The Graveyard Whistlers

Maritz Inc., the St. Louis giant nobody knows, the company that created the gold retirement watch and other corporate incentives, faces the future with a frozen smile

Feb 6, 2002 at 4:00 am
The tiny Maritz jewelry company went bankrupt during the Depression. Then it got religion. Three decades later, it was building a city on a hill.

Set high on the Fenton bluffs, the corporate headquarters of Maritz Inc. would eventually straddle I-44. Its bland concrete-striped buildings throbbed with the combined energy of Dale Carnegie, B.F. Skinner and Disney as giants of the automotive, banking and telecom industries eagerly poured millions into the religion of noncash incentives.

America's workers might beg for raises and bonuses, but Maritz knew that what they really wanted were "trophies": rewards they could brag about, exotic trips to remind them of their status and achievements.

The epiphany came when two Maritz brothers started selling their dad's gold watches as service awards and the gold company watch became a national icon. By the '50s, the company watch was one page in a thick catalog of what later employees would dub "trash and trinkets."

Maritz's warehouse looked like Santa's, chock-full of fancy TVs, Coach bags and sports gear selected to remind recipients of their status and accomplishments. Clean-cut, smiling acolytes learned to design communications that "sizzled," incentive plans that instantly motivated the desired behavior.

The word spread across five continents. Soon Maritz was the 157th largest private company on Forbes' list, with offices and partners throughout Europe and in Latin America, Australia and Asia. Clients' names were never revealed, although local buzz linked Maritz with Edward Jones, A.G. Edwards, Anheuser-Busch, Southwestern Bell, the St. Louis Post-Dispatch and, for a time, Monsanto.

Maritz's secret formulas stayed in Fenton, where the alchemists often worked past midnight perfecting the dogma of enthusiasm. Stuff was a powerful symbol for them, a potion capable of focusing confused workers' minds, steeling their resolve, affirming their place in the world and their ultimate value to the company. Stuff glorified the work, and it transformed surly distributors and sales reps into happy team players.

The corporation also practiced what it preached. Maritz managers gave out merchandise-award points like Halloween candy, and there were parties and picnics and bouts of overtime as convivial as college cramming sessions. When spouses suspected an affair -- what boss called at 1 a.m. to go over sales strategies? -- employees earnestly explained their mission.

Then the world changed.

The days of corporate luxe are drawing to a close, and managers are tightening their budgets. Auto manufacturers negotiate incentive plans the way they buy sheet metal. Wal-Mart and Sam's Club have glutted the market with merchandise that was supposed to be special. The Internet spews data, making Maritz's customized research, on-site travel agents and trademarked polls -- "In a landmark international survey by Maritz AmeriPoll, researchers found that 52 percent of Europeans have consumed at least one beer in the past month" -- look silly.

Since 1998, Maritz's core business -- secret incentive packages custom-designed to fire up workers, sales reps and distributors at 29 of the world's 50 largest corporations -- has been losing serious money. So have their smaller competitors; in recessions, incentives look like luxuries. Maritz is better positioned than most because it offers so many other services and its travel business is so lucrative. But long before the terror of Sept. 11, companies were substituting peanut butter for lobster and switching their VIP junkets from Borneo or Milan to Las Vegas or Miami.

Even Maritz loyalists are getting nervous.

They eat lunch in the company cafeteria, looking through a wall of windows at a gray windswept terrace that overlooks a ravine. No one brings up the days when the cafeteria was subsidized by Maritz -- $2 for a steak lunch -- and the company picnic lasted all day and night, bubbling with Dionysian excess. Instead, they say how easy it is to find a parking space since the 5 percent layoffs last spring. Twining damp fingers, they note how peaceful the old campus is now that Maritz is buying all these new companies elsewhere. They talk in a rush about the corporation's brave new high-tech future.

They don't mention studies showing that external rewards can lessen creativity. Or management theories that look at the whole person, addressing individual needs far too varied and subtle to be met in a merchandise catalog. Or the movement to engage workers in the work itself, allowing them to help shape the corporation's future. The hottest new workers, the information-technology specialists, couldn't care less about European juicers or trips to Cancun. They want autonomy, flexibility, resources, full information and a share in decision-making.

