Workmate-based bonus scheme pure logic

Imagine a remuneration scheme in which your bonus relied on the performance of your workmates.

Imagine a remuneration scheme in which your bonus relied on the performance of your workmates.

If they stuff up, it would cost you hundreds, and if you did not make the grade, it would cost everybody a five-figure shareout.

And imagine if meeting your target meant calling out a helicopter at 2am to fly from Auckland to Palmerston North - though fortunately at company expense.

Such a bonus system operates at Auckland-based Logical Networks, which designs, builds and manages IT infrastructure.

Pay for all 100 staff, including accounts people, is performance-related.

Back-office staff have 20% of their wages "at risk"; and for engineers earning salaries of $70,000 to $120,000, the "bonus" share of their wages is a quarter.

Logical's New Zealand marketing manager, David Tse, says the system works well.

The company has met all its agreements for three years and everybody is happy.

"The workers are happy to receive the bonuses, the customers are happy with the service and, though he is paying out more, the finance chief is happy because he knows this is generating more custom," says Tse.

Unlike many other firms, Logical offers restoration agreements to its customers; agreements based on how speedily the company can fix a problem.

Tse says that is better than traditional response agreements as it is no good having someone on site looking at a problem straight away and not being able to fix it for days.

The company has about 30 engineers or "network support specialists" in eight offices around New Zealand, who are available 24 hours a day, seven days a week.

Logical operates a system called Sentinel, which monitors its 300 customer networks remotely.

"Staff log on to the networks like another user and can reboot and fix from here," says Tse.

Usually problems are fixed before the customer is even aware they had one.

For more serious matters, the customer's folder is consulted and the company is contacted.

Then, staff will go on site to deal with the problem, regardless of the time of day.

They usually take parts with them, plug them into the problem equipment, taking back the customer's part for repair.

This is quicker than repairing on site and the customer will get his own part back at a later date.

Logical tries to fix problems in from one to several hours, depending on the agreement with the customer.

In a recent incident, a customer in Palmerston North had a service breakdown but the Wellington office had run out of appropriate spares.

"Our guys located a spare in Auckland. It was a two-hour restoration agreement and it took 30 minutes to track something down.

"The airline flight schedules wouldn't allow the part to be couried down, so our southern regional manager said to fly it down anyway. A helicopter was hired at 2am, paid by Logical.

"It cost the company $3000 to meet the agreement, but that's what we had to do. The support guy drove to Palmerston North and met the agreement with 20 minutes to spare," says Tse.

Had he not done so, it would have been costly to himself and his colleagues.

If the engineers meet all their agreements in a month, they all receive their bonus.

If they meet all their agreements for two consecutive months, they receive 125% of the bonus.

If they meet all of their agreements for three months in a row, they receive 133%.

But if they miss one agreement in a month, they lose half the amount.

That jumps to two-thirds if they miss two and all the bonus if they miss three agreements.

And if their bonuses are tracking along at 133%, as they currently are, a single mistake brings the bonus down to 50%.

Logical deals with 6000 customer requests a year, with the Sentinel team handling around 1200.

Tse claims a 98% customer satisfaction record.

Furthermore, if a customer writes in to praise a staff member, they receive a $250 cheque if named and $150 if not named.

Tse says the bonus system gives all staff "ownership" of problems so they all pull together and do their best.Customers are not let down, productivity is increased, revenue increases and the company gains a reputation for reliability.

Normally, IT staff like to work independently, but to meet the agreements they overcome their "technical pride and individual ownership" of a problem and raise their hand and ask for help, learning along the way, he says.

"Because of the scheme, an issue becomes everyone's problem and the entire NSS community rallies around to resolve it."

Tse cannot see any disadvantages to the scheme; at least, none worthy of causing a review."It has a 100% buy-in by all employees, so if it's not broke ... And our staff relish the opportunity to excel and be compensated for it," he says.

And there is the other side-effect, which is perhaps the real reason Logical hasn't missed an agreement in three years.

"Talk about peer pressure," Tse says. "No one wants to be the one that stands up at the weekly NSS meeting to announce that they were the person that missed the agreement and caused everyone to lose money out of their pay packet."

What do you think of this bonus system? Does your company have anything better or more interesting? Email darren-greenwood@ idg.co.nz.

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