by Lisa Grimaldi and Brendan M. Lynch | June 01, 2004

The awarding of a Continental Airlines incentiveTwice blessed: From left, Continental Airlines’ human resources executives Donna Towle and Melanie Jernigan present reservations specialist Ermanno Iacopozzi with a new Ford Explorer his second to reward seven years of perfect attendance.

In an era of budget cutbacks and corporate scrutiny, big companies continue to see great value in running incentive programs. For employees, the allure of travel, cash bonuses and expensive premiums remains a powerful motivator. As an example, a 2004 survey by the Maritz Travel Co. found that 89 percent of employees competing in an incentive program kept the travel reward in mind when performing their jobs. For employers, these programs help boost profitability, performance and team-building. Incentives, in short, still appeal to the bottom line.
But such programs must be well run to succeed. M&C talked with planners at four major U.S. corporations with significant and distinctive incentive contests. Their stories will prove rewarding.

Continental Airlines: A rally around ratings
Houston-based Continental Airlines’ program makes a great example of the power of incentives to turn around a company’s corporate culture, its esprit de corps and even its fortunes.
    “Ten years ago, we were the most broke airline in the industry. We had a product customers did not want to buy and a work force that did not want to come to work,” says Donna Towle, the carrier’s senior director of corporate human resources. Add to that a poor on-time record for arrivals and departures, and a reputation for inconsistent customer service.
    Continental’s two formal incentive programs were launched in 1995 and 1996, soon after current chairman and CEO Gordon Bethune came aboard. Towle, who helped design the programs with other top managers, says they specifically targeted two areas found to need the most improvement: employee dedication and teamwork.
    Beyond the generous travel perks employees already received as part of their benefits, a new incentive initiative gave the carrier’s 40,000 employees (with the exception of senior managers) a chance to win a new Ford Explorer, provided they had perfect attendance for a six-month period. Each period ended with a drawing, and one winner from each of 10 work groups was selected.
    The other program, intended to boost monthly on-time arrivals, was cash-based. When first launched, employees received $65 each month the carrier made it to the top five (as determined by the Department of Transportation) and $100 if it achieved number-one status.
    “The first month it was offered, we made it to the top five, and we’ve moved up consistently,” says Towle. As economic turbulence and fierce competition has persisted, the bar has been raised from top five to top three, and now the airline has to place first before rewards are handed out. Also, Explorers are now awarded once a year, instead of semi-annually. The carrier hopes to bring back the broader rewards in the near future.
    To date, Continental has given away some 120 Explorers and paid $332 million in on-time bonuses; according to Towle, the amount is far less than costs the airline would have incurred to compensate customers for delays.
    CEO Bethune and Continental’s other top brass consider these incentive programs so crucial to the airline’s continuing success that they’ve retained them in the wake of 9/11 and through some tough fiscal periods, even when hard business decisions such as employee furloughs have had to be made.
    “We said we could save a few a hundred grand, even millions [by cutting the programs], but we would have inherently changed the company’s culture,” notes Towle. “We would rather keep them and be a smaller company.”