What's new
What's new

Employee incentives.

kuraki556

Cast Iron
Joined
Aug 13, 2010
Location
WI
In my area, outside of general incentives like profit sharing, there are relatively few, if any companies, who offer any kind of incentive outside of base pay in skilled manufacturing. For general labor manufacturing, such as Ashely Furniture, they often offer a base rate + a production bonus. It doesn't happen often, but it has happened, where I've lost good employees because they would rather work the low skill, low responsibility job where if they haul ass, they could slightly exceed the base wage I might be paying them currently (even though the pay scale they're on would exceed anything they could make with production bonuses after a couple years). That's rare, but it has happened.

Anyway, I'm curious if other shop owners/managers offer their machinists or skilled tradesmen anything in the way of incentive past their hourly rate. I don't mean one time windfalls, like they really pulled it out for you on a particular job/month so you gave'em a $500 thank you, but a documented, scheduled incentive program based on some metric of performance.

I ask, because I'm going to propose something like this to our management team for our group of machine programmers. These individuals are responsible for programming, developing setups, sourcing tooling, staying on top of tooling technology or bringing new technology in to the shop. Another responsibility of theirs, is to improve current machining processes to effect the bottom line: i.e. reduce a cycle time to increase capacity at a workcenter, source 1 tool that might replace 3, etc.

This responsibility has generally exempted them from the "extramile program" that other, lower skilled employees could historically participate in, where they might submit an idea to save time or money, and get rewarded if it is valid and implemented. That didn't bother me for a time, because the reward was small, and the program was not husbanded very well by management. However, that is changing, and the program I believe will become a much more effective tool for improvements, as well as more rewarding for employees, in the future.

So now it does bother me. These programmers might make somewhat higher wages, but they more than proved their worth last year, saving the company hundreds of thousands of dollars, perhaps even millions if you consider their efforts to improve a process on a job we may have lost if they were not able to reduce our internal costs to produce it.

I happen to believe that is worth more than a few dollars an hour more on a pay scale than the machine operators who are not in a position to make the same contribution, and who would be rewarded on a graduated scale if their idea netted the same result.

So I am going to propose a clear definition of what is expected from this group of employees, say, 10% of their annual earnings, which would not be a hard measure to achieve given their past performance. And if they exceed that amount, to reward them on a percentage of savings basis, similar to how a salesman might get a commission based on net sales on top of his annual salary. In talking to my guys, they like the idea, but I was happy to see that they suggested that they be evaluated as a team, rather than individually. I was glad they came to that conclusion since I was worrying over "incentive sniping" or losing the open cooperation between individuals that we currently have. Team based incentives eliminate that, as well as trying to parse who is responsible for what when a number of individuals work on a project.

What do you think? As a manager/owner, or as an hourly machinist?
 
If you give more money to the workers, there will be less for the guys at the top to take home. That just isn't right.
 
If you give more money to the workers, there will be less for the guys at the top to take home. That just isn't right.

Your caricature of a "conservative" is slightly more entertaining than your caricature of a liberal. Either seems to be an exercise in hyperbole.
 
John, you remind me of the time someone said to me, "I can never tell when you're joking and when you're being serious".

I replied, "When I smile I'm being serious".

I walked away and the poor bastard had the strangest expression on his face.

...LOL....


Kuraki556,

I am planning on implementing some kind of incentive program here in my shop.
I want it to be based off of employee and company total productivity.
You can give the guys an extra dollar here and an extra dollar there but over time, because it is a constant, it becomes overlooked, and spent.
I'm thinking to start off with something like a base bonus rate in relation to senority/years of service and growing as time goes on, and multiplied by some kind of factor on the company's net profits vs projected profits. If the company does well they get a better bonus if there is a bad spell it goes the other way. I'm also looking at paying it out over several points over the year so that it is easier to manage and it is relative to the current productivity.
I'm hoping that way eveyone gets a even start, if there are profits it affects everyone porportionally.
It is better to have everyone helping the weakest guy to bring him up to par than everyone looking after their own.
I'm not a guru in finance so this idea may not work, but being a small shop anything beyond the standard pay structure is
a plus.


h.s.
 
