Thursday, February 4, 2010

Cash Rewards

I was recently reading up on Customer Development and came across a recent post on Steve Blank's blog about Incentives and Legends. It reminded me of our journey at TheLadders.

We loved a good party, so we celebrated every time we crossed a $100k/wk milestone ($100k in cash collected for the week, $200k, etc). Our first such party was a black-tie affair in January 2005 at the Rainbow Room atop Rockefeller Center (during a blizzard).

The most memorable celebration might have been the one for crossing $500k in the spring of 2007. The full company gathered in the office around 4pm, and everyone was handed an envelope from their manager. When Marc (Founder & CEO) gave the word, each person opened their envelope and found five crisp $100 bills inside. Of course, it was great to get $500 in cash, but it was just as rewarding to watch other people open their envelopes.

The one hundred faces simultaneously racing from confusion to shock, amazement, excitement and pure glee were a sight to behold. As the music cranked and the bubbly flowed, a steady parade of people came to shake Marc's hand and thank him.

Everyone at TheLadders that day will remember that celebration, yet no one remembers the day when their quarterly bonus was direct-deposited into their account... which is a long way of saying that I couldn't agree more with Steve's lessons learned:

-Cash has a much greater affect than a check.
-Done correctly it turns incentives into legends.
Posted by andrew at 2:17 PM

5 comments:

  1. That was an amazing day. Great point about the quarterly bonus -- I think as a company we constantly struggled with how to position that as a "bonus" and not just a deferred piece of expected comp. Not sure we ever really found the sweet spot to be honest. The $500 cash day though...wow.

    Also, you should have comments through disqus.
    ReplyDelete
  2. I never thought of my quarterly bonus as deferred comp. At the beginning there were no bonuses promised, so anything extra was just that - extra. I was also paranoid that the company would fall apart at any minute, so when the bonuses materialized each quarter, it was a pleasant surprise. I wonder if I was the only one who felt that way.

    As for disqus, I've long wanted to make the switch, but the comment volume on the site has never justified investing the time. If you keep commenting, I'll reconsider...
    ReplyDelete
  3. Hmmm, ok, more context is required. I can definitely speak for my direct reports when I was managing Recruiter Relations -- they were paid such a low base salary (below what we started community folks at when i started) that their "bonus" was considered deferred comp. They all banked on it to pay rent/bills, etc. You could argue that it wasn't setup necessarily as a bonus like the rest of the company received -- it was more sales-quota based (albeit on JREQs) -- but the point is the same.

    You do raise an interesting point about the mindset of pre-bonus-plan employees but I'm not so sure that everyone had the same experience as you. If you recall, we were pretty flexible at the end of quarters where we had grossly overestimated goals in terms of rewarding almost full bonuses. I think that speaks to people's expectations of bonuses as deferred comp as opposed to something that could either be achieved or missed.

    Once we really got rolling though, did you still feel like the company could fall apart at any minute? I would think your fear shifted slightly from "complete disaster" to "perhaps they won't go quite as well as I had planned."
    ReplyDelete
  4. I think the rational side of me feared that things wouldn't go quite as planned, but there was still a big part of me that feared "total collapse."

    Of course twenty minutes later, I would feel like we were on top of the world and unstoppable.

    I'm not sure whether that makes me bipolar... or just a veteran of a startup.
    ReplyDelete
  5. I think the rational side of me feared that things wouldn't go quite as planned, but there was still a big part of me that feared "total collapse."

    Of course twenty minutes later, I would feel like we were on top of the world and unstoppable.

    I'm not sure whether that makes me bipolar... or just a veteran of a startup.
    ReplyDelete

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