Maritz is desperate for such workers. Since the Y2K scare, it's been pouring money into disaster-proof state-of-the-art information systems, hiring programmers and Web-site designers and even "ethical hackers" to test the systems.

But bringing tech experts into a place as company-identified as Maritz is like introducing Trappist monks at a Baptist social. Their worldview doesn't match the Maritz ethos, and neither do their values. The chief information officer says what "incents" them is different. But the rest of the corporation hasn't seemed to notice.

Maritz already has 870 info-tech specialists on its full-time staff, with a bounty out for more. Yet the influx hasn't changed the old goodies-for-behavior philosophy one bit.

"People are people," says eMaritz president Brian Fitzpatrick, a true believer who's convinced that everyone is motivated by trips and stuff. "There's a plethora of options out there today, so what we have done is offer an equal array of options, a very significant array that would rival what you can get from a Best Buy."

Maritz is going high-tech -- for a low-tech purpose.

Every company within the corporation is generating vast amounts of digitized data, all so it can speed up the trophy delivery -- because in the optimistic, tightly structured, utterly pleasant world of Maritz, there's no incentive to question the assumptions.

In cords and turtlenecks that strike the perfect business-casual note, Maritz salesmen sit on pastel sofas in the research building's lobby, legs crossed loosely at the knee, reviewing notes from their secret seminar.

Behind them, a receptionist who's never had PMS ladles small talk from an eternal font of niceness. On the wall hangs a giant world map, its blue oceans and green continents as luridly bright as the illustrations in a children's encyclopedia, its grownup research stations red-starred all the way from Santiago to Seoul.

No delusions of globalism here: Maritz is the world's largest gatherer of customer-satisfaction data, the world's largest provider of incentive travel services, the world's largest provider of integrated motivation services.

Well trained, and younger than the norm, its employees move smoothly past fountains and latte stands, award plaques and company flags and portraits of pale men in dark suits. Over in the travel building, the walls are lined with mementos: a 10-foot alpine horn, a sizable chunk of the Berlin Wall given in gratitude by the Grand Hotel of Berlin.

But the halls are very quiet.

For years, Maritz had 7,000 employees. Then the total dropped to 6,300. Last May, Maritz said declining revenues would force them to do what every motivation expert advises against: lay off 5 percent of its workers. Maritz promptly went out and bought an Australian research company, a German meeting and incentive firm, the McGettigan meeting-management firm and Librix, a big learning-technology firm.

And then it shed a few more employees, in smaller, unannounced purges months after the corporate sweep.

"You could shoot a cannon through the buildings and not hit anybody," says one, an employee of more than a decade who was laid off this fall. "Bonuses are shrinking, and there were no raises last year. We got a day off instead of the usual $50 holiday gift certificate."

In the tradition of genteel poverty, Maritz is even taking in boarders -- Safeco Insurance, Firstar Bank -- on its 250-acre, lake-dotted campus.

Publicly, Maritz admits only that its clients are growing more cautious in tough economic times, then swiftly notes that if ever incentives were important, it's in tough economic times. The corporation, privately held and family-owned, does not provide financials in its annual report. Even when forced in a lawsuit to divulge its net worth, it did so only under seal.

Maritz's accountants have insisted it stop counting the $1 billion or so in airline fares that flows through Maritz Travel every year, but back in 1998, by the old accounting method, Maritz had $2.15 billion in revenue. The next spring, Maritz announced it was shooting for $3 billion by 2000. Maritz spokesman Phil Wiseman says that when you factor in the airline money, this year's $1.3 billion in revenue is the highest ever.

But it's still a long way from that millennial goal.

An affable, balding guy with a pleasant voice and an air of genuine niceness, Wiseman has worked at Maritz for more than 15 years. Asked about ventures that have fallen by the wayside, such as the splashy business-theater spectacles and video productions that used to keep a passel of local actors steadily employed, he says politely, "Business theater is not as robust for us as it once was."

The telemarketing venture? "We grew the company and sold it."

The trumpeted new Heybridge Web company? "It has actually been absorbed into our corporate structure now."

Asked whether there are any famous Maritz mistakes in the company lore, Wiseman looks startled: "I'd be hard-pressed to think of any."

