Incentives

[kodydog]

Sofadoc brought up "incentives" in another post and I wanted to run this by everyone.

I've worked two places that offered incentives to increase productivity.

The first was a factory in NC. We were starting a new line of furniture and after 6 months we built the assembly line up to 6 or 7 employes. One day the plant manager came up to us and gave us a piece of paper showing our average weekly output. He said if we could increase our productivity he would share the profit on each of our paychecks. This only amounted to $10 or $15 each week but the increase in productivity was tremendous. Mind you the quality had to stay the same. Anybody caught taking shortcuts would see the furniture come back and thus slow production.

The second was a guy I worked for in Jacksonville. He owned an upholstery company, a refinishing company and a house cleaning company. He had about 20 employes to keep track of. His incentive was a $20 bonus if you came in on time every day and worked a full 40 hour week.

I bring this up because the place I work has a big backlog. Customers call every day wanting to know where there furniture is. Employes show up late or not at all. And when they do show up some putz around like they haven't a care in the world. It's truly no concern of mine but its very frustrating for the boss. When I bring these ideas up he tells me they want to keep a family atmosphere, incentives are more for factories and take away the personal atmosphere found in a mom and pop business.

My feeling is if you offer incentives, then when a careless employee complains about their pay or asks for a raise, you can say, the opportunity to make more money is there. Any program that lets the employee advance is both good for them and good for the company.

[gene]

My feeling is if you offer incentives, then when a careless employee complains about their pay or asks for a raise, you can say, the opportunity to make more money is there.

Careless, unmotivated, lazy, irresponsible employees will complain about their pay, and anything else, no matter what additional incentives are offered them. Complaining is a part of how they do their job.

Any program that lets the employee advance is both good for them and good for the company.

This is a great point, however, I don't think incentives can motivate unmotivated people, nor can incentives get people who do not care about their job to care about their job.

If the owner is not interested in improving quality/service/ work conditions/ employee moral or attitudes, then I think you may drive yourself crazy thinking about how much more/better the company could be if only...

One of the worst incentives I've seen was where money would be donated by the company to a charity if certain goals were met. I've also seen this used as Christmas presents: the company informs the employees that their Christmas gift this year was a company donation to a certain charity. If it's my money, let me spend it the way I want. If it's the company's money, why make it sound like I, as an employee, had something to do with how it was spent. LOL

I've found that incentives need to be very specific: specific goals, specific ways of determining if the goals were met, and specific payouts of whatever kind if the goals are met. It does not always need to be money.

If incentives are not met it can be very demoralizing for the employees. It also can be very dangerous for some bozo if it's that bozo who caused everyone to miss the goal.

It's a good topic.

gene

[byhammerandhand]

I seem to have been taught that lack of money is a demotivator, but money is not necessarily a motivator.

http://blogs.hbr.org/2013/04/does-money-really-affect-motiv/

http://www.forbes.com/2010/04/06/money-motivation-pay-leadership-managing-employees.html





On the other hand, I have a cousin who worked for Lincoln Electric.   Bonuses there were usually about the same as the annual wages and were performance based.   In order to get a job there, you have to be recommended by a current employee.   Once on a team,  if you are not working to the team's standards and satisfaction, you're gone.

[sofadoc]

I seem to have been taught that lack of money is a demotivator, but money is not necessarily a motivator.

That's been my general observation  as well.

I have a friend who opened her own Starbucks-type coffee shop in town a few years ago. Her daughter was a senior in high school at the time, so she hired several of her daughter's friends to work there. She could've paid them minimum wage. But she chose to pay them $12 hr. She explained to them that she expected quality effort from them..........no screwing off.

They screwed off..........and screwed off.........and screwed off. The shop closed after a year.

Of course, these were kids. But my observation has always been that adults behave pretty much the same way.

Overpaying the help is just as bad as underpaying.

[SteveA]

I worked in a shop where the boss (going back many years) put $ 2000.00 in an envelop and said he would deduct mistakes from the balance and what was left us three guys could split for Christmas. It did work because no one wanted to spoil the Christmas bonus.
SA

[kodydog]

If the owner is not interested in improving quality/service/ work conditions/ employee moral or attitudes, then I think you may drive yourself crazy thinking about how much more/better the company could be if only...

