worker operating a forkliftGood workers are hard to find, many CEOs report. Despite an economy that some feel is in recession – don’t you believe that part – unemployment statistics across the country are just shy of levels traditionally thought of by economists as full employment. That means you work harder to hire good people and then you have to keep working to keep them, because someone across town is willing to pay them more than you are to induce them to come to work for them. How do you cope? You can count on the familiarity of your company being an advantage vs. an unknown new situation. Unless your business is a sweat shop that should be a positive. But what about the pay issue? I strongly believe customized incentive programs are a powerful glue to keep good people fastened to your payroll. Let me give you an example: a long-time client of mine is in a manufacturing business that requires highly skilled workers, and everyone wants them. Because their industry is booming, they were working all the overtime they could get from their people just to keep up with the orders. And they weren’t keeping up well enough, in the eyes of several of their key customers. Enter the simple bonus/profit sharing plan.

We installed a quarterly bonus plan that applied to everyone on the payroll, down to the shipping clerk. It’s funded from a percentage of profits and allocated to each worker based on their evaluated performance. To keep it simple the evaluation is a short check list of critical activities that are deemed directly supportive of timely and accurate delivery of goods to their customers. Every quarter each employee gets an additional amount in their paycheck or, at their option, added to their 401(k) account. A typical bonus can add $2-3 an hour or more to everyone’s paycheck for the entire quarter, all in one chunk of cash. The program has been in place for about 18 months now. The results:

With no major additions to equipment or plant layout changes, the company is now shipping roughly 15% more in sales than they were 2 years ago, with higher quality and better on-time delivery. And overtime has been reduced by 75%! As a result, profit margins have soared and morale has rarely been higher.

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