The ultimate incentive scheme?

2003

Last week he banned internal email because it wastes staff time and reduces customer satidsfaction.

Now John Caudwell, the multi-millionaire owner of high street retailer Phones 4U, has announced the employee incentive scheme to end all incentive schemes as part of his battle with market leader Carphone Warehouse.

At a conference in Birmingham, Mr Caudwell produced £1m in cash packed into suitcases. He then said that each of the company's 25 senior sales directors could earn up to £1 million per head in bonuses if they hit sales and customer service targets.

A further £10 million is being dangled in front of 56 sales managers and 340 store managers. The loyalty scheme starts next month for associate sales directors and in January 2004 for everyone else. The money, once achieved, could be drawn within two years.

The £35m loyalty fund is part of the £405m the Caudwell group got through the sale of a mobile phone servicing business to Vodafone.

Caudwell, who has described British bosses as "corporate tossers", is renowned for his unusual approach to staff motivation. Last year, he ran a competition to find young management talent with a £100,000 job as the prize. Motivated staff create exceptional customer satisfaction, he believes, which in turn will increase Phone4U's profits.

"What I am trying to put into the people in the business is that customer excellence produces profitability. If we can really exceed customers' expectations then the amount of business that will come into our stores in terms of referrals, repeat business and recommendations will be just phenomenal," he said.

"What I am trying to do is replace an element of the marketing and advertising budget with the best advertising that there is, which is the referral mechanism.

"I would be gutted if I do not pay out this money to somebody. I have announced this scheme to everyone and if in a year's time there are not some sales directors who are scoring in a big way on this millionaire's pot, then either all of my strategy has failed or I have bullshitted everybody."