Good point Gene. The owner likes to make money but his son is content to ride out the remaining years on the companies good name.  And I'll have to admit there is nothing I can do about it. This puts me into a conundrum. I'm a growth kinda guy like most of the people on this forum. And I see great potential for this company. But he is totally unmotivated.

I admit I'm surprised at the responses to the topic. But after reading hammers links I can see where your coming from. The reason the profit sharing worked in my Factory example was because the two top upholsterers on the line WERE motivated by money and we kept the rest of the line going. Without us the idea would have been dead in the water.

On the point of finding what motivates people. We had a high school student working for us. We made a deal that if he got all his work done by the end of the week we would order pizza.  Every week we jotted down on a chalk board the pieces that needed to be done. It worked.

[sofadoc]

We made a deal that if he got all his work done by the end of the week we would order pizza. 

Here I go again.........knocking the topic way off course ;D
Every single take-out pizza around here tastes like the cardboard box that it comes in.
What brand of pizza are you using as an incentive? Because if you offered ME a Domino's or Little Ceaser's, or Pizza Hut pizza, I would consider it more of a threat than an incentive. And the independent "Mom & Pop" pizza joints around here are even worse.

Of course, I used to love them back when I was a high school student myself. There's just something about that age group that can't discern good food from mediocre.

[baileyuph]

Kody I believe you are asking a logical question about your boss's attitude.

I am not so sure the boss doesn't agree with your idea of incentive. Instead, I believe he perceives that going forward with the suggestion of incentive pay, in his case or business at this time, might create a problem or make the problem worse.

Whether he is right or not, time will tell.  For now, instead of trying to fix the problem, the boss has reason, in his mind, trying would likely create a worse problem.

You are admired for your values and idea(s) of improvement in company performance, however.  Don't change, your values are strong values, the right values.

Doyle 

[Mojo]

It has been proven, time and again that " family atmospheres " in a business setting does not work. The lines easily become blurred between family and boss and there are alot of employees who will take advantage of this situation.

My son runs his corporation with each individual employee in mind. Your bonuses and incentives are based on your own individual performance. He takes very good care of his workers and his bonuses and incentives are very generous. I have seen him give down payment money to a few workers to help them get a new home or whatever. He provides them with excellent salaries and generous benefits. He will intervene on their behalf if they need help in their personal life as well. But God help them if they try and take advantage of his generosity. He will show them the door in a heartbeat.

He demands the most from his employees but he constantly shows his appreciation to them. Their revenue growth has been astounding over the last 10 years and he credits it to having dedicated and hard working employees. I believe what also helps is their entire focus is on the customer and by making them happy everything else falls into place. His employee retention rate is very good. Very few ever leave.

I believe in incentives in some situations and have seen the benefits of it. But it takes a business owner who is a people person and motivator in order to successfully apply them. Otherwise you end up with employees who will milk the owner for all he can get.

Chris

[sofadoc]

My wife works at a place that gives bonuses when certain goals are met. Before she came to work there, it was rare for anyone to reach a bonus goal. Most of the employees there considered the goals unattainable, and just settled for straight salary.

Then my wife started getting bonuses between 2-4K per quarter. Did the other employees take notice, and start trying harder? Nope. They started whining and complaining that the playing field wasn't level for them. The profitable clients that my wife had cultivated were re-distributed evenly among the others.

The moral is: Work hard, and you will be rewarded.......OR just piss and moan, and you'll get rewarded anyway (after all, this is AMERICA!).

Yes, money is a great motivator. But it can also cause jealousy and bitterness.
I have a buddy that owns a fast food joint. He says that if he even so much as gives a good worker a 10 cent raise, it causes a mutiny.

So I guess we have determined that money is only a good incentive when you have good workers to begin with. Offering a bonus in an attempt to transform a bad worker into a good one is probably not a good idea.

[byhammerandhand]

The company I used to work for had regular cash crunches.   Every couple of years the company came up with another new way to put it to the employees.   One of the schemes was that your raises would go into a bonus pool until your bonus pool topped out at 10% of your base salary.   If the company made 100% of its financial goals, the bonus would be paid in full, at 150% of goals, you'd get 120% of your bonus pool.   Well f
1) It took about 3 years to get the 10% built up.   So three years without raises.
2) The goals were set by the owner and completely arbitrary. 
3) An individual employee had very little impact, personally, on meeting the corporate goal.
4) We never got one red cent from this marvelous plan.

