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Done correctly in a stabilized operation and with the proper controls in place, pay and/or time off incentives make sense and result in a favorable outcome for the employees and the employer. The success of an incentive program is directly dependent on operational stability, quality controls and labor standards integrity. If incentives are based on labor standards that are poorly applied or if quality controls are not in place or enforced, the result may be expensive for the employer and a windfall for the employees working under it. Prior to implementing any incentive program, several steps should be taken. First, ascertain that the operation is stable. Second, make sure adequate quality control (QC) checks and balances are in place (e.g. safe operating practices and accuracy audits). Third, verify that labor standards upon which incentives will be based are fair and reasonable.
Quality incentive programs can be implemented in tandem with productivity incentives. Quality incentive programs give the most productive workers an opportunity to earn more when error rates are decreased. Another approach is a "disincentive" program that reduces or removes productivity incentive payouts when error rates go above certain levels. Regardless of the method used to improve accuracy and quality, only programs that utilize structured, consistent auditing processes (e.g. dock audits) prove to be successful in the long run. To prevent potential issues such as false shortages and excessive damage, supervision must always be involved.
The best approach is to implement incentive programs in phases. With a long term goal of making everyone possible in an operation eligible for a financial reward when work is performed more efficiently, with fewer errors, fewer accidents and lower overall cost. This takes time to do correctly and with minimal disturbance to an operation. Where discrete, engineered standards don't exist or are not realistic, group or "whole workforce" incentives can be implemented by establishing realistic goals through time study observation and realistic KPI goals.
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