"Game show" program boosts loyalty

Want to make work more fun? Treat it like a game show. Nortel Networks, an Ontario-based international communications company, gives its employees an opportunity to win prizes instead of cash bonuses.

Nortel got the idea from Netcentives, a San Francisco consulting firm that specializes in programs to strengthen employee and consumer loyalty.

Supervisors at Nortel reward employees with a certain number of points for every job well done. Those employees can immediately trade the points for cash, or let them add up and exchange them for different kinds of prizes-which can range from a set of tools to a vacation in the sun.

Nortel's workers enjoy the drama and excitement the program generates. Because the company pays most of the taxes on prizes, the majority of program winners choose prizes rather than cash. (Taxes on cash can run as high as 39.6 percent.) From this, Nortel reaps a psychological benefit: Cash bonuses tend to rapidly disappear, whereas more tangible prizes-DVD players, for example-hang around, reminding the employee of the firm's generosity.

So far, 25,000 of Nortel's 80,000 workers worldwide have won bonus points, and 40 percent of those have exchanged them for prizes. Kathy Gorley, an administrative assistant, was able to save up enough points over three years to pay for remodeling her bathroom. Jessica Flynn, a senior financial analyst, traded her points for an allexpenses-paid trip to the Pro Bowl in Hawaii.

Because the entire "game show" setup is conducted online, Nortel has found it faster and more efficient to run than previous bonus programs. And, best of all, the new program does appear to reinforce employee loyalty. Last year's winners say they plan to stick around and shoot for bigger prizes next year.

From Ahmad Diba, If Pat Sajak Were Your CEO. . , " Fortune, December 18, 2000, p. 330.