Case Studies from the Wilson Group

This section of our website contains several actual case studies of companies that have developed and utilized highly effective reward systems to address critical business issues. They reflect for their own organization a "best practice" and an excellent example of how rewards can link directly to an organization's key challenges. Once you have reviewed the summary and selected the case studies you are interested in, clink on the link in the summary and you will receive a download pdf of the case study. We hope you find this information helpful to discovering how your organization can address its particular needs.

Allied Signal
Creating a Process for Winning Together

Allied Signal is a highly diversified worldwide company that develops and manufactures components and systems for the aerospace, automotive, chemical, fibers and plastics industries. As part of their growth and manufacturing improvement strategy, Allied Signal implemented a program called: "Winning Together" in order to increase both employees' productivity and their vested interest in the company. Since its inception, the "Winning Together" Program has been expanded to many of Allied Signal's plants and has generated over $250 million in savings, over 40 times its costs.

Amazon.com
Shaping a High-Performance Culture through
HR and Reward System Design

Amazon.com is the world's largest Internet bookstore and one of the most visited sites on the World Wide Web. Founded in 1994, Amazon.com sells everything from gourmet food, to books, music and flat-screen monitors. Due to its explosive growth and enormous revenue potential, Amazon.com strives to recruit the top talent in the field. Though providing relatively conservative salary packages for it new-hires, with very competitive stock options, Amazon was able to attract talent that shared its growth objectives. With its share price skyrocketing from $18, when it first went public in 1994, to $200 by 1999 (adjusting for the stock split), even low-level employees saw enormous gains in their income. This strategy helped to minimize cash expenses when the company had very low profit margins, but provided employees a direct stake in the growth and success of the company. The alignment between the business, total compensation and culture has been a key element to Amazon's continued ability to attract and retain top performers.

Baptist Health System, Inc.
Evolving the Rewards Focus from Entitlement to Results

Baptist Health System (BHS), a not-for-profit company, is Alabama's largest integrated healthcare delivery system, providing high quality healthcare through its 11 hospitals, primary care network, Birmingham-based Health Partners Southeast HMO, wellness/exercise facilities and senior living communities. BHS was recently ranked in the top 50 of the Integrated Health Care 100 Directory. BHS, along with virtually every other healthcare system in the United States, faces unprecedented challenges to its business mission from multiple pressure points. BHS's success is attributable to its incentive plans, which reward employees for increased productivity and quality with quarterly incentive pay, the ability for certain employees to telecommute, and variable gain-sharing, which compensates highly productive employees for their hard work.

Burke, Inc.
Retaining Critical Talent with Customer-Focused Rewards

Burke, Inc. is a leading international business research and consulting firm helping manufacturing and service companies understand and accurately predict marketplace behavior. As an incentive to retain its top performers, Burke decided to develop a performance-focused plan benefiting the senior consultants who provide a direct link between Burke, Inc. and its customers. Senior level consultants were provided with the resources to effectively "run their own business" within the organization. As a result, costs and turnover have decreased and profitability and management capabilities have increased.

CIGNA HealthCare
Retaining Employees when Faced with Consolidations

When corporate buyouts, layoffs and decentralized operations management disrupt an organization, restructuring must reasonably follow. Such was the case when CIGNA HealthCare acquired Healthsource in 1997. In order to retain employees prior to the restructuring and layoffs in two Healthsource operational areas, employees in the closing locations were offered generous severance packages and bonuses for remaining with the company before and after the transition date in order to maintain performance prior to the closing of the locations. As a result, turnover before the targeted date remained low and customer satisfaction and performance did not decrease. After the locations were closed, employees received ample time to find new employment.

Cisco Systems Inc.
Creating a Share in the Success

In just a little over 20 years, Cisco Systems Inc. has become one of the top 40 companies in the world, offering products ranging from networking routers to integrated solutions-oriented equipment and services. Cisco Systems has built itself on its acquisition program, which has allowed it to diversify by entering new markets. Company profitability is driven in part by its compensation plan, which incorporates both a cash incentive program (tied to the company as well as the individual performance) and a stock options program (tied to both employee contributions and growth potential). The programs have led to both retention of employees and employee maintenance of company stock as well as the retention of talent and an adherence to company strategy and values.