A management expert who worked at Maritz for years calls it "a no-bad-news organization. You just simply don't say it." A former Maritz writer says: "'Positive' was a word you always had to use. The solution was always to put a positive spin on something, and everybody always seemed to get it but me. If the client wanted it balmy in Ireland, it was balmy in Ireland."

Wiseman says Maritz makes a point of hiring "people with a positive attitude, because if they have a positive attitude you can do almost anything with them."

Negatives, meanwhile, slide smoothly into the abyss. There's no company archive; old annual reports aren't kept at hand; photographers aren't allowed on campus.

Years ago, when a Maritz exec introduced himself at his daughter's sorority dinner, a college professor dropped his fork: "Those buildings off I-44? I had myself convinced that must be some kind of Mafia front organization. How could any company be that successful when I never hear its name?"

Maritz has never sought publicity. Locally, the biggest splash comes from the million-white-lights holiday display. And the company's still gnawing its cuticles over an old rumor that it throws those lights away every year. Yet nobody even blinked last August when an article in the St. Louis Post-Dispatch pointed out that for more than a decade, Maritz has poured its skills of persuasion, plus $4 million in hard cash, into a program to increase attendance at the St. Louis Public Schools.

The kids got pizzas and prizes. The administrators got fêted at Cancun's Moon Palace -- even though Maritz's own chart showed overall attendance at 89.5 percent in 1990 and 89.53 in 2000, with only slight fluctuations in between.

"We consider the Be There program to be very successful," says Wiseman, noting that because the district receives $13.41 in state money per student per attendance day, even slight increases can bring millions in additional funding.

No matter how grim or mundane the truth might be, there's always the patented Maritz topspin.

Maritz comes by its rosy glow naturally. Founder Edouard Maritz came to this country with the Icarians, a utopian community determined to live in material prosperity and joy.

Reality interfered.

So, in 1894, he opened a jewelry business. During the Depression, his sons James and Lloyd bailed the business out of bankruptcy by using the jewelry for business incentives and service awards. Then they set family precedent by fighting bitterly, splitting the company.

Lloyd took the jewelry side, which foundered within five years. James, an optimist like his father, kept the incentives side and built it into an American religion. Elflike, with huge crystal-blue eyes, James "The Boss" Maritz loved to sell and persuade and tell jokes. Hard work and fun struck him as inseparable. Even after his 1969 diagnosis of ALS, Lou Gehrig's disease, he had himself driven to work every day for another decade, spinning his wheelchair down the halls to tease his beloved employees. His eldest son, Jim, serious, kindly and reserved, took over administrative duties; the younger brother, Bill, as optimistic and outgoing as their dad, whipped up the sales force.

By the time Jim was officially CEO and Bill was president, the brothers had sumptuous, near-identical offices side by side on the top floor of the administrative tower.

They spoke only to fight.

If Jim had an idea, recalls a friend, he'd call an underling, who'd present it as his own. Then Jim would ridicule the idea publicly so that Bill would embrace it. Employees called this "the war in heaven." The thunderbolts grew so intense that the board sought, as Maritz so often does, the help of consultants. The consultants announced that one brother had to go and suggested that the younger, more extroverted Bill would have the energy to carry Maritz forward.

Once again, the optimist had prevailed.

Bill surrounded himself with able, like-minded men, eventually making Norm Schwesig, who'd taught his son at John Burroughs School, the first non-Maritz president of the core incentives company. Along the way, Bill delegated heavily, expending his own energy in civic affairs and preaching the gospel of positive thinking.

His older brother, meanwhile, "was deeply disturbed by the way things worked out," recalls one of Jim's good friends, philanthropist Des Lee. "I told him to hang in there, build his own life back. Afterward, he got involved with his son in the safety-shoe business, importing shoes from Taiwan. I don't know whether he was ever able to accept what happened."

Jim died several years ago, and insiders watched with interest to see whether Bill would attend the funeral. He did. But that didn't change his determination to banish Jim's son from the business.

Only one Maritz boy would stand in line for the throne: Bill's son Steve, whose robes were cut from the same cheerful cloth as his father's.

In April of 1990, when Missouri closed I-44 so Maritz could wedge the last section of its pedestrian bridge into place, employees dotted that hill at 3 a.m.

