Coca-Cola's Sweet Taste of Success
October 03, 2008
Coca-Cola's leadership restructured its incentives from a hodgepodge of awards to a centralized program, and now they can see—and measure—the results.
By Alex Palmer
The Coca-Cola Bottling Company has been a big believer in incentive programs for decades. Incorporating rewards, including gift cards, Coca-Cola logoed merchandise, and tickets to sporting events, Charlotte, N.C.–based Coca-Cola Bottling Company Consolidated was pumping plenty of resources into encouraging its workers to do their jobs well.
But there was a big problem: Nobody was tracking these programs. Almost all of Coca-Cola Bottling's incentives were run at the local level, with a jumble of initiatives in effect across its 65 office, distribution, and production facilities and dozens of teams. With little direction or oversight, most of these programs were basing awards on what had been done in the past, or what the local leader wanted to do, versus what might be in alignment with corporate strategy and/or show a greater return-on-investment (ROI).
"It was a hundred years of, 'We've always done it this way and no one knows why,'" says Chris Ceravalo, senior manager of compensation and recognition for CCBCC. "We really didn't know how much we were spending and what exactly we were spending those dollars on…pretty much anybody could come up with an incentive."
According to Ceravalo, the uncoordinated programs seemed to make more of an impact on employees' sense of entitlement than on their sense of engagement. The workers simply expected the awards regardless of performance, and managers were effectively held hostage by what they had given out in the past, more worried that they would hurt morale by taking anything away than interested in how they could boost performance by introducing something different.
This began to change when Coca-Cola's chief human resources officer assigned Ceravalo the task of determining how much money was being spent annually on incentives throughout the company. Figuring out the price of all the disparate programs in place was a serious fact-finding effort that took six months to a year to complete, and when the final sum was tallied, a few leaders were somewhat surprised by the amount.
"When they originally started looking at the programs, they thought that they were spending around $100,000 [annually]," says Anthony Luciano, senior vice president of sales and marketing for Statesville, N.C.–based The TharpeRobbins Company, which had been running Coca-Cola's length-of-service awards. "They kept looking and they found that they were spending about $200,000. They kept looking and two hundred became almost $500,000, which became $1 million and ultimately over $2 million. They just kept finding ways in which people were recognized and they just had no way to manage and track that."
Ceravalo presented his findings to the company leadership, recommending that a more formal program be developed with clear metrics. Working with executives from every department, Ceravalo helped develop a comprehensive, company-wide incentive program, tapping TharpeRobbins to help run it. The result was SPARC Rewards.
A Comprehensive System
SPARC Rewards actually consists of a number of programs under the same banner that award different behaviors (such as sales or efficiency) on differing timelines (some are short-term programs, others are ongoing), but all aim for the same qualities that the letters of "SPARC" stand for: Simplification, Prioritization, Accountability, Recognition and Celebration.
The program functions through an online platform developed with TharpeRobbins. Employees are awarded SPARC Cards (logoed Visa gift cards) or SPARC Points when they are nominated by their superiors. An employee can also award SPARC Points to his or her coworkers as part of a peer-to-peer program. These can be redeemed for merchandise, travel experiences and Visa gift cards.
This system includes virtually every department and office, rewarding the wide range of behaviors the company had been incentivizing previously, but through a consistent, centralized program that allows team leaders and the executive team to have access to the reports of how many dollars are going where. As Luciano explains, "the two biggest things that they came back to were trackability and accountability."
Sales, customer satisfaction, safety, wellness, training, stewardship, and a number of other awards are all tracked through SPARC, with each program tailored to offer the right rewards for the particular behaviors.
Nor is the Coca-Cola Bottling Company finished developing SPARC. A wellness program, which awards individuals for participating in Weight Watchers and similar programs, is under development after one of of the company's locations decided to do a "Biggest Loser"-style program for delivery truck drivers. They were put in teams and the group that lost the most collective weight was awarded SPARC points. "When they get in teams, you start seeing some results, and interesting competitiveness, like one team bringing donuts in just to tempt the others," says Ceravalo.
The program was a huge success, with participants losing an average of 10 pounds per individual. The SPARC incentive was clearly making an impact, and Ceravalo says that after the results they were able to measure in this program, the company will be rolling out more competition-based programs next year.
Getting Everyone On Board
Changes of this magnitude are bound to face some pushback, and Ceravalo acknowledges that his group worked through some initial resistance, particularly from the team leaders who had been with the company for decades and were skeptical. To help alleviate some of these concerns, Ceravalo's team first emphasized that the SPARC Rewards program was not about cutting costs on incentives—they pledged to spend the same substantial amount under SPARC that they had been spending in previous years—but about ensuring that the awards were adding value back to the organization either from an economic gain or through increased employee engagement, and that the maximum number of employees were being touched by the program.
At the same time, Coca-Cola Bottling Company's leadership built a level of independence for each of the groups into the program, allowing them to exercise choice in what would be awarded and how. They did not want "centralized" to mean "depersonalized," and with an operation as wide-ranging as CCBCC, a high level of flexibility made plenty of sense.
"Some of our locations have very high market share, so it's more about just maintaining good, solid executional basics," says Ceravalo. "In others we're at parity, so fighting for that extra bit of shelf space is more valuable."
A Measurable Impact
Ceravalo decided to figure the impact of its programs in what he calls a more "circular" way, working with TharpeRobbins to create a measurement system that frequently assesses and reassesses the effectiveness of each facet of the SPARC program.
He cites a few advantages to this style of measurement, not only that the specific incentive can be tracked at different points in time, but also allowing for adjustments to be made if programs are creating unwanted results.
When a SPARC Reward program crosses the one-year mark, Ceravalo will prepare a formal review of its overall impact and recommend possible adjustments. To date, none of the programs have reached that threshold, but six-month reviews (see the chart on the previous page) are showing good results—though for Coca-Cola Bottling, merely being able to tabulate the cost and results points to the SPARC system's value.
Beyond that, by comparing SPARC programs to older ones that have not yet been added to the SPARC system or discontinued, Ceravalo was able to demonstrate that the older programs were "not showing that increased performance," he says. "It's the upfront process of thinking through what it is that you're trying to incent. If you're stuck in the past thinking that we've always done it this way and I just want to give people a hundred dollars, you're never going to get to a point of providing a return to the organization."
With this comprehensive incentive framework, Coca-Cola's leadership is able to gather information on a huge range of behaviors, company-wide. "Every piece of data that goes into the program, we can provide metrics back on that," says Luciano, "whether they want to know non-responder rates, or ship dates, who nominated whom, reasons for nomination, approvals, the frequency of nominations or whether they are using their entire budget."
Ceravalo credits the deliberateness and the care that went into researching and constructing SPARC for its success. "Build it right, think it through and it might not be one hundred percent, but you'll end up with a much better product than you would if you had just slapped it together and said, 'Here you go,'" says Ceravalo. "You've gotta slow down sometimes to go fast."
Send comments to alex.palmer@incentivemag.com.
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