Compensation: STAR Treatment at Brinker

Brinker develops a new benefits package that rewards high-performing managers.

By Monica Rogers, Contributing Editor -- Chain Leader, 4/1/2006

Brinker hopes to improve management turnover with a new benefits package that includes an improved 401(k) program and restricted shares.

Oscars, schmoscars. For the 100,000-plus employees of Brinker International, the media event of 2006 is in December. That’s when the Dallas-based company will announce its first 5-Star Challenge top winner—the Brinker GM of the Year—in a ceremony broadcast live to 1,259 Brinker restaurants nationwide. The company chooses the winner from top performers across its four casual-dining concepts.

In that shining moment, all eyes will be on the general manager who produced the highest unit profit and sales. He or she will win $25,000 in cash, tickets for a weeklong family vacation and the keys to a brand new car. And sharing in more than the excitement, hourly employees at the winning manager’s restaurant will win a party and get to take home cash.

For Kelli Valade, vice president of people and performance at Brinker, the award ceremony will have special significance. It caps two years she and other members of the human-resources team spent analyzing and reorganizing compensation and benefits at Brinker. Unveiled this year, the new package rewards high-performing managers and offers benefits that managers said were most useful to them.

A new retirement plan tops the list. “Our managers told us that retirement benefits were important—a real and critical sign of stability for them and of their commitment to the long term at Brinker,” Valade says.

The company poured $5 million-plus into taking its 401(k) to a new level. It has increased its match on employee contributions to 4 percent of total salary, up from 1.25 percent. General-manager conferences this year will include a “Planning for Your Future” component with financial experts educating managers about how to take advantage of participating in a company-sponsored 401(k) plan.

Cash and Prizes
Performance-based compensation is another big focus. In addition to the general- manager-of-the-year award, Brinker’s 5-Star Challenge program rewards the top 5 percent of general managers across all Brinker concepts for performance against profits and sales goals. Prizes include a trip with spouses to Hawaii and a comp card good for free dining at all Brinker concepts for a year. Reaching that upper echelon also puts managers in the running for the GM-of-the-year award.

General managers also have a new long-term component to their compensation programs: granted restricted shares annually with a three-year vesting cycle attached. “If they are in position when the shares vest, there is big money for them at stake,” Valade says. “We did it this way because we wanted to make sure the most important position in our operations—our front-line general managers—benefited.”

SNAPSHOT

Concept

Brinker International

Headquarters

Washington, D.C.

Units

877 Chili’s, 224 Romano’s Macaroni Grill, 121 On the Border, 37 Maggiano’s Little Italy

2005 Systemwide Sales

$3.9 billion

Average Check

Chili’s $12.59, Romano’s $15.18, On the Border $13.49, Maggiano’s $26.60

Employees

102,084

Expansion Plans

672 new stores by fiscal 2008

Brinker has also enhanced wellness initiatives. “Today it’s about emphasizing the whole person by offering both preventive and maintenance programs,” Valade says. The company will soon offer employees access to WebMD, for example, an internet portal that includes everything from health-risk assessments to care history, resources and medical advice. Brinker is also expanding health-club reimbursements, once attached to fitness centers only, to cover pilates, yoga, support groups and other wellness options. And it added a work-life manager to its corporate ranks, “a newly created position to help us to continue to understand the value of flexibility at home and at work,” Valade says.

Questions and Answers
Communication has been key in shaping the new compensation and benefits program. “We followed the macro trend that says employees want and need to be able to evaluate the benefits offered to them, just like they do with any other purchase they make in life,” Valade says. To do that, she says benefits need to be easily explained and employees need to have multiple resources to help with making those decisions.

The benefits team totally overhauled the benefit-communication strategy. All printed matter explaining benefits is now branded with a fun “All About U” theme, written in short, easy-to-understand language, and enhanced with bright contemporary graphics and packaging. Smoothing the decision process, Brinker has toll-free third-party numbers employees can call, plus an in-house toll-free call center, and a company intranet site where all benefits are outlined.

And instead of having managers distribute benefits information to employees at the store, the company now mails materials to employees’ homes.

Throughout 2006, Valade will continue to collect feedback. “Since we changed so much this last year, our hope is to continue with education and keep things consistent so we can read the results now that the dust has settled,” she says.

Early indications? “Our management turnover rates are at 24 percent and continuing to trend downward,” says Valade. “Measuring results of management reception to our enhanced 401(k), for the few groups that have seen this presentation thus far, the feedback has been extremely positive.”

And on the 5-Star Challenge incentive? “We are hearing great things about that, but until we actually give the award in front of thousands, we won’t have fully realized that benefit,” she says.