Operations & Finance

What better way to increase revenues than to give everyone a stake in the bottom line? That’s what Akron General LifeStyles Health & Fitness Center did, and it worked.

LifeStyles’ Gainsharing Compensation Program offered financial incentives to all of its employees for reaching or exceeding set goals, both financial and otherwise. This incentive promoted the idea that employees don’t have to be at the management level to be motivated to improve service.

The program set a base pay for employees at 90 percent of the fair local market value, with incentive compensations set at 0 to 25 percent of semi-annual base pay. The company then made a list of measurable financial and non-financial goals. Customer satisfaction, a non-financial goal, was measured by quarterly customer surveys and employee performance evaluations, and served as the gatekeeper for the bonus program (no incentive was earned if customer satisfaction was not reached). Financial goals were set at three levels: meet, exceed or greatly exceed. Incentive bonuses were paid based on meeting goals. The two sets of goals encouraged employees to work toward improving customer satisfaction and keeping costs down — both of which improve the bottom line.

One important element to the program was to ensure that employees believed their goals were within reach. Without this belief, they would not have the motivation they needed for improvement. To do this, the company held a series of meetings to review departmental expectations and to present conservative performance assumptions that demonstrated how the program could work. And it did.

LifeStyles saw some positive changes as a result of this innovative program. Because the program offered incentives on both a departmental and center-wide basis, a greater sense of teamwork was felt. What’s more, employees felt empowered by their ability to make a difference.

Employees at the center exceeded their goals in June 1997 for a bonus of 16 percent of their base pay, and in December, they exceeded their goals for an incentive pay of 10 percent. In June 1998, they exceeded goals for a bonus of 20 percent of base earnings for the six-month period.

LifeStyles attributes the program success to the low attrition rate at the center: 17 percent. Customer satisfaction surveys are excellent, and staff attrition was at 9 percent for the first half of the year.

Traditionally, incentive programs belong to the management team. But LifeStyles has proven that it definitely pays to provide incentives to all employees. When the company wins, everyone benefits.

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