Encouraging Productivity Through Compensation Incentives
A client ran a 50,000-square-foot warehouse that contained 10,000 items, some sold in cartons/boxes – others individually. The process began with the computer printing packaging slips and two individuals grabbing the items off the shelves and handing them to another team to check for accuracy, then it was finally passed on to packaging. They averaged 90 line-items per hour.
The Quickborner Team of distribution systems experts has said that this same team, if motivated, could pick, pack and wrap up to 140 line items per hour. That means that for every hour that this same team worked with a properly designed compensation program, they could be handling 50 additional line items.
Motivating employees to do what management wants them to do is a critical element of the overall compensation program, and it starts with a well written job description. A job description will not only attract the right candidates, it will also help you organize what you need accomplished, and it will allow you to build the right incentives: be it bonuses, compensation, and/or commissions.
Going back to the example above, what can we do to motivate our current employees to WANT to increase productivity and at the same time be happy at their job?
What we did here was develop a Bonus Incentive Program, which we planned to encourage each team when productivity benchmarks were met. Team members received $250/quarter if their team achieved 105 item-lines per hour, $350/quarter for 115 and $450/quarter for 125. The average team in his warehouse went from 90 lines per hour to 120 lines per hour within 45 days. There was a spirit of competitiveness, and everyone wanted that bonus.
As you can see, there are ways of remeding a situation already in progress. This type of motivation isn’t limited to the warehouse and can be easily applied to purchasing, account receivable and delivering. Every department can have a well developed Bonus Incentive Program and with it – happy workers.
What is the benefit to the company? Dollars that were outstanding are now available for the company to apply in other areas such as marketing and advertising. In effect, it is a win-win scenario.
As long as people are properly motivated and trained to do their job — and as long as there is management actively involved to help these individuals achieve their success — bonus compensation will help you and your company succeed.
What methods have you used to encourage productivity among employees? I’d love to hear your thoughts.
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Craig holds an MBA from the University of California (Berkeley) and has been awarded the coveted CMC Certificate by the Institute of Management Consultants - Washington, DC. Stimmel's clients include AMOCO Oil, Staples, John Heath & Co Ltd (UK), Beautone (Taiwan), Hunt Mfg, Avery-Dennison, Steelcase, The Hon Company and many others. Craig is a nationally published author of articles covering both distribution and service business development issues as well as being a featured speaker at trade events and conventions.