While incentive pay may motivate managers and other salaried employees, many companies have trouble making it work for hourly people. But E.T.C. Carpet Mills Ltd., in Santa Ana, Calif., seems to have found a solution: it attaches incentives for hourlies to specific activities related to corporate goals.

A year ago, for example, the company saw a need to expedite the preparation of orders for waiting customers."We had to differentiate ourselves from our competitors," says president Michael Berns. "There are some 20 carpet manufacturers in southern California, and it's not unusual for customers to wait an hour and a half for an order. We wanted to try for 10 minutes or less."

So Berns set up a bonus fund in the shipping department. The company pays $1 into the fund for every order finished in 10 minutes or less. Whenever an order takes longer, the fund is penalized $10. Then every three months, the balance is divided evenly among the department's 10 employees.

The program works. In the past year, the department has developed a reputation for quick customer service, and the employees have picked up bonuses as large as $600 each. Meanwhile, the company has begun to apply the system to other departments.