Blankets kept the cold mist off their shoulders as they waited, sipping coffee and chatting excitedly. When the crane finally pulled back, everybody burst into applause, half-eaten doughnuts dropping unnoticed or smashing between their palms.

Maritz is a family.

People who don't do the classic "two-year tour at Maritz" and burn out often stay for decades, pouring their psychic blood into the place and blithely ignoring spouses cynical enough to call it a cult. Working at Maritz means overtime, cramming and intense pressure, but it also means being part of a team of conscientious, extra-nice people whose first goal is getting along with each other. And the friendships forged there tend to last.

People start as tour directors fresh out of college and climb through the ranks, which gives Maritz lots of smoothly acculturated vice presidents in their early 40s and darkens the line between those who come "up from the inside" and those who come "from the outside."

The inner circle is the Maritzes themselves, and employees talk warmly about their Maritz CEO: how he scribbles brilliant ideas on dinner napkins, how he knows their names and remembers their hobbies and their kids' ages. Bill fulfilled the role to perfection: At client dinners, he'd bring a plate and sit for a while with the Maritz staffers in the back of the room; at company meetings, employees leaped to their feet to give him a standing ovation before he even opened his mouth.

But last year, Bill succumbed to prostate cancer, and Steve took over as paterfamilias. He has yet to build up his own legends, but employees already dwell on his warmth, his optimism, his remarkable memory for their names. Every month, Maritz's peak performers grin in front of a mottled gray-blue backdrop so their portrait can be hung in the cafeteria, then troop off to a luncheon hosted by Steve.

At Maritz, the fastest way to become a hero -- short of befriending a Maritz -- is to have a crisis on your project and then resolve it, positively and cheerfully. Heroes quite literally win points. And if they earn enough, they get a 60-second "run through the Maritz warehouse," complete with cheerleaders and banquet and permission to keep all they can grab. But employees can also earn a few award points by walking back and forth across the pedestrian bridge to keep their arteries clear. They get discounts on their SUVs, and debit cards they can use at the mall ...

Beneath all the perks runs a dark stream of irony: When you ask longtime Maritz employees and managers what keeps them motivated, they never once mention incentives. They're the self-motivated type, themselves, they say. Pressed, they'll concede that the trips and catalogs are swell -- but what they've always found exciting is the cool work Maritz does and the camaraderie of being part of it.

"We picked people who had good work values," says Mary Smith, a former Maritz recruiter and manager who was laid off from the travel company this July but still raves about its extraordinary climate. "People would go to amazing lengths, and no one really thought to be rewarded for it. You just wanted to."

In other words, the company that burns midnight oil supplying motivation to corporations that can no longer rely on the work ethic, camaraderie or the inherent interest of the work -- succeeds by relying on the work ethic, camaraderie and inherent interest of its work.

A manager who quit reluctantly after eight years says she "just fell over in a heap, completely burned out. But that was my own fault. It's a wonderful company."

She still remembers her first sight of campus: "Bill had planted, like, a million tulip bulbs, and everyone was so friendly. I remember going, 'God, I'll do anything, put me in the mailroom!' "

Maritz's most recent annual report hypes "rewards and recognition elements that drive and reinforce new levels of performance by answering the question 'What's in it for me?'"

Maritz's Web site herds more than 1,000 branded awards "carefully selected for their ability to unfailingly deliver ... trophy value." Maritz is even working with the eIncentives company to develop electronic scratch-and-win games that might draw Web-surfers' attention to performance-improvement products.

Trophies do get people's attention. But they also encourage cheating: Incentive journals are rife with horror stories about cars bought twice, life insurance sold to relatives who later cancel, reports filed late or early to meet the quota.

Studies show that people making collages or writing poems for an external reward work less creatively than people doing the same project for fun or internal satisfaction. Purveyors of external rewards run into "fatigue" unless the circus barkers continually change their spiel. To generate real excitement, rewards have to be luxuries or status indicators.

Maritz counts on the majority in the middle, whose basic needs are already met but who crave reassurance, thanks and esteem. But in today's economy, the middle is sliding down to more basic needs, such as job security. And though the Maritz trophies are meant to fulfill higher psychological needs, they sometimes supplant them. Incentive plans make it easy for a lazy manager to bypass all that mawkish praise and simply say: "You met your quota; you're going to Acapulco."

