No doubt you have had hundreds of conversations about Pay-For-Performance in your organization - how to ensure budgeted merit increase dollars go to your best performers and create a gap between what the performers get when compared to the average folks. If you are in a Fortune 500 company or simply have standardized your comp plan, you likely have a Merit Matrix to reinforce this type of reward system. If so, does your plan include taking money away from those who don't meet the performance goals you have outlined? I didn't think so - but Publix (yes, the service-oriented supermarket) has. From the Lakeland (FL) Ledger:
"Lakeland-based Publix Super Markets Inc. spent years creating a "Tie Pay To Performance" plan that offers penalties as well as rewards. Mass merchants have used performance incentives for years, but they're usually tied to a store's performance and are meant to foster teamwork.
Publix zeroes in on each worker and adds the unconventional twist of institutionalizing disincentives even for top performers. "We want a customer experience the customer deserves and expects at Publix, so we are rewarding people for hard work while increasing what we pay overall," said Shannon Patten, spokeswoman for the grocer that employs 142,000 people full- and part-time in five states. "But some associates face a decrease if their performance slips."
Here's how it works. Top performers, many of whom pocketed raises two to three times and up to $1 per hour more than what they were used to getting, love it. Others are getting their standard raises. Many must resolve to work harder. In February, 19 percent of employees up for review got no raise and 4 percent took pay cuts. Publix says the plan is working. In August, 68 percent of hourly workers got a raise. The rest were put on six-month notice they had to shape up. Six months later in February, 77 percent got reviews good enough for raises, showing more workers got the message.
It's a culture shock at a chain already named one of the nation's 100 best employers, that consistently rates tops in Consumer Reports customer service ratings, and was just named the best of 19 major retail chains rated by the University of Michigan Customer Satisfaction Index. For years, virtually all Publix store workers could count on a modest annual raise. Not now. Semi-annual evaluations, based on supervisors' numerical ratings in 21 areas, grade workers as role model, superior, successful or two types of needs-work-to-keep-the-job. The rating is matched to a performance pay range for each job. Publix gives workers a six-month warning to improve their performance to keep their current pay rate. That goes for top-rated "role models," too."
Wow. That's hardcore, and obviously a plan that is designed to ensure that the Publix brand of service first is sustained moving forward. It's also notable that Publix to my knowledge is a employee-owned and a union-free workplace - you have to wonder that if the Employee Free Choice Act was passed, if Publix could be so nimble and aggressive on this type of plan. See the Union-Free Employer for more details on this bill and contrast what the EFCA would mean for companies like Publix as they attempt to maximize service to customers. After all, protecting their brand focused on service is what allows Publix to survive against Wal-Mart Supercenters where companies like Bruno's and Winn-Dixie (both chains in the Southeast) have fallen.
Last Note - I actually took a tour of a Publix with a youth group earlier this week. I prompted my six-year old son to ask the manager "Why do Winn-Dixie stores shut down and Publix stores never do?" The manager didn't miss a beat, explaining that they never cheered when a competitor shut down, but identified a dedication to quality and service as the keys to the brand's success....