The Coca-Cola Company
Linking Incentive Compensation and EVA to Drive Shareowner Value

The Coca-Cola Company leads the global beverage industry in volume, profitability, growth and innovation. The company is managed from an economic value added (EVA) and economic profit viewpoint to keep profits high and maintain a high return to investors. Compensation programs were realigned to give value to stockholders by creating variable pay programs to focus on economic profit. Two compensation programs were designed. The annual incentive program provides rewards to high performing divisions, while the stock option program provides options, based on a percentage scale, to all employees depending on performance. Both programs have led to increased profitability for the company and an amplified stock price for investors.

Community Health Plan (CHP)
Engaging Physicians in the Process of Change

Community Health Plan is involved in the changing culture of healthcare. As HMOs, doctors and hospitals seek to maintain equilibrium based on achieving the best care for its patients, physicians must rightfully be compensated for their new role within this healthcare dynamic. CHP of Vermont developed a pioneering compensation plan for its physicians. The program based the payouts on a combination of quality of care, patient access, physician performance and group medical cost management; the payouts were made both quarterly and annually. Physicians in the program were educated about the desired behaviors and practices reflected in the metrics and were involved directly in the plan's design. They became highly vested in the program. As a result, patient care improved with a marked decrease in unnecessary emergency room visits. Additionally, more and more physicians received payouts for the services rendered, demonstrating that financial incentives can reinforce desired quality of care, patient satisfaction and medical ethics. This program lead to a dramatic improvement in both the financial health of the organization and the culture and commitment to patient and quality medical care.

Corning Inc.
The Case of Continuous Improvement-GoalSharing

Corning Inc. (formerly Corning Glass Works) is a highly diversified manufacturing company. Corning replaced its old compensation plans with a new program that gave employees great line-of-sight into how their actions impact business unit and overall company performance. A GoalSharing matrix was devised based on a list of measures vital to the productivity or performance of a business unit and included a portion tied to the Company ROE (return on equity) performance. Cash bonuses (later with the option to buy company stock with the bonus) were awarded based on a simple scorecard formula that compared their achievements to the established goals. As a result, the performance of each business unit improved significantly, overall company productivity increased, and Corning achieved a top quartile rating of ROE among other Fortune 500 companies. The GoalSharing program rapidly became a model for how to bring line-of-sight performance measures into alignment with compensation and total reward programs.

Cummins Engine Company
Sustaining Continuous Improvements in a High Performance Work Setting

Cummins Engine Company is the leading manufacturer of large diesel engines and power generators with annual sales in excess of $5 billion. The Atlas Crankshaft, Inc., a division within the Cummins, decided to develop a variable compensation program to increase the link between its employees and the awareness of their productivity. Employees are rewarded with quarterly payouts based on specific business performance of the division which included feedback on their service from customers. The results have not only strengthened the division competitiveness and profitability, it has reinforced a culture of engagement and excitement lead by the division's leadership team. As clearly demonstrated by the program at Atlas, employee involvement in the performance challenges of the organization on all levels is important for productivity, customer service, employee safety and financial results.

The MathWorks, Inc.
Retaining the Spirit of an Emerging Company

The MathWorks Inc., the creator of MATLAB®, is a highly productive IT company creating products for the design of cars and air traffic systems, for medical research, and as education tools for scientists. The MathWorks has become the world's leading provider of tools for engineering and scientific professionals. Employees at The MathWorks are kept up to speed with company operations to maintain a highly vested workforce. In response to issues with a prior compensation program, the company's executives developed the "Stakeholder Program." The program is a bonus-based compensation plan, which uses quarterly payouts based on individual performance and company profitability. By linking the payouts clearly to specific common performance measures, the company has been able to create a very meaningful stake in the growth and success of the company. The compensation system has increased employee involvement and commitment to the success of the organization and has created a "stakeholder friendly" culture within business.

