Incentive-Based Payment Programs
You are about to implement an incentive program. Here are the questions you should be asking:
How do incentives work, when should we implement them, and what are the true impacts to productivity, utilization, and safety?
How do we put together an activity-based compensation program? What are the pros and cons?
Where can you apply these programs in your supply chain – just inside the four walls of the DC or as well as transportation, retail, customer service?
What motivates your workforce?
Benefits to Activity Based Compensation
- Employees focus on completing value-added activities
- Become aware of lost-time (ext. breaks, talking, etc.)
- Rewarded for above average performance
- Become self managing & inform management of barriers to productivity
- Morale improves
- Focus changes from “How long am I at work?” to “How much work can I complete today?”
The 4SIGHT road map to Incentives
- Establish the “right way” to perform activities through best practices and preferred methods
- Communication programs and leadership training for the front-line supervisors/managers to ensure culture alignment
- Development of Engineered Labor Standards to establish performance baseline (average)
- Systems selection, design and implementation to ensure right technology for initiative
- Effectively use preferred methods and coaching to get workforce to baseline
- Creation of ABC and incentive programs to reward performance above baseline and overcome plateau-effect