HUMAN RESOURCES

The All-Purpose Incentive System

Implementing a well-rounded incentive program to increase productivