Everyone Gets a $100,000 Bonus!

When 1,380 employees got a $100,000 bonus each, the story should have made headlines everywhere.  The brilliant bonus decision was a wonderful example of a corporation that cares deeply about its employees. Both because the reward was so successful and because it illustrated a side of companies that is rarely displayed to the general public, it needs to be better publicized and widely discussed.

Each employee of Hilcorp was granted a one hundred thousand dollar Christmas bonus for their individual contributions to company success. That action publicly demonstrated the corporation's strong investment in their most important resource, their people. The simplicity of the scheme avoided the usual defects of over-designed reward programs:

• No fancy formula to confuse people
• No differentiation by title, grade, base pay, seniority, performance, race, sex, hair-color, weight or other irrelevant variables
• No disparate treatment to inspire envy, jealousy, suspicion or skepticism
• No complex distribution scheme to argue about
• No insignificance in the award amount but memorable, enough for a lifestyle change
• No inequity to generate complaints or resentment

The bonus approach featured perfect equality of treatment, precise targeting and open public disclosure.  It rewarded and motivated, achieving high morale and shining a bright light of clear common sense in a dark world typically filled with foggy complicated schemes.

Perhaps this latest move merely sustained an already high level of mutually enriching engagement.  This is not the first time the privately-held Houston oil and natural gas company has gifted its workers with substantial pieces of their profits. When they met a five-year goal in 2010, employees were given a choice of either a $50,000 car or $35,000 in cash. While there are few signs that publicly traded enterprises have followed this example, their established practice of generous beneficence seems to have paid off for everyone there.

Hilcorp’s practices are also a noteworthy model of worker-friendly dedication by a corporation (ugh) engaged in a stereotypically filthy business. Certain types of self-righteous people shudder with distaste at the very mention of oil, natural gas and fossil fuels. Firms engaged in their exploration and production are routinely pilloried. Sneering critics frequently project expectations of hateful behaviors upon such employers. While non-renewable energy drilling and extraction companies seem to attract particularly strong societal distaste, sometimes I wonder if there isn’t a general bias against all enterprises engaged in the making and selling of products or services at a profit.

We rarely get any news about good corporate employers.  In a world where all the attention seems to go to divisive voices screaming hostile insults or shouting dehumanizing rhetoric, it is refreshing to hear a gentle happy melody.  Instead of flinching at spiteful slurs designed to trigger knee-jerk emotional outrage from desensitized audiences deluged with sound bites competing for their attention, receiving a calm friendly positive message that brings a pleasant smile is a welcome change.

Wouldn’t you like to see more wildly successful programs like this?  All it takes to produce more such victories is a minimal reinforcement effort on your part.  Please share this with any decision-maker considering a reward program. They frequently need to strip down their complicated lawyer-ized packages in order to replace the usual dense obscurity with similar remarkable clarity.  Let’s help spread the good word!

Of course, perhaps you have already discovered and successfully tested a superior consequence for behavior that is even more effective. If so, sharing it with us would be an even better gift for the holidays.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience, specializing in job evaluation, market pricing and pay budget distribution. After corporate HR jobs in chemical and pharmaceutical manufacturing, he consulted at retail, government, energy, IT, tax-exempt and other industries throughout North America before becoming Senior Associate of pay survey software publisher ERI until returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook) and speaker, Jim gave expert witness testimony in many reasonable executive compensation cases both for and against the Internal Revenue Service and also serves on the Advisory Board of the Compensation and Benefits Review.

Image courtesy of Feelart at FreeDigitalPhotos.net

Comments

[Dan Walter]

Thanks for posting this Jim. This program also helps show the power of profitability. This program cost the company $138Million in the current year. Even when amortized over the 5 years since the last big award this is not chump change. But, it is an incredibly effective way to spend compensation dollars.

Many profitable companies work to follow the "next big thing" in non-cash or heavily performance-leveraged incentive plans. Sometimes, cold hard cash is the real answer.

[E. James (Jim) Brennan]

Well, cash is indeed the only reward that buys groceries, Dan. To extend the food parallel, as you certainly realize, a healthy diet relies on certain foundation staples, a variety of essential supplements and an ever-changing selection of specialty items. No one element meets all nutritional needs.