My thoughts;

Incentive program = establishing company goals. The goals must be documented and realistic, and the incentive must be documented, fairly shared, and reasonably generous. If it doesn't meet all those criteria, there's gonna be bitchin and moaning of "we were promised this" and "so and so got $X, I got $Y", etc., - and the complaints would most likely be true. You may also want a tiered system of incentives, such as 5% increase over last year equals so much reward, and 10% increase equals something better.


G
 
The only incentives I'd ever apply would be a cattle prod to keep them up to pace and a tazer to get the real tossers out the door.

Less of these so called incentives and a proper days work for standard pay and the economy would be in much better shape.


We've got fat lazy and greedy.
 
The company I work for gives out % bonuses to all employees including "Us" machinist guys. It is based on the overall outcome of the company for the year. I was here for couple months the last of the year and was still able to get bonus pay. This is nice to have something to look forward to in Feb. and March each year.
 
The only incentives I'd ever apply would be a cattle prod to keep them up to pace and a tazer to get the real tossers out the door.We've got fat lazy and greedy.



You have to understand that they are there for the same reason you are. To make money, feed their families. Cash is the best motivator, lack of is the best demotivator. Keep them hungry and they will keep coming back doesn't work now that the great depression is over.

Regards
 
Last edited:
The most successful printer's i ever encountered paid based on profit share, fairly heavily at that too, normal wage with no profit there was bellow average, a good months profit share could damn near tipple take home pay! It's just how humans work. If they can get that bit more for doing it they often will go the extra mile. Cattle prods don't work - require constant application, heck even the police get fed-up with tazzing the same criminals eventually!

Equally it gives them some feeling of self worth std hourly pay does not, they truly become part of the company and really want to see it succeed. They will pull together and do things that a lot of other employees else were would not bother with. Management there did not have to do any of the usual little prodding - cojuling that most places did. The employees really sort of self policed one another. This meant management could focus on what mattered, getting work done + increasing sales.

Its a bit like looking at the boss of the company, if next year he was going to get paid the same regardless, would he put the effort in to make big improvements - try his best? Look at bankers for a example of this one!

In my eyes expecting people to go above and beyond for the same pay is equal to ignoring the fact your paying a intelligent life form to do something not a robot! Intelligent life forms only do do things involving more effort for more reward. Weather that's a monkey climbing to the top of the tree to get the sweetest ripest fruit or Programmer developing a new approach to make a job run faster. Its still the same problem with the same basic solution. A donkey will pull that cart further if it thinks that carrots going to be tastier!
 
heck even the police get fed-up with tazzing the same criminals eventually!

LOL.......

I agree with adama.
I want to be on a team that everyone pulls the same.
Think of sports teams as an example.
The players are there for two reasons, one because they love what they do and two they get paid well, especially the better they do it.
The only difference in our line of work is that we dont have and screaming fans, we have screaming customers.

You just have to:

a) find the right people that want to pull
&
b) figure out what the corret carrot is


h.s.
 
I agree with Gordon, it is a slippery slope. I worked for one company that actually gave bonuses, and many that promised them. The first was a well organized and established business that always made money, and if they didn't they knew why and what to do different next time. They would post quarterly revenue reports in the break room for everyone to see. And they were not weak bonuses IIRC they were based on a percentage of the bottom line and determined by percentage of an individuals quarterly income. The later seems to be every other shop I have ever worked at. And when the time comes the owner comes out and announces that they were not profitable this time so everyone needs to step it up a notch. This is obviously crap, based on the square footage of their home and the car that they drive and their general attitude about cost. Personally I work the same way no matter what. If there is an incentive/bonus great, but I still work as hard as I can regardless. Find those people, pay them what they deserve, and treat them with respect and you need no incentive program.