Sears, Roebuck and Company
Regaining Market Leadership

Sears, Roebuck and Company, a 100+ year old company known for its vast array of products and services, began facing competition from growing competitors that offer similar products at lower prices. In response to declining financial prospects, the senior leadership team embarked on an infamous transformation of the company. The process engaged managers and employees at all levels in strengthening the attractiveness and competitiveness of the company in the retail marketplace. Much was changed about the company. One of the key discoveries was the clear linkage between people, customers and financial performance. Sears was able to document that financial results were determined heavily by customer loyalty; and customer loyalty was determined heavily by employee satisfaction. Customer and employee loyalty became leading indicators of financial performance. This principle was then integrated into the company's entire range of variable compensation plans. Management incentive plans were linked to the three key measures of employee productivity and satisfaction, customer loyalty and financial results. Employees participated in the company's profit sharing program and all salaried employees were granted stock options. As a result, profits have increased and customer loyalty, once dangerously fleeting, increased dramatically. The company was able to turn its financial results around and secure a very competitive position in the retail marketplace.

Southwest Airlines
Finding the Formula for Success

Southwest Airlines, selected for several years as one of the Best Places to Work, has achieved an outstanding reputation in its short lifespan. A high level of employee commitment is maintained at Southwest by engaging all employees and hiring new employees who fit the Southwest standard. The pay for its 85% unionized workforce is related to seniority, which reinforces longevity. Pay for new hires is frequently well below market, but increases more rapidly than other companies as individuals demonstrate their active contribution to the company's success. Executives within the company are paid less but are more invested in stock to create a greater investment in the company. But, the most distinguishing characteristic of Southwest Airlines is its highly involving, exciting recognition programs. People throughout the company are actively and publicly recognized for small and large contributions to key success factors of the company. It is estimated that at least every hour of every day, someone (or some people) in Southwest are recognized by management or their peers for doing something special — for customer support, operational efficiency, and supporting others within the company. Southwest has learned that their success depends on the ability and style of their people (hence the importance of hiring) and the culture (hence the attention to innovative recognition and compensation programs). This has resulted in a company with incredible success in the airline industry and a great place to work.

Starbucks Coffee Company
Building a Unique Total Rewards and HR System for a Unique Company

Starbucks Coffee Company has exploded with growth since it's founding in the 1980's. It has become the leading retailer of specialty coffee in North America and operates 1,800 retail locations in North America, the United Kingdom, and the Pacific Rim. Full- and part-time "partners" are offered a comprehensive benefits package, which remains atypical of the industry. Company employees also have the ability to buy discounted stock in the company. Both the benefits and compensation plans have increased employee satisfaction, and as a result, created higher levels of customer satisfaction. Company employees are asked for their input about the operations of the company parallel to customer feedback programs. Employees receive ample training and are held to the company's mission statement with regular feedback from management. Surveys have demonstrated a high level of employee satisfaction and a low level of turnover has been maintained. Starbucks has also been named as one of the Fortune 100 "Best Companies to Work For" and has retained an enormous share of the market providing quality products to loyal consumers.

Techneglas, Inc.
Increasing Competitiveness with Productivity Improvements

Techneglas Inc. is one of the world's leading producers of glass panel used in the production of television tubes and the largest such manufacturer in the United States. The company is a wholly owned subsidiary of Nippon Electric Glass, Ltd. (NEG). In the later 1980's and early 90's, the Pittston, Pennsylvania plant of Techneglas began to face growing market competition. To maintain their stake in the market, the plant began to implement programs to increase productivity and employee engagement in the company. They developed a compensation plan known as PRIDE +. In this program, a portion of the plant's profits are allocated as quarterly payouts to employees based on specific, competitive measures of performance. Departments are also given special recognition awards based on their contributions to the plant's overall performance. As a result, overall productivity increased, employee safety has become a high standard, and the company has retained its competitiveness and its characteristics as a great place to work.