Measured right, incentive programs still work in many situations, convincing sales distributors to push a certain product or shoppers to stick with a particular brand. Best of all, they're cheaper than cash. Maritz says its original hunch has been backed up by independent studies showing that noncash incentives get the same bang for one-third the buck.

But the more sophisticated the worker and the more complex the job, the less the trophies gleam.

Maritz keeps its clients confidential, letting them take the credit for the incentives and improvements, but recently it worked with a health-care system. Fitzpatrick pronounces the program a resounding success, but another Maritz insider recalls that "doctors and nurses were very resistant to responding to an activity that had incentives. From their vantage point, their work was much bigger than that. They're not going to do something for a patient because it'll get them a toaster."

But Maritz has suckled for decades on what many now call an outworn creed.

"Incentives are radical behaviorist; they're B.F. Skinner on the simplest level: Do this, get that," says one former employee. "Today, many, many organizations are moving toward a more systemic, participative, whole-person way of engaging and motivating employees. But Maritz doesn't tend to listen to employees in that way. Historically, Maritz is a jewelry company. It's stuck on stuff."

Maritz isn't exactly a big risk-taker, either.

Maritz Marketing Research deliberated for more than three years before shortening its name to Maritz Research; on the big day, Wiseman was quoted saying, "We've gotten advice from some of the most noted marketers in America and they agreed: Our name was too long."

Bill Maritz's cousin Ray Maritz, the architect who designed the campus, says he offered several modern designs but that the corporation "wasn't quite ready for that." Instead, its leader chose bland, friendly buildings of indeterminate style -- and made the administrative tower nine stories high, rising well above the low uniform roofline of the other buildings.

Tour directors refer to top officers as the "Maritz masters." Management-level employees are allowed to hold Class B stock but must cash it out if they leave -- and it's not voting stock. Only the family has voting stock. The board of directors is the CEO, Steve Maritz, plus half-a-dozen wealthy white guys who generally agree with him.

"The people who have influence are the people whose opinions get heard, not the people with data," says an employee who struggled to urge more participatory management. "In order to improve something, you have to admit there's a problem, and that's considered negative."

Maritz did experiment with "re-engineering" back in the late '80s, but the concept of inverting the pyramid and putting the needs of the front-line employees first never quite got implemented.

"'Project REACH' is like a curse word in the organization," says one employee who weathered those years. "It was pretty much a disaster." Maritz, world champion of teamwork, returned to a more hierarchical organization, pooling the creative types, bringing in suits to direct the projects and ensconcing the leader at the top of the tower. Official reality remains positive and "customercentric" -- and any challenge to that gets squashed.

Take Paul Eades, for example. A human-resources vice president, he was charged with classifying Maritz's increasing roll of freelancers as either independent contractors or part-time employees. Most of them wanted to be independent contractors. But an automotive specialist earning more than $400,000 a year from Maritz, said Eades, should have taxes withheld from his earnings. Managers exploded -- didn't Eades realize how valuable this guy was to the client, how much money was at stake on this project? Again and again, Eades warned his colleagues about the subjective but ominous tax laws, once even titling a memo "Topless Dancers" to get their attention. But Dick Hurley, president of the performance-improvement company in the mid-'90s, reportedly thundered at meetings, "If anybody impedes a sale, we'll get rid of them."

Eventually Maritz got rid of Eades. He sued, claiming he'd been fired for refusing to break the law, and last January a St. Louis County jury awarded him $168,000. Maritz has appealed the decision "on both factual and legal grounds," says Wiseman.

In the glory days, Maritz's strong suit was creativity -- the bland, inoffensive corporate kind, high-glossed and foil-stamped and buzzing with energy.

Brainstorming day and night, Maritz packaged other people's temptations. It had the art of luxury travel perfected: A navy-jacketed tour director met the group's plane, took care of their bags, guided them to soft chairs or glasses of Champagne while she made sure their rooms were ready. Tickets were already arranged for Wimbledon or the Winter Olympics. Awardees were reminded continually how special they were, how richly they deserved all this.

