Linking Compensation to Environmental Metrics
From the C-suite to the mailroom, Intel holds employees accountable
Intel's renewable energy projects included solar installations at three facilities. (Photo: Walden Kirsch)
Human Resources Innovation
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Intel's employee bonuses: Green in every way
OTHER INNOVATORS
At PepsiCo, a portion of executive officers' variable compensation is related to PepsiCo's "Performance with Purpose" priorities, which include environmental sustainability.
2009 INNOVATIONS REVIEW
Companies find that environmental sustainability helps reduce costs and gain advantages.
Companies reward the things that matter to them. If they want to drive sales, they provide incentives to sales people. If customer satisfaction is important, they find ways to measure it, and increase the pay of employees who do a great job with customers. The same now goes for environmental excellence.
Intel has recently made clear, through changes to its pay structure, that reducing the company's impact on the environment is a priority—and it's everybody's business. Last year, Intel included environmental metrics in the calculations that determine all employees' year-end bonuses.
As part of Intel's total compensation package, the employee bonus is based on Intel's net income, each employee's bonus target, and company-wide performance on operational goals, which in 2008 included three environmental goals related to:
- Energy efficiency of products. This included specific targets for key products.
- Reputation for environmental leadership. The company hired market research firms to survey customers, IT professionals and other business people to see what they thought of Intel's reputation around sustainability.
- Completion of renewable energy projects and purchases of green power. This included solar installations at Intel facilities in India, Oregon, and New Mexico. Intel also became the largest purchaser of green power in the U.S., according to the EPA's Green Power Partnership program.
This year, Intel modified its metrics slightly to include reducing the company's carbon footprint, which will require every employee to take steps to reduce energy use.
Environmental metrics models shift perspectives
According to Intel, the most significant change for executives and employees was a new willingness to look at projects that did not have an immediate ROI but that helped meet longer-term goals, such as increasing the use of renewable energy.
Environmental Defense Fund's research indicates that Intel is the only major corporation in which all employees' compensation is affected by the company's environmental goals. Although environmental metrics make up a small percentage of the points that determine the employee bonus—only 4 of 125—it is an important new model.
Intel is making the message clear: Sustainability is too important to be left to the sustainability officer alone.
Posted: 06-Apr-2009; Updated: 20-Apr-2009
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