We ended up calling it the "bone-us" plan.   Can you say, "Dissatisfaction?"

Other plans included rolling furloughs (three weeks on, one week off) for three months, 4.5 day work weeks,  401(k) matches that never happened, years in a row with frozen salaries, and dropping 10% of your current base salary into a similar bonus pool (i.e., getting an immediate 10% pay cut.)  When I left, they owed me over $40K of unpaid salary that eventually came in over the next 12 months.    Employees that are still there are now mostly working 3 and 4 day work weeks.   Fortunately, 3 day workers get 66% of their salary and 4 day workers get 85%.  And those are some of the many reasons why I want to punch the whiners that say, "I live on a fixed income."   For most of my working career, I would have been very happy to have a fixed income.  At least you get COLA and if you really needed more money, you could go out and get some work, if only, "Welcome to Wal*mart."

It had a lot of the other job satisfiers, but finally this salary stuff and the outlook that everything would be sent to India over the next couple of years got to me.

[bobbin]

Very money motivated.  Very quality motivated.  Working "piece rate" can do that for you; esp. when you see the lazy slob next to you whining about how unfair the rates are but you're thinking just the opposite because you were smart enough to understand "time and motion". 

I worked my tail off, but I made very steady, well above average money doing it. (and I had health insurance, too! go figure).  But my job went to the Caribbean basin or SE Asia, where worker bees didn't "cost so much".  And my employer never had to shoulder any of the cost of lost jobs... but the profits only rose.  And taxes paid? I still wonder about that.   

Hammer.'s bonuses... I wonder what the tax benefits to the employer were? esp. over time, given the natural progression of frustration about failure to achieve "standard"; what did the attrition rate do to the employer's bottom line?  What were the tax savings for Hammer.'s employer?

[byhammerandhand]

Found this today from a journalist whom I admire, Tess Viegland:

"it's time to leave--when you have too much self-respect to stay."

http://longreads.com/search/Tess%20Vigeland/?l=0

[byhammerandhand]

People often misunderstand revenue, expenses and taxes.   Occasionally, you'll hear an obliviot say, "Well you can write that off."   They don't obviously understand that money spent is money spent.  It's only reduced by a tax savings based on the expenses.  So spend a dollar and get 23 cents benefit.   I guess you can make that up in volume?

The bottom line and taxes were only affected by the reduction in expenses.

I don't think attrition was much considered.   I remember I was about to go out of town for a vacation to visit family one Easter.   My boss called me into a room in a nearby hotel.   On flip chart sheets and white boards all around the walls were names of hundreds of engineers and support people.   Color-coded names.  Red would be gone, blue would stay, and green was undecided.  Sometimes whole groups were wiped out.   A day or two later, I met with my colleagues from Australia and they wanted to lay out some plans.   Only I knew that their group would be gone by the end of the month.   My director encouraged me to go on vacation and "have a good time."   When I got back from vacation, I had the duty of calling in 1/3 of my staff and laying them off.   Meet at 3:00 PM on Monday, their computer accounts would be inactivated at 3:01.   Thereafter known as "Black Monday."   And whenever the computer network went down, it was like prairie dog villages with heads popping up from the cubicle, "You down?  You down?"   Everyone worried about, "Can I see you in my office?" calls.

Hammer.'s bonuses... I wonder what the tax benefits to the employer were? esp. over time, given the natural progression of frustration about failure to achieve "standard"; what did the attrition rate do to the employer's bottom line?  What were the tax savings for Hammer.'s employer?

[momto3fatdogs]

I will probably get flamed for saying this....but I don't see lazy employees as bad employees. I see them as having a bad boss. Bad employees get away with tardiness & laziness & poor productivity because it's tolerated. By whoever is the "boss". Small scale businesses or large scale. there is just no paying some people enough for pride. You either got it or you don't. And I won't say anymore without getting all politcal. but I will say that the bigger a company it is, the harder it is to get shed of the slackers.

Sam