Scaling Up: How a Few Companies Make It...and Why the Rest Don't (Rockefeller Habits 2.0)

by Verne Harnish

The key for Sullivan turned out to be an unusual compensation plan (think “differentiated activity”). Young people interested in becoming managers were asked to “invest” $25,000 in an Outback restaurant. Imagine one of your children coming home and sharing that they found a job managing a restaurant. After expressing your initial skepticism (“What, managing a steakhouse after obtaining a four-year degree?”), you get around to the all-important question: “So what does it pay?” Whereupon she explains that she actually needs to pay the company to get the job! Here was the deal Sullivan pioneered: New managers would invest $25,000 and commit to staying for five years. Outback would take the first three years to train them to run a restaurant, paying a competitive wage. During the last two years, the new managers would get to run a restaurant on their own. If they hit certain performance milestones by the fifth year, they would get a $100,000 bonus — a 4x return on their investment — which would vest over the next four years. If they signed on to stay at the same restaurant another five years, they would receive the $100,000 in one lump sum, plus $500,000 worth of stock that would vest over the next five years.