Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Sun Feb 08, 2009 2:38 pm Post subject: Effective Pay Plans?
A very common complaint among business managers is the lack of enthusiasm employees tend to have for their jobs. Ironically a common complaint among workers is pay that is not commensurate with the work expected. I think there is a common thread, one all but overlooked by today’s management.
Most management theory, in use today touts the benefits of incentives. The thought appears to be that workers will inherently be lazy if not coerced by some sort of “prize.” I feel this notion is totally mistaken and at the heart of the problem. Incentives, by nature are manipulative. They are a scheme concocted by management to influence the behavior of workers.
I have seen a huge amount of debate on which incentives are most effective. I have rarely seen debate on whether the concept is viable at all. My question is, should we continue to attempt to manipulate the behavior of employees or simply work to make the work enjoyable?
I feel common sense dictates that a person performing an enjoyable task will do so with more enthusiasm than a distasteful or boring task. Evidence is clearly seen in the effort people regularly pour into sports and hobbies. While either may be a great deal of effort, people approach them with a zeal managers could only dream of in their employees.
As to the second point, people are largely unconcerned with payment for their hobbies and sports interest. This is not to say pay is not important, only that it is less effective in motivation toward a task than enjoyment. Further evidence lies in people regularly leaving higher paying jobs [they dislike] for lower paying jobs they enjoy. In my experience, if a person dislikes their job, they will feel underpaid, regardless of the sum.
In point twelve, I think Dr. Deming spells this out. The thought that people should be well paid and enjoy their work may be strange to many managers. Removing the conditions of no work, no pay may even be horrifying. There is a leap of faith involved, a willingness to try another way.
Cost, productivity and efficiency rather than government bailouts, will determine the survivors in the 21st century. Moving into the future, workers that contribute 50% effort will simply not suffice. Substituting leadership and pride of workmanship for incentives may be scary, but I believe the alternative is far worse.
Joined: 15 May 2007 Posts: 146 Location: Garden City, KS
Posted: Mon Feb 09, 2009 9:33 am Post subject:
A shop I worked in the past tried a commission type of pay "scheme" in the attempt to motivate a young employee who just didn't "turn the hours". The new pay "system" worked for two months...then he reverted back to his "old ways".
The issues as I saw them were two-fold. Some of it was the kid needed to just grow up a bit, that's all there was too it. I don't know exactly how the shop could have helped and whether they should have tried or not. The other issue was the shop itself. The flow of work was very erratic and unorganized.
I guess, thinking about it now, there was another issue...no one talked to each other. The shop owner/manager never sat down and spoke with him, and he never asked for a meeting either. I'm not saying either party could have come to an agreement, and perhaps the real answer was that they would need to part ways (which is what happened anyways).
Like Louis states, some of the best things a business can do for its employees is remove obstacles. Whether the obstacles are preventing a proper operation (repair, estimate, payment receptions, etc), preventing pride of work, preventing pride of life (money, freedom, etc); the list can go on.
Sometimes, though, that may not be enough. As frustrating as it may be, no matter how much you try to remove obstacles, that person may still not be happy.
I think this leads to an interesting question: "How, as a manager or owner, can you see when you've done your part and that now this particular employee cannot be satisfied?" I feel there is danger here as well. With the wrong attitude, you may give up too soon when in fact the shop can do more. So..maybe a better way to ask is: "When is enough enough?"
Later, Matt.
_________________ Matt Fanslow
ASE CMAT/L1
Crag-Technologies, Inc
www.wavehook.com
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Mon Feb 09, 2009 7:55 pm Post subject:
Hi Matt,
MattFMN wrote:
A shop I worked in the past tried a commission type of pay "scheme" in the attempt to motivate a young employee who just didn't "turn the hours". The new pay "system" worked for two months...then he reverted back to his "old ways".
I think to say the system "worked" for two months may even be a bit off. The young man likely initially felt he was advancing. He worked harder than he naturally was able. Soon he realized he could not keep up the pace and reverted to a more comfortable pace.
The trick I believe, is to gain far more production without extraordinary effort. In a good system, it will pain a man no more to produce double or triple his former output. This is sustainable.
MattFMN wrote:
The issues as I saw them were two-fold. Some of it was the kid needed to just grow up a bit, that's all there was too it. I don't know exactly how the shop could have helped and whether they should have tried or not. The other issue was the shop itself. The flow of work was very erratic and unorganized.
If this is the case, the first problem seems like an issue with hiring criteria. The second goes to the heart of the discussion.
