Article

Motivating through metrics

Plenty of companies have vibrant cultures, but great companies foster a passion for the business.

By Frederick F. Reichheld and Paul Rogers

First published on diciembre 01, 2005
min read


Getting the right people on board—and then all enthusiastically pulling in the right direction—has bedeviled organizations since the time of wooden ships, when most "motivation" left lash marks. Today's corporate helmsmen may be more enlightened, but they still face the same challenge. How can a company transform its frontline crew into a meritocracy that pulls together? Recently, a handful of firms have addressed this problem by tying rewards to team performance and putting customers and employees, rather than bosses, in charge of performance rankings. These trendsetters all link frontline performance rankings to customer and peer feedback, not just productivity. And they apply simple metrics for compensation, promotions and career transitions. Rewarding exceptional hiring: At Enterprise Rent-A-Car, one of the world's leading car-rental concerns, managers cannot be promoted unless their branch delivers customer service at or above the average for all comparable branches. Success is judged by the Enterprise Service Quality index (ESQi), which shows the percentage of customers who rate a branch five out of five when asked if they were completely satisfied. If this metric isn't met, the entire team is ineligible for promotion. Many teams have introduced a voluntary weekly metric called the Vote, in which team members rank one another on how well each has provided outstanding customer service. This personal accountability for team success has led to higher ESQi scores-and happier customers. Tapping that extra 10%: Inspiring even the best employees requires clear, personal and immediate goals, and not some wide mandate to maximize overall profit. At Ireland's Superquinn grocery chain, the bakery staff at one store was recently challenged to increase the number of households that purchased from the bakery. The reward: a helicopter trip around a local bay. The team set up a doughnut cooker inside the main entrance, offered shoppers a taste and guaranteed the doughnuts' freshness. As a result, the households that purchased from the bakery increased to 90% from 75%-and all 20 bakery colleagues won helicopter trips. Keeping the best: Metrics can help companies identify who isn't rowing all-out, while not demotivating those who are. At Applebee's restaurants, general managers' bonuses are based on financial results, measurements of how well patrons rate their overall dining experience and staff turnover rates. In the casual-dining segment of the restaurant business, an entire staff can turn over twice in one year. Applebee's looks at turnover among the top 20% of performers, the middle 60%, and the bottom 20%. Managers are rewarded for their success in retaining that top 80% and encouraged to help poor performers to improve or seek other opportunities. Since 2000, turnover among hourly associates has dropped from 146% to an industry-leading 84%, evidence not only that managers are more motivated to hold on to their teams, but also that the teams, minus poorer performers, are more stable. Last year, Applebee's same-store sales growth rose 4.8 percentage points. By keeping these principles in mind, managers can get all the oars in the water, pulling in the same direction. Frederick F. Reichheld is a Boston-based Bain Fellow. Paul Rogers is a Bain partner in London and leads the firm's Global Organization practice. To learn more about how companies craft reward systems that insipre their front lines, read "Motivating Through Metrics" by Frederick F. Reichheld and Paul Rogers, from the September 2005 issue of Harvard Business Review

Getting the right people on board—and then all enthusiastically pulling in the right direction—has bedeviled organizations since the time of wooden ships, when most "motivation" left lash marks. Today's corporate helmsmen may be more enlightened, but they still face the same challenge. How can a company transform its frontline crew into a meritocracy that pulls together?

Recently, a handful of firms have addressed this problem by tying rewards to team performance and putting customers and employees, rather than bosses, in charge of performance rankings. These trendsetters all link frontline performance rankings to customer and peer feedback, not just productivity. And they apply simple metrics for compensation, promotions and career transitions.

Rewarding exceptional hiring: At Enterprise Rent-A-Car, one of the world's leading car-rental concerns, managers cannot be promoted unless their branch delivers customer service at or above the average for all comparable branches. Success is judged by the Enterprise Service Quality index (ESQi), which shows the percentage of customers who rate a branch five out of five when asked if they were completely satisfied. If this metric isn't met, the entire team is ineligible for promotion. Many teams have introduced a voluntary weekly metric called the Vote, in which team members rank one another on how well each has provided outstanding customer service. This personal accountability for team success has led to higher ESQi scores-and happier customers.

Tapping that extra 10%: Inspiring even the best employees requires clear, personal and immediate goals, and not some wide mandate to maximize overall profit. At Ireland's Superquinn grocery chain, the bakery staff at one store was recently challenged to increase the number of households that purchased from the bakery. The reward: a helicopter trip around a local bay. The team set up a doughnut cooker inside the main entrance, offered shoppers a taste and guaranteed the doughnuts' freshness. As a result, the households that purchased from the bakery increased to 90% from 75%-and all 20 bakery colleagues won helicopter trips.

Keeping the best: Metrics can help companies identify who isn't rowing all-out, while not demotivating those who are. At Applebee's restaurants, general managers' bonuses are based on financial results, measurements of how well patrons rate their overall dining experience and staff turnover rates. In the casual-dining segment of the restaurant business, an entire staff can turn over twice in one year. Applebee's looks at turnover among the top 20% of performers, the middle 60%, and the bottom 20%. Managers are rewarded for their success in retaining that top 80% and encouraged to help poor performers to improve or seek other opportunities. Since 2000, turnover among hourly associates has dropped from 146% to an industry-leading 84%, evidence not only that managers are more motivated to hold on to their teams, but also that the teams, minus poorer performers, are more stable. Last year, Applebee's same-store sales growth rose 4.8 percentage points.