“At Rhino Foods, Incentive Pay Is an Expression of Respect”

Rhino Foods, which operates a production facility and warehousein Burlington, Vermont, is a small business with big ideas for howto treat employees. The company produces handmade ice-creamsandwiches, and its bakery turns out cheesecakes, brownies, andcake pieces. It also developed the cookie dough used as a mix-infor Ben & Jerry’s ice cream. Rhino’s two production shifts makeproducts to order, with product lines changing from day to day, soworkers have to be flexible. Rhino cross-trains its employees tohandle baking, ice-cream processing, and cookie doughextrusion.

Management at Rhino Foods is focused on goals. When workersarrive each day, they pass by a bulletin board displaying the day’skey performance indicators—measurements identified as important tobusiness success that day. These performance indicators mightinclude costs, sales volume, safety measures, or adherence to theschedule. Ted Castle, Rhino’s founder and president, has observedthat employees work on the areas of performance the companyhighlights. For example, when the company introduced safetytargets, the number of injuries fell from triple the industryaverage to less than average.

This manner of operating is based on Rhino Foods’ purpose andprinciples, which are posted on the company’s website and in itslobby. Its purpose is “to impact the manner in which business isdone.” That impact comes from living up to principles in fourcategories: finances, employees, customers and suppliers, andcommunity. The Employee Principle at Rhino Foods says, “Weestablish relationships with our employees and their familiesfounded upon a climate of mutual trust and respect within anenvironment for listening and personal expression. We provide avehicle for our people to develop and achieve their personal andprofessional aspirations.”

That high-minded language is behind the company’s use of goalsand rewards. Posting business goals as key performance indicatorstreats employees with respect by being transparent about theconnection between what they do each day and how well the businesssucceeds. Management practices open-book management and teachesemployees to understand the financial measures of the company’ssuccess. By focusing on one to three critical measures at a time,the company makes financial literacy more achievable. The effortequips employees to contribute more at work and gives themfinancial skills they can transfer to their personal lives as wellas to broader roles in their community.

Employees receive daily, weekly, and monthly reports of theirprogress. When the company meets its goals, employees receive abonus. Use of bonuses in conjunction with open-book management hasled to increases in production efficiency, customer service, andproduct quality. It also has lowered costs associated withworkplace injuries, prompted innovation, and developed employees’leadership skills.

1. What form of incentive pay isdescribed in this case? What are the pros and cons of this kind ofincentives?

2. What additional types of incentivepay, if any, would you recommend for Rhino Foods?

Answer rating: 100% (QA)

1 The form of incentive pay described in this case is a bonus The pros of this kind of incentive are ... View the full answer