Donna Genie walks through a manufacturing plant's incentive pay system where 10-station production lines use quality checks to catch defects. When a worker finds a problem, the whole station stays until it's fixed, and overtime costs come out of the team bonus. Peer pressure keeps quality high.
Questions this video answers
10 stations.
About three to five workers per station.
Overtime must be paid at time-and-a-half for hours past 8 in a day.
Overtime wages paid are deducted from the potential team bonus pool.
Chapters
I've worked on many incentive plans for payroll, and there's always some catches to them. I found an interesting one recently that I want to share with you. This would be an incentive plan to encourage your entire team to work together to minimize costs and put out the best product or service that they can. Let's dive in. I was recently visiting a manufacturing plant and was on a tour. And in this plant, they had 10 different stations where work was being done. And each station had about three to five team workers in that one station. Now, as this product, product moved down the line, it had some quality checks in there. So if anyone was found to have kind of a recall, we'll say, and got called out by the quality control. That worker's job, who had to do that skill, had to go down the line to the quality control, fix that product, and then make sure that it passed quality control. After he did that, he had to go through every station back until he got to his station and put that same fix into play on every product he had produced from the start of his job that day until that quality defect was found. Now, the fun part was that that team of workers on that station all worked together. So they started out very early in the morning, and when they finished their quota of what they had to produce for the day, they were allowed to go home. Whether that was early on in the day, late in the day, whatever that be. Now, we all know if a worker stays past 8 hours, you're required by law to pay overtime and a half rate. So what they did was all of the team members on that team, whether they were the one who had the output that was incorrect or not, had to stay there on that position until all of the team was ready to be released. So if you and I are working on a team and I do something wrong and I have to go make all these corrections, maybe you didn't do anything wrong. You're still gonna have to sit there and wait for me because I've gotta finish all of my section and all of my repairs to get it back to where it should be from a quality perspective. So you may get overtime, and I may get overtime for doing that job. So you would think that that would be reminding me, like, hey, I should slow down, I should do something wrong, so I hit time and a half. That's usually the case where we try to put time limits on people as well. If they go past the time limit, who's it really hurting? Well, the catch in this case is that this company has a bonus incentive plan at any time they have to pay out overtime wages. Those wages are deducted from the potential bonus that all of the team gets. So although I may have received some overtime pay and while I'm sitting there, I've got to wait on my co worker or you're waiting on me to finish my job and I got overtime, it feels like I got something good happen. But in reality, the whole team is mad because they've now lost out on bonus money. So in that plan for the incentive team, now the whole team's job. So if my next door step on this line finds something wrong, their duty and it benefits them is to come back and say, hey, you did something wrong, Go back and fix this so that we don't have to wait on you to fix all of your whole day's work because you're doing something wrong. This also incentivizes the team to say, hey, not doing the right job, she's not qualified to do this or she's doing a poor job, she either needs more training or we want her off our team. She's slowing us down. So the team is given control of booting people off of their team if they're not doing a quality job. So I think this is a good floor plan to think about on how you create an incentive plan that incentivizes not only the individual to do a good job, but incentivizes the whole team to work together and to point out problems rather than look the other way and say, oh, it's not my job. So think about how that can apply to your payroll in your company. I'd love to hear your feedback and your ideas of other incentive plans that you've seen that might have been successful. Or if you've tried something and it didn't work, let me know and we'll take it back to the crowd and let's crowdsource the answer and give you some suggestions if possible.
