OK, I need to fess up.  I got online today, downloaded a recipe for a mocha frappuccino from some arbitrary website (blame google).  Strong coffee, hershey’s syrup, hershey’s cocoa powder, sugar, milk, and then a secret ingredient… Mocha Chocolate Chip ice cream from Graeters, an ice cream shop in Cincinnati.  Combine it all, add about 20 ice cubes in the blender and shazam, yumminess in a glass.  Add some real whipped cream and drizzle with more syrup, and I am about to go headlong in a caffeine buzz.  I figure it cost me about a buck.  Four more, and I can buy a real one from Starbucks…  I’m not sure that is good for their business model, but they are closing one of the 600 stores that I often frequent…  Take that Starbux.  Take that shareholders.

Wow.  That felt good.

My son asked if what i did was like file sharing.  And then he smiled.  I hate 16 year olds…

Anyways…

I’ve had some interesting discussions in the last month or so on what has become a “controversial” topic in my recent lead article in Human Resource Executive’s special section on Rewards and Recognition (July 2008).  One of the themes of the article (and my upcoming book on Rewards & Recognition) is as follows:  Organizations need to reward the 20% of the employees who account for 80% of the company’s accomplishments.  I thought it was pretty nebulous,  innocuous, inoffensive, harmless (yes, I used the thesaurus.. sue me).

The 80-20 rule, the Pareto Principle, the law of the vital few.  I’ve often heard it used with a company’s financials:  80% of the revenue comes from 20% of the customers, 80% of the profit come from 20% of clients, 80% of complaints come from 20% of consumers.  There may be some folks that argue about the exactness of the numbers, but by-and-large most folks agree with the principle (hence, the name).

But people seemed to get upset that I proposed broadening this principle to employee rewards inside an organization.

“All employees want to be rewarded for their hard work”

“It’s not fair that all employees don’t benefit from the success of a company”

“This idea is going to kill the concept of teamwork, some people are rewarded while others aren’t”

“How does this square with the concept of equity and fairness”?

I love the last one, so I’ll start with that one first.

American Heritage Dictionary defines “Equity” as Something that is just, impartial, and fair.  So I ask you, what could be more fair than ensuring those employees who make the greatest contribution to the company’s success receive the greatest rewards and recognition?  Is it fair to the A/B players that others share equally if they don’t have the same impact on the bottom line, or don’t work as hard to ensure customer satisfaction and retention?  Of course not.

Don’t get me wrong.  Not everyone in the company is in a position to impact the organization to the same degree.  Salespeople have a direct line to revenue, while CSR’s tend to deal with after-sales care and support.  Workers in the factory don’t do the same job as senior leaders in the organization.  EXACTLY RIGHT.

So, another important tenet of any Rewards program is that it can’t be a One Size Fits All strategy.  CSR’s should be compared to other CSR’s, salespeople against salespeople, production workers vs. production workers.

So what’s the issue?  “C” players do acceptable or minimally acceptable work, that’s why companies can’t and don’t put them on progressive discipline.  Their “reward” is keeping a job that helps them pay their ever increasing bills and take care of their family.

Think of your own company for a minute and consider the 10% of your customers that make up nearly half of your revenue.  Go ahead, I’ll wait (plus my frappuccino is melting).  Do you treat these high value customers better than bottom feeders?  Do they get access to your best people, processes, and pricing?  Do you bend over backwards to ensure you are constantly meeting and exceeding their expectations?  Do you include them in your product and process improvement efforts?  OF COURSE YOU DO.  It’s not right or wrong, it’s business.

So why should it be any different with your best and brightest employees?