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Family Turmoil Aside, the Incentives Business has Proved Rewarding for Maritz

June 29, 2005
Related Topics: Recognition, Featured Article, Compensation, Benefits
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When it comes to keeping workers happy, loyal and believing that their employers are appreciative of their efforts, St. Louis-based Maritz Inc. prides itself on being the silent partner of thousands of companies who run a variety of incentive and recognition programs. Maritz, a $1.2 billion reward and recognition provider and market researcher, counts among its clients 28 of the world’s largest organizations.

    With 4,000-plus employees worldwide, more than half of whom are in the St. Louis area, the family-owned, privately held company operates seven related businesses, including Maritz Rewards, Maritz Incentives, Maritz Travel and Maritz Loyalty Marketing. Many of Maritz Incentives’ clients, including American Express and Marriott International, have been listed among the best companies to work for by Fortune magazine.

    Under its own roof, Maritz employees are treated to some of the best incentive programs around, and the St. Louis Business Journal has ranked the company as one of the best places to work at in that community.

    But that good feeling does not necessarily hold for some people with the Maritz surname. Almost from the beginning of its history, Maritz has been marked by family-ownership tensions, and they persist to this day. The company also underwent an internal shake-up in January 2004 with the departure of Brian Fitzpatrick, president of the incentives division, and some 30 other employees.

    Internal bumps notwithstanding, Maritz is a significant player in the incentives and recognition industry, with total revenues that have hovered between $1.2 billion and $1.5 billion in any given year, according to the company. Forbes’ lists of the 500 largest private companies in the U.S. put Maritz at No. 166 in 2003, with $1.4 billion in revenue. For the 2005 fiscal year, it slid to 227, with $1.2 billion in revenue.

    While revenue was down last year, the company had a 10 percent increase in year-over-year earnings in 2005.

    "We made more money in fiscal year ’05 than in all the previous years we’ve been in business," CFO Jim Kienker says. Revenue dropped because of a decline in corporate travel after the Sept. 11 attacks and because Maritz sold three of its businesses in March 2004: Delve, Maritz Research’s data collection unit; TRBI, Maritz Research’s London subsidiary; and TQ3 Travel Solutions, its corporate travel subsidiary.

New leadership
    Maritz says its incentives business is taking shape under the direction of Jane Herod, who was named president of Maritz Incentives in August, replacing Fitzpatrick.

    "Under Jane Herod’s leadership, Maritz Incentives is focusing on identifying and targeting reward and recognition solutions and awards to a company’s particular objectives (because) companies are dealing with a lot of change in today’s business climate," says Paula Godar, director of marketing communications at Maritz Incentives.


"What family business hasn’t had
their problems? Keeping everybody happy and everybody speaking is
not easy. A lot of private companies
go through this."
--Jean Hobler, middle sibling of the Maritz clan


    Maritz vice president and managing consultant Rodger Stotz says that while there have been decreases in some corporate budgets in the past three to five years, clients during that time have become increasingly interested in extending incentives beyond their traditional use with the sales force. They want to use them for employees in nonsales positions too.

    "They are concerned about the employees feeling stressed or not feeling that the corporate culture is supporting them to the degree that they would like," says Stotz, who works from a home office in Connecticut when not traveling.

    To meet that challenge, Maritz looks at more than just incentives, he says.

    "We get involved with the learning aspects of organizations. And we utilize the Internet and Web-based applications for monitoring, measuring and communicating the incentive plan, as well as providing faster feedback to the participants of incentive plans."

    With such technology underpinning its business, Maritz today is a far cry from the company’s beginnings in 1894 as a fine jewelry maker.

    The family patriarch, Edward Maritz, died in 1929, the year of the great stock market crash. The business nearly crumbled. Holding on were sons and co-CEOs James and Lloyd, who were left in the desperate situation of having to sign over the equity in their homes in order to secure loans to keep the business afloat.

    In 1950, their children James Jr. and his cousin Lloyd Jr. split the company in two after a dispute, leaving James Jr. running the 20-year-old sales division that sold watches, jewelry and other merchandise to companies as incentive awards. This comprises the Maritz Inc. that is best known today.

