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Employees Act Like Business Owners

In the first year, ValuTree saved a million dollars.

September 18, 2003
Related Topics: Recognition, Change Management, Compensation, Benefits
Small Company
Name: ValuTree Real Estate Services, a wholly owned subsidiary of SunTrust Mortgages, Inc.
Location: Richmond, Virginia
Business: Real estate title agency
Employees: 46

When Pat Rollins, division manager of ValuTree, was given the chance to forma new real estate services company within SunTrust Mortgage, she wanted to besure that every employee on her team was committed to its success. The newcompany brought procurement and payment of SunTrust clients’ tax billsin-house--services previously performed by external vendors.

    SunTrust employees had often complained about the outsource system, but theyalso used it as a scapegoat, Rollins says. "If something went wrong with a taxbill, there was always someone to blame," she says. "At ValuTree we arefully responsible for all of the tax services. If we mess up, it’s our fault."

    She took half of the staff from Sun Trust’s tax service department tolaunch the new venture. To secure their loyalty and excitement, Rollins crafteda new pay-for-performance reward and recognition system that includes financialincentives, parties, and weekly conferences to recognize performance. Theprogram encourages employees to improve accuracy in billing, lower error rates,and reduce overall costs. At the end of the year, if Rollins’s team meets aset savings goal, they receive a percentage of every dollar beyond it that theysave the company.

    But providing a financial payoff wasn’t enough to make the programsuccessful. It would only work if employees understood the impact their behaviorhad on the company, she says. "It required a cultural shift, forcing theemployees to think of ValuTree as their own business."

    So Rollins introduced weekly meetings, in which one group of employees standsin front of the rest of the group and explains how their efforts that weekaffected the business--positively or negatively. In preparation for a busyfourth quarter, for example, one group set up tax bill payments in advance toavoid last-minute overtime costs. "The meetings force everyone to understandthe dynamics of what they do and to see how all of their efforts tie together,"Rollins says.

    In the beginning, teams attended meetings grudgingly, but after a while theygot excited, and more and more team members started showing up to support eachother. "Now, when one group has a success story to share, everyone celebrates,"she says. And when they make a mistake, instead of attacking each other, theytry to find ways to fix the problems.

    An individual employee, for example, might have missed an important due date,which resulted in significant financial penalties. Rollins was afraid they wouldall blame the individual responsible for the error, but instead many of themacknowledged that they knew she was overwhelmed that week and did not offer tohelp. They spent the rest of the meeting brainstorming ways to avoid makingsimilar mistakes in the future. "As a manager, it is amazing to seelower-level employees that committed to the business."

    When errors happen, ValuTree uses corporate funds from SunTrust to pay thecosts, then the company has to pay that money back before it sees any newprofits. In the past, no one cared about that debt, and it easily got out ofcontrol, Rollins says. Now she posts the debt on a board in the office, updatingthe balance twice weekly. "It’s like a credit card; if they don’t pay itoff, they lose their incentives."

    At the end of each month, Rollins throws a low-cost party to celebrate theteam’s efforts, and to go over the cost-savings they’ve compiled over theyear. At those parties she acknowledges individuals who have contributedsignificantly to the savings for that month. Several employees have told herthey’ve never received this kind of recognition from a manager before. "Justto hear their names tied to an accomplishment gives them a sense of pride intheir work," she says.

    The incentive program has had a huge impact on the success rate. In the firstyear, ValuTree saved SunTrust a million dollars and her team received 22 percentof their salaries in bonuses--four times what they would have made had theystayed in SunTrust.

    It also has changed the way they approach their jobs, she says. In early2002, for example, the team began evaluating the duties of any employees whoquit to determine whether they should be replaced or if the team could absorbtheir workload. As a result, this year they opted not to replace two employeeswho left, in order to improve efficiency and profits. "They are thinking likebusiness owners, and seeing the value their choices and efforts have to thecompany," Rollins says.

    The key to the program is not the money. It’s making sure employeesunderstand their role in the business, Rollins says. She thinks it would haveworked without the financial incentive as long as there was recognition, but themoney got it rolling faster. Within six months of launching the program, she sawa reduction in billing errors. "The incentive tied it all together. When theydo well they see the rewards, and when they screw up they feel the pain."

Workforce, November 2002, p. 81 -- Subscribe Now!

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