Our Bonus System Story and the Day an Employee Cried

Aug 28

6 min read

Why we built a bonus system where our whole Ohana shared the risk, and the reward, of building Hawaiian Vacations.

At Hawaiian Vacations, we didn't hand out bonuses the way most companies do — a flat percentage, buried in an envelope, forgotten by February. Ours were tied to real numbers, rebuilt year after year. And they mattered enough that one year, when we personally handed the bonus to one of our team, she burst into tears right there in our office. “This is the down payment for my house,” she said. “Thank you so much.” And John and I cried with her. It wasn't the size of the check that got us. It was watching someone realize that the company's win meant she was winning, too, in a very personal and meaningful way.

That's the story I want to tell you this week, because a bonus system isn't a perk you bolt on once you can afford it — it's one of the clearest ways you tell your team what kind of company you're actually running.

Our bonus plan at HVI evolved constantly, and I mean constantly. Some years we made it so complicated with formulas and modifiers that even we had trouble explaining it, and other years we simplified it down to something anyone could do the math on in their head. Eventually we landed on two tracks that worked together: Individual Performance Objectives, which we called IPOs, and something we called the Spirit of Ohana, or SOO. The IPOs were hard numbers — specific, measurable, no wiggle room. The SOO was a softer, subjective advisory read from the department heads and the owners on how someone showed up for the team. We kept it out of the math on purpose so it couldn't be gamed. We wanted people to be rewarded for what they actually did, how they showed up day after day, and we wanted to recognize them for who they actually were. We didn't want to confuse the two.

If your team can't tell you, off the top of their head, how their own bonus gets calculated, you don't have a system — you have a mystery, and mysteries don't motivate anybody.

We wrote more about untangling that exact problem in Our Team Didn't Understand the Numbers How We Fixed It.

Do your people know, right now, what number they'd need to move to earn more?

2003 was the year we made a signifcant shift: we set three gross revenue benchmarks for the year and attached a dollar amount to a company-wide bonus pool at each one. Hit the first benchmark, the pool paid out. Hit the second, it paid more. Hit the third, it was like hitting the jackpot. Every eligible employee at HVI had a stake in all three, and there was nothing hidden about it — the number was the number, and everybody could watch it move. Over the years, our bonus-to-net-income ratio ran somewhere between 12 and 26 percent, and bonus as a share of total compensation landed between 8 and 15 percent.

That's not pocket change — that's a real transfer of the company's upside to the people who helped create it.

And if you've never actually sat down and figured out whether your team could name the one number that decides whether they get paid more this year, that's worth three minutes of your time with my free Owner Diagnostic — it'll show you exactly where you stand in building a business where your people are winning alongside you, and helping you grow the business.

What would happen to your team's effort if they could actually watch the number move?

We told our Ohana, out loud, that the risk was shared

None of this worked because of the math alone — it worked because we said the quiet part out loud, over and over. We told our whole Ohana: “It is the desire of the owners of HVI to share the rewards, as well as the risks, of being in an entrepreneurial game with the people who work with us to achieve our goals.” We meant it in both directions. “You, the members of our Ohana, share in our risk every day, knowing that the future of our business, and your jobs, depends upon each and every one of us doing everything we can to ensure the company's profitability. When we succeed in these efforts, we all win.”

Culture doesn't happen by accident — you have to say it plainly, more than once, until people believe you mean it.

We go deeper on building that kind of culture on purpose in We Owned Our Market, and Culture Was the Real Secret.

Have you ever actually told your team, in plain words, that you're sharing the risk with them — or have you just assumed they know?

Then somebody cried, and so did we

That's the moment I keep coming back to — the year we handed someone their bonus and she broke down right there because it was, in her words, the down payment for a house. And the crying didn't stay with her. It moved through the company, because it wasn't that big a place, and everybody knew exactly who she was and what that check had just made possible for her. That's what rippled out and galvanized the whole team toward the same goal, because we were all in it together.

We weren't trying to prove we were generous — we were trying to prove that everybody wins.

Our team wins, our customers win, and yes, even our vendors need to win, too. That's what builds momentum.

When was the last time your team watched a win happen to one of their own, up close?

We celebrated big, on purpose, every single time

Celebration was never an afterthought at HVI — it was the other half of the bonus system. We took the whole company on weekend trips. We rented limousines and took everyone to five-star dinners. One year we flew the entire company to Las Vegas for the night. Our bonus parties were the most anticipated events on the calendar, and people planned around them.

It was how we made the win visible, loud, and shared — instead of something that showed up quietly in a paycheck and got absorbed into the electric bill.

If you want to understand why some teams show up energized, and others just show up, it's rarely about the size of the incentive — we broke down what actually kills that energy in The Surprising Thing That Kills Team Motivation.

What's the last thing your team celebrated together, out loud, as a company?

This Week’s Exercise

Write down the one number your bonus or incentive plan is actually tied to — then ask three people on your team if they could tell you what it is.
Separate what you're paying for measurable results (your version of an IPO) from what you're paying for culture and attitude (your version of an SOO) — don't let the two blur together.
Pick one upcoming win, even a small one, and plan how you'll celebrate it out loud as a team, not just note it in a spreadsheet.
If you don't have a written bonus or profit-sharing plan yet, draft the outline this week: what triggers it, who's eligible, and how you'll communicate it before you ever hand out a check.

Final Thoughts

I still think about that year — handing over a bonus check and watching it become a down payment on somebody's house, watching the impact of that ripple throughout the company. That's what a bonus system is actually for. Not compliance, not a line item, not a retention tactic dressed up in HR language — it's proof, delivered in a real dollar amount, that when the company wins, the people who built it win too.

The lesson: a bonus plan built on real numbers is one thing. A bonus plan people can feel in their own lives is what actually builds a team that's in it with you.

This week, look at whoever's on your team and ask yourself honestly: do they know, in dollars, what it looks like when you win? If you're not sure, that's the leaf to grab first.

To your success,

Ral West

Livin’ the Dream