    When James Maritz died in 1981, James Jr. and younger brother Bill became co-CEOs, while James Jr. also served as chairman. Bill doubled as president, a title that his brother, six years his senior, held 20 years earlier.

    According to a Wall Street Journal report, Bill decided in January 1983 that he no longer wanted to share the top position with his brother. But it was unclear who should have the CEO job. Middle sibling Jean Hobler, who evenly controlled one-third of the stock with her brothers, reluctantly chose a consultant to select the best leader. The consultant picked Bill, and soon after, Jim’s share was bought out. After 37 years at the company, Jim retired. The two brothers never spoke again, the Journal reported.

    Now a former Maritz board member who sold her stake in the company in 1994, Hobler, at 79, has outlived her feuding brothers only to see her nephews carry on the dueling tradition.

    "What family business hasn’t had their problems?" she asks in a phone interview in early June. "Keeping everybody happy and everybody speaking is not easy. A lot of private companies go through this."

    In 1998, Bill Maritz turned the CEO title over to middle son Steve, who began at the company in 1983 as an account manager for the former Maritz Motivation Co. By February 2000, Steve’s older brother Peter and younger brother Philip were removed from the board seats they had held since 1994.

    Peter and Philip retain their total 40 percent stake in the company, versus Steve’s 60 percent, but the two have for years been embroiled in a lawsuit against Maritz Inc.

    A revised suit filed in spring 2004 asks for Maritz to be dissolved and that the proceeds from the liquidation be used to buy out their holdings, according to the St. Louis Business Journal. Peter Maritz says he prefers not to discuss the lawsuit.

    In a written statement, the company said the minority shareholders’ claims are "completely without merit."

    "The litigation is just the latest tactic in their long-standing campaign to coerce the company to buy their shares for an exorbitant price," the statement continues. "Our legal position is very strong and we will defend the case vigorously."

Keeping tabs
    While family issues buzz at lesser or greater volume in the background, Maritz goes about its business.

    On the incentive side, many clients consolidate their rewards and recognition programs and have them accessed, monitored and managed via an online portal.

    An important aspect of online reporting is that it helps executives keep better track of how their managers use rewards. One company knew managers were dipping into the rewards budgets, but really had no idea who was being awarded prizes, why they won, or what they actually received as prizes. With online reporting, that information can be tracked.

    Also with online reporting, Maritz or an in-house awards coordinator can see who is racking up points but not redeeming them, or who is not recording their sales in order to automatically qualify for points. Those employees can be reminded via e-mail or online notices to use them or lose points before they are zeroed out at the start of the next quarter, or even to enter their sales so that they can claim an award.

Business link
    Incentive programs need to support business goals, and with Maritz’s help, Bank of America Corp. has been able to strengthen connections between the two.

    "When I look back to where our programs were several years ago, there were some great things being giving out to associates, but they weren’t necessarily consistently tied to the results the business is trying to achieve," says Rick Bradley, senior vice president and manager of the recognition and awards program for Bank of America.

    With 175,000 associates and 22 different lines of business across 29 states and about as many countries, Bank of America had multiple reward systems in place prior to Maritz helping it implement the Bank of America Spirit Awards program three years ago.

    Under the old system, an employee from the small-business division, one from the mortgage company and one from personal banking--all working out of the same center--were being rewarded differently, Bradley says.

    One associate might have received a bank-branded T-shirt or coffee mug, while another may have received a leather portfolio or something more significant for the same type of performance, he says. And since employees talk, the inconsistent reward structure defeated its purpose in many cases.

    Maritz brought an infrastructure that allowed employees to choose a reward by simply accruing points and cashing them in for items in an online catalog.

    Perhaps the ultimate test for an incentive provider is how it treats its own employees.

    Maritz began rewarding its nonsales employees in the 1970s, long before it became a trend among its clients, says Stotz. It has a number of programs and uses cash and non-cash rewards and recognition to cite employees for jobs well done.

Workforce Management, July 2005, pp. 74-75 --Subscribe Now!

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