ten. This figure is the employee’s annual sales quota. Twenty-five percent of that quota is strictly for December, and the remaining figure is divided by the months remaining in the year. This new figure is the sales person’s monthly sales quota. Each month the employee exceeds the individual quota earns a $50 bonus. If the quota is doubled, so is the bonus. However, in December, exceeding the quota earns a $200 bonus and doubling it earns a $400 bonus.

No split commissions

Other financial motivators are important, adds Gordon. In stores where one sales associate “turns” a customer over to another associate, for example, any sale made to that customer is credited to the sales associate who closed the sale or the resulting commission is split 50-50. If not dealt with appropriately, this can create competitive pressures that disrupt harmony among staff members.

Gordon makes all “turnover” sales a source of income to each party involved. “We pay double,” he says – full commission for each sales staffer who was part of the sale.

“With this method, a salesperson doesn’t hesitate if he or she feels a turnover is needed to close the sale,” he says.

Gordon also makes working at his store fun. He offers vacation giveaways for certain sales goals, including greatest number of units sold, oldest item sold or total dollars sold in a given period. He also offers cash prizes. “For example, we’ll have “did we beat the day?” where everyone earns $10 extra if we do.” Other perks include encouraging employees to take advantage of “spiffs” given out by suppliers, particularly watch companies. These offers often involve cash or merchandise rewards for specific numbers of items sold or allow employees to accumulate “sales dollars” that can be counted toward buying merchandise.

Motivational Rules for Managers

Larry Helms, Western Training Systems, Medford, Ore., created “maxims of management,” which he believes are the keys to employee motivation.

1. Behavior that is rewarded gets repeated.

2. You must reward what you inspect, not what you expect.

3. Don’t reward poor performance.

4. If you keep doing what you aredoing, you will get the same results.

5. Praise publicly, criticize privately.

6. Don’t mix personal with professional.

7. It’s impossible to treat everyone alike, but you can treat everyone fairly.

8. Become a model for behavior.

9. Exhibit patience and persistence.

10. Success comes with failure.

11. Build teams for the long run.

12. Practice “management by walking around.”

13. Share your vision of the business.

14. Build relationships.

15. Note individual talents.

16. People will be motivated if they feel they can do it, will be appreciated for it, and it will be worthwhile for them personally.