MattFMN wrote:
I guess, thinking about it now, there was another issue...no one talked to each other. The shop owner/manager never sat down and spoke with him, and he never asked for a meeting either. I'm not saying either party could have come to an agreement, and perhaps the real answer was that they would need to part ways (which is what happened anyways).
Let me give an extreme example.
I hire you to produce holes. They must be two inches from the top of the board, equally spaced on both sides and two inches apart. I give you a tape measure and a hand drill. No matter how many meetings we have are how well we communicate, you will not out produce a man with a jig and automated press.
Communication is important and may have helped a bit. Making the job easier and error proof is an even better investment for production and efficiency.
MattFMN wrote:
Like Louis states, some of the best things a business can do for its employees is remove obstacles. Whether the obstacles are preventing a proper operation (repair, estimate, payment receptions, etc), preventing pride of work, preventing pride of life (money, freedom, etc); the list can go on.
Sometimes, though, that may not be enough. As frustrating as it may be, no matter how much you try to remove obstacles, that person may still not be happy.
Well stated, some folks are simply unsuited for certain types of work.
MattFMN wrote:
I think this leads to an interesting question: "How, as a manager or owner, can you see when you've done your part and that now this particular employee cannot be satisfied?" I feel there is danger here as well. With the wrong attitude, you may give up too soon when in fact the shop can do more. So..maybe a better way to ask is: "When is enough enough?"
Later, Matt.
This is a great question Matt. I think SPC can be effectively used to measure improvement. Satisfaction is a very subjective matter. Here’s the short [for me ] answer: I know a man that performed the same job for thirty years. He was excellent at it. He always said he could not wait to retire, He was always dissatisfied. After he retired, he constantly laments about the good old days and how much he misses them. He is now dissatisfied with retirement.
Certainly we want people to be happy. That is difficult to measure. We can measure accomplishment and improvement and infer that a normal person achieving them is more likely to be satisfied. We can set up situations that will normally result in happiness (e.g., fair treatment, good pay, time off, self esteem, rewarding work, etc.) Beyond that we can only know we have done our best. Some people will not be content. I think that is a management decision, whether or not they should remain.
Thanks Matt, as always you bring up very insightful points.
Joined: 06 Dec 2008 Posts: 12 Location: Dallas, TX, USA
Posted: Wed Feb 11, 2009 10:50 am Post subject:
I have always paid my mechanics hourly because I think they produce better work. I have a friend that owns a shop and always paid flat rate. He changed to hourly and said his mechanics slowed down considerably.
_________________ Fred Reece
Business Owner/Consultant
Dallas, TX, USA
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Wed Feb 11, 2009 7:58 pm Post subject:
Hi Fred,
Fred Reece wrote:
I have always paid my mechanics hourly because I think they produce better work. I have a friend that owns a shop and always paid flat rate. He changed to hourly and said his mechanics slowed down considerably.
I think this could happen for a number of reasons. Without knowing the facts my comments are just general.
There is a [well deserved] bit of scepticism on the part of most employees. When their pay is tampered with, many will assume the worst. This lack of trust can be de-motivating. People who assume the change is to save the company money, at their expense, can react very negatively.
Many times the flat-rate system has been used for years instead of management. Rather than leadership, team spirit, joy in work and continual improvement, there is "work or don't get paid." Taking away the carrot and stick leaves a void. It takes a great deal of time and effort to establish true management.
Joined: 06 Dec 2008 Posts: 12 Location: Dallas, TX, USA
Posted: Thu Feb 12, 2009 10:55 am Post subject:
That could well be, he has always had a good bit of turnover. I haven't talked with him lately, I don't know if things are better now. What do you think is the best way to change from incentives to hourly?
_________________ Fred Reece
Business Owner/Consultant
Dallas, TX, USA
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Fri Feb 13, 2009 7:07 pm Post subject:
Fred Reece wrote:
That could well be, he has always had a good bit of turnover. I haven't talked with him lately, I don't know if things are better now. What do you think is the best way to change from incentives to hourly?
Hi Fred,
I'm not sure there is a best way. I believe as a person learns true management the choice is obvious and moving away from incentives is a natural result. In an ideal company, the rest of the company will also see the benefit and everyone will be in favor.
This is seldom the case however. More times than not, there will be resistance at least from some. In my case, I wanted to be certain my staff did not perceive it as a cut in pay. I averaged each person's last two-years wages and added 10% and paid that as salary. That was 20 years ago and production has risen every year since. Thanks Fred, I appreciate your interest.
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] answer: I know a man that performed the same job for thirty years. He was excellent at it. He always said he could not wait to retire, He was always dissatisfied. After he retired, he constantly laments about the good old days and how much he misses them. He is now dissatisfied with retirement.