It was fun even back on the ground in Fenton, breathing the heady air of other people's pleasure. Maritz made easy millions through the '80s with the fat-tired automotive industry, where giants such as General Motors shared program costs with their dealerships and a salesman had time to burn. If closing on the new Ford Taurus meant lolling on the beach in Ocho Rios for a week, by God, he'd do it.

A few slight frowns appeared during the economic downturn of the late '80s, but Maritz rushed in more consultants, shuffled its internal structure and started billing directly for its brain trust instead of tacking performance fees onto the reward merchandise. Inside, the atmosphere cooled a little, lost some of the college fun. But revenues bounced back.

"Work hard, have fun" had always been the Maritz motto. But in the '90s, as the economy shifted, Bill Maritz added a phrase that set everybody's teeth on edge. Now hung in heavy brass letters at the base of the corporate tower, his parting admonition to "Get the job done" signals a shift in client expectations.

The reflective lag time between proposal and execution -- hmm, what did we just sell, and how can we best fulfill that promise? -- has vanished. Today everything must be done immediately, and it must be cutting-edge, its costs pared to bone.

The inevitable solution: information technology.

"In the past, we have been a very custom-offering type of business," explains chief information officer Gil Hoffman. "Whatever a client wanted, we'd find a way of getting it done. But with today's technology, we're going to more of a product-offering type of approach. We can have 80 percent of a solution built from components and then plug in options, faster and at a lower cost."

Across every company, the corporation that once slipped secret, proprietary, customized success formulas across mahogany conference tables is veering toward standardized products available on the Web. Industry giants that once opened on-site offices for Maritz travel agents can use a Maritz self-booking program. Marketers can pull obsessively updated reports from an online Maritz Research database. Companies can track their customers' loyalty online and off, automatically conferring award points.

And the new eMaritz company, announced last July, has spun the altar of noncash incentives back to front, taking years of specialized behind-the-scenes knowledge, boiling it down into formulas, packaging them as software and selling them online. Now mom-and-pop companies can buy Maritz's expertise cheap without ever talking to a Maritz salesperson. "No-touch" has become a compliment.

The old Maritz endures alongside the new: In a corner of the travel building, a skinny little guy who's been there since God was born stares happily at a laminated wall, tracking 23 award trips and VIP junkets to hot spots such as Aruba and Palm Springs.

Across the highway, in the info-tech lair, a row of young computer experts sit in front of a wall of monitors, watching for performance glitches, overloads on one of Maritz's 400 client Web sites, interlopers hacking too close to Maritz's firewall. All systems are monitored 24/7, and behind the glass doors one can see the guts of sentience: bunches of colored wires thin as broomstraws, boards glowing with pindots of yellow and green light.

These are technical professionals, and whereas the guy in travel might be delighted with a toaster, what they want is "a high level of autonomy over the conditions, pace, and content of work," says the Sept. 28 HR Reporter. "They have a strong need for self-management [and] a leadership style that gives them as much independence as possible." Worst of all for Maritz, they "tend to identify first with their professions and second with their organization."

Asked whether the high-tech influx is changing internal thinking about incentives, Fitzpatrick says no: "People are people, and whether they thrive on recognition or on earning something they wouldn't normally spend the money on, I'd say we are all pretty well motivated by it."

But Hoffman, who leads Maritz's exploding tech force, admits "there's a different type of reward and recognition they look for." Stuff doesn't interest them, he says, sounding relieved to air this. "Most are just energized by the technology itself. They want training and opportunities to use new skills. And they look for reasons why they are doing their work."

Why are they doing it? What will technology allow Maritz to do for its clients and employees 10 years from now?

"Say you have this wireless device you carry all the time," says Hoffman, "and you're shopping. You might want to provide customer sat[isfaction] info and get paid points for it. And while you're still in the shop, you might be able to make a purchase with those points, and by providing loyalty to a particular brand, you'd earn points again. Then maybe you'd check your account and find out you had enough to purchase some travel, and by going to a particular site and using a particular hotel, you'd earn points again. There's a whole reward mechanism that builds behavior."

It's the classic Maritz reward mechanism, slicked up for the future. They already know it works like a charm.

As long as people still want stuff more than they want autonomy.