Companies have come up with a variety of compensation strategies for motivating salaried employees, but hourly workers pose a different challenge. For one thing, hourly people may not respond to the same incentives as those on salary. What's more, it's often hard to tell what incentives they will respond to -- incentives tied to things over which they have some control.
One of the more successful programs for motivating hourly workers has been developed by a little ($3-million annual sales, 75 employees) company in Ashland, Ore., called Parsons Pine Products Inc. The world's largest manufacturer of slats for louvered doors and shutters, and a major player in the rat- and mousetrap game, Parsons's principal claim to fame is its four-point plan for "positive reinforcement" of workers.
The plan includes:
* Safety pay. Each employee who goes for a month without a lost-time accident receives a bonus equal to four hours' pay.
* Retro pay. The company also divides among employees the money it saves when its workers' compensation premiums go down due to a reduced accident rate.
* Well pay. Employees get no sick days. Instead, they receive monthly "well pay," equal to eight hours' wages, provided they have been neither absent nor tardy.
* Profit pay. Parsons has a bonus pool, into which goes all the company's earnings above 4% after taxes.An employee's share is determined by multiplying the person's wages or salary times a job rating based on attendance, productivity, and leadership. The bonus, offered to hourly and salaried employees alike, is paid twice a year, once at Christmas and again in July, when the plant shuts down for vacations.
Overall, the plan has been extraordinary effective. Before its inauguration, about 10 years ago, Parson's accident rate was 86% above the state average; turnover was high; and tardiness and absenteeism were making it difficult to schedule production. Today, the accident rate is 32% below the state average; turnover is minimal; tardiness is rare, and absenteeism has dropped to almost nothing. But founder and owner James W. Parsons admits that the program takes a firm hand to administer. "One woman called to say that a tree had fallen, and she couldn't get her car out. She wanted me to make an exception. But if I did that, I'd be doing it all the time."