Robert my ±2
 
What wages are you paying?

If you have a good skilled employee who would rather work as a grunt labourer at a furniture factory...........you need to take a serious look at what your paying. Basing it on a projected payscale after a couple years doesn't amount to knee high in jack poop, the employees your loosing see it as a promise, something free to give that costs a company nothing and is easily reneged upon. Promises, kind words and encouraging remarks are great, but the return you get on them diminishes rapidly.

Incentive programs are counterproductive in my opinion, if its pro rated for each worker there will eventually be resentment between employees and if there is no "bonus" employees will often think that the boss has "shorted" them regardless of how lean of a year it is.
 
If you REALLY want to pay your employee something extra, do a time study. IF the job is 1/2 an hour, and they do it in 20 minutes, PAY them for doing it quicker.

If the job is 7hours, and they do it in 5, PAY them 40% more of your hourly.

If all you can think is that "I got some GOOD idjits working for me.", you will never have "loyal employees".

Chris'sake, even the AUTO dealers pay their slaves BY THE JOB.

YOU tell them they should be happy to even HAVE a job.. You give me a 20hour job, I do it in 10, and YOU laugh all the way to the BANK?

Fuck you! You sound like all the rest of the Owners. ALL MINE!!!

George
 
Offer a bonus scheme and everyone will look at how they can maximise it for their advantage. This does not mean you the owner get the benefit. It just means your employees will act like cunning business persons like you and gain the maximum benefit from a situation for the least input.

Employment is a risk/return investment for both parties, a bad agreement/contract will cause the employment to fail. Base pay is getting paid to do your job, a Bonus is payment for not doing your job but something extra/else. If pay is attached to company performance yet authority doesn't cover the whole company then pay value is outside the individuals control, not a good idea for continued employment.

The words of our roles really reflects pay outcome/expectation in an employee eyes and should an employer. Manager is ment to manage, supervisor is to supervise (not manage), toolmaker is to make tools for the business not manage the business direction to increase profits. Get your people doing the best at their role, get them to be the best at their role. Don't educate them as a gift, educate them to deliver your business profits, so plan education, outcome expected should be part of your profit outcome, not just to make smarter employees.


Try:
Employing more people on less time and offering the better ones more work time to earn the extra income. At the bottom end you churn and burn employees till you find good one, at the top you get really good value for paying extra money.

Offer a special projects bonus: non standard work that increases efficiency. I was at a company who had its long term employees meet 3 Saturdays in a row to discuss making efficiency increases, they then made jigs, machine modifications, product mods, stocking mods to the company. They submitted the KPI's current values and after 12 months looked at the new values. Every ounce of profit (tax adjusted) was given to the employees in the program. The culture of the company went from plodders to specialist entrepreneurial thinkers. It was amazing how many small changes were made, even the local fuel station was roped in to manage a full tank of forklift gas in the corner of our dispatch. The forklift was never out of gas after that and the stores man was never MIA for half a day getting gas. PS all the guys were warned they would be dismissed if they were caught doing this special project work during normal hours (unless preordained).



Dont offer money unless you have to. Money is vouchers that get taxed and devalued every time they change hands. Look at an incentive scheme that delivers the end result! Try a week of their holiday time at your holiday house or lend them your boat for the week end. Get them into the club your a member at for a free session etc etc. Think about the buying power your company has and offer this discounted buying power as a bonus to the employees. A stationary pack for their kids to start school for the year, lumber for a home DIY, fuel you get a tax break on and they dont.
 
So you have to pay some one to come to work and do a bit, then pay extra to get a proper days work out of them?

No, they must already be giving a days work for their pay otherwise you wouldn't keep them around, correct? Incentive would be to show appreciation for effort and results above and beyond. Unless you believe that there are no limits to what an employee "owes" you for the days pay. OT pay is not an incentive in my experience.
 








 
Back
Top