Creating an effective incentive program for blue collar labor can lead to improved service levels, reduced labor cost, happier well-paid employees and greater profits. The key word is effective.
If an incentive program is not structured correctly it can create more problems than it solves. A well-structured plan needs to be easily understood by the employees and they must feel they are in control.
It is also important to make the reward as immediate as possible. The main objective of incentive pay is to affect behavior. Worker performance should include productivity, quality, attendance, safety and attitude.
Here are the 10 easy steps to create an effective incentive program.
- Measure Productivity. The most effective incentive programs can drill down to individual performance. Once you start including more areas into the formula the less impact it may have.
- Set Accurate Labor Standards: People need to know how they are measured and rewarded. The standards must be fair, demanding and attainable. Reevaluate and reset standards after any equipment or process change that impacts work content. Incentive should accurately reflect worker performance.
- Keep it Simple. Try to go to the most basic measurements possible. You need to eliminate any mystery on how people make incentive pay.
- Post performance quickly. Posting worker performance quickly and publicly gives associates visibility into process and builds credibility in the program.
- Pay incentives quickly. Production and quality incentives weighted with attendance performance should be paid on the paycheck that corresponds to hours worked.
- Identify best practices. The best process ideas come from the people who are doing the work. When you find a better method, integrate that into the SOPs and training and get everyone to embrace it.
- Remove obstacle to performance. Work the floor personnel to identify any impediments that reduce worker effectiveness and try to remove them.
- Equip with the right tools. Make sure employees have the right equipment to do their job and that all of the equipment is at full functional capability.
- Train the workforce for results. Create a training program that embraces all of the elements of high performance and don’t omit training for temporary workers. If they are essential to your labor strategy then it is essential to onboard them correctly.
- Promote safe practices. Give employees quality tools and the right environment in which to do their job. If they are not working in a safe environment, efficiency, productivity, and risk will sabotage your results.