When 7-Eleven Inc. wanted store employees to embrace its Five Fundamentals strategic initiative, the company looked to an enterprise incentive management application to tie employees compensation to compliance.
The company previously managed store performance through spreadsheets created in Microsoft Corp.s Excel, but this process involved too many manual steps, limiting the number of people and variables the system could handle, according to Terry Guth, 7-Elevens director of organizational effectiveness and staffing. “We recognized that as we increased the number of areas of emphasis, we needed a more automated system,” said Guth.
Prior to rolling out Callidus Software Inc.s TrueComp in 2001 to handle the Five Fundamentals campaign, 7-Eleven looked at competing EIM products, although Guth declined to specify which. The company upgraded to TrueComp 3.0 earlier this year, he said.
TrueComp is priced at $350,000 for 400 users and $60,000 per 100 additional users. Volume pricing is also available.
The TrueComp incentive management system measures the efforts of 2,400 store managers and 30,000 employees at 7-Elevens 5,800 nonfranchise stores in the United States and Canada to execute the companys Five Fundamentals: product assortment, value, quality, service and cleanliness.
Armed with spreadsheets, 700 field consultants—7-Elevens equivalent of district managers—perform monthly evaluations of each stores execution in these areas, Guth said. Using the spreadsheet, the consultants calculate ratings on the Five Fundamentals and then enter the scores using a data feed into the Callidus system to pay out bonuses to store managers and employees.
One of 7-Elevens key requirements was that the system had to scale and automate processes. “When you start talking about tens of thousands of employees, you have to get away from a manual process to an automated system,” said Guth. “Callidus best met our needs for accepting data feeds and managed our incentive system in an automated fashion.”
Multicurrency support was also an important criteria because the system had to support 7-Elevens Canadian stores. TrueComp gives the company the ability to perform currency conversions within the incentive system.
Besides paying bonuses based on stores adherence to the Five Fundamentals initiative, 7-Eleven is now using TrueComp to calculate incentive payouts for other strategic initiatives. When 7-Eleven wants to emphasize a new product, the company can track sales and pay incentives to hourly employees when sales of the new product meet certain goals, Guth said.
Following a pilot test of TrueComp in the companys 70 stores in Florida, it took 7-Eleven about nine months to deploy the system companywide, said Guth. Much of that time was spent integrating TrueComp with the companys other systems, including Oracle Corp.s Oracle Financials, a mainframe-based human resources application, and an LDAP directory that manages operations from the perspective of organizing the stores and their staff under field consultants. In July, 7-Eleven migrated the mainframe-based human resources system to Oracle HR/Payroll.
Integrating TrueComp with the operations directory proved most difficult because of exceptions and complexities within the directory. Guth said his team needed to spend a significant amount of time figuring out how to make sure that a store manager who moves from one store to another within a pay period is compensated properly.
However, because TrueComp has been integrated with 7-Elevens other systems, the company is able to avoid many of the manual processes associated with employee turnover.
Although 7-Eleven manages payroll for some of the companys franchisees, none of the 35,000 workers employed by the franchisees are covered under the TrueComp system. Guth sees this as an area of potential growth for the TrueComp system. Using the system, 7-Eleven could pay out incentive bonuses to franchise employees and pay bonuses to the franchisee itself based on strategic initiatives.
“I would envision down the road a system where we could have an incentive as a way to measure and enforce [franchise partners] execution of the Five Fundamentals,” said Guth.
Technical Analyst Michael Caton can be reached at [email protected].