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A system of rewards Featured

9:55am EDT July 22, 2002

When Sam Reed, an engineer for Akron-based R&R International, went to work last Friday, he had Puerto Rico on his mind. It’s safe to say, so did most of R&R’s 225 employees.

Reed knew the company’s quarterly conference call lunch meeting was that day, and that along with cash, clothing and other rewards, the company CEO would be giving one lucky employee a trip to Puerto Rico.

But Reed, who works on location for R&R in Reynoldsburg, Ohio, knew he’d miss the meeting, so he e-mailed Kellie Kerr, the company’s HR manager. “He said, ‘I won’t be able to attend the teleconference, so just call me and tell me where to pick up the tickets,” Kerr remembers. “I said, ‘Yeah, right.’”

Neither Reed, a 16-year veteran of the company, nor Kerr, thought he actually would be picking up those tickets later that day.

Reed’s not the only R&R employee who’s been handed an all-expense-paid week-long trip to places such as Hawaii, Tahiti, Bermuda and the Bahamas. For the last two years, the company’s been rewarding employees with trips, cash and other valuable items every quarter.

The rewards are part of the company’s REWARD program, an acronym for “recognize employees’ willingness, achievement, response and dedication.” The program was created in 1997 by R&R’s CEO Gurinder M. Rana as a way to promote safety, innovation, quality and performance, while improving profitability.

Sound too good to be true? While the company last year spent about $25,000 on incentives — including $15,000 in cash rewards — it saved three times that in recouped sick days alone, says Kerr.

“Initially, we had a lot of apprehension from employees — that this was just going to be another fly-by-night thing, and apprehension from management — how is this going to benefit the company,” says Kerr, who, with a group of employees, runs the program. “Now it’s fully supported.”

“For a lot of the employees, it’s their first experience with an employer that does anything like this,” says Kristine Burgess, an executive assistant with the company. “It certainly is mine. People have never heard of a company doing something like this. It is really exciting and motivating to be a part of that.”

The philosophy behind the program comes from the mindset and culture of Rana, who was born and raised in India. Rana started R&R in 1980 with a $50,000 loan from the Small Business Administration. The company, which specializes in construction management and environmental remediation services, brought in $56 million in revenue last year. Rana expects R&R’s revenue to exceed $100 million in 1999, partly due to the recent acquisition of Jennings & Churella Construction Services Inc.

“In the Eastern world, there still a tremendous sense of loyalty,” says Rana, who believes that the value placed on loyalty diminished in the U.S. when corporations such as AT&T and IBM started to lay off veteran employees. “Fifty years ago, there was some kind of a bond that existed. There was a sense of loyalty, there was a sense of commitment. An employee knew that if they performed well and if they were loyal, they’d have a lifetime job. About 25 years ago, that unspoken, unwritten agreement was broken.

“It really boils down to, what is the purpose of having a business? Is it just to have money? I think the purpose of a business should be much broader. The purpose of a business should be where people can grow, learn. We want to be connected, we want to be mentally stimulated ... we want to feel like we belong to something which is good. There’s nothing wrong with people feeling that they work for a great company.”

Rana says developing recognition and incentives programs are ways companies can help rebuild that connection.

“There now is a system through the rewards program where we can recognize employees and say, ‘Your ideas are valuable, we appreciate you thinking about it, we appreciate you doing something about it and we appreciate you caring about it.’”

Kerr says one of the challenges of a successful incentive program is maintaining awareness — not just on that Friday four times a year when a trip is given away.

“The whole point is to keep the employees remembering the program,” says Kerr. “On the first of the year, we announce what the trips are going to be, with photos: Tahiti for second quarter, Las Vegas third quarter, Bermuda fourth quarter.”

Throughout the quarter, employees are encouraged to fill out a brief nomination form when a peer is spotted preventing an unsafe condition, avoiding a potential material or profit-loss problem, performing above and beyond expectation, or suggesting an efficiency improvement. The committee grants each nomination a number of points for the value of the contribution.

Points can be cashed in at any time for the dollar value; for example, a very good suggestion may garner 1,000 points, or $100.

At the end of the quarter, during a cross-market theme luncheon, any employee who has either accumulated 600 points or not used his or her sick time, is eligible for the trip. All employees are invited to the lunch, at which company logo wear and other prizes are distributed.

Kerr is sure that the program has not only had lasting effects on the staff, but increased profitability.

“A letter from a client, for example, how can you attach a dollar amount to that?” she asks. “But I certainly think it will have a lot to do with us winning that contract for another five years for $5 million. How can you really put a dollar amount to the program? The most important part is that if it weren’t successful, if the employees weren’t happy about it, they wouldn’t be participating in it.”

For Rana, it goes much deeper than that.

“I think the responsibility of every business person is to not only create a financially strong company, but also create a place where their people feel comfortable going,” he says. “If you can pick the best of India and the best of America and we can combine them, we can create heaven on this earth. It’s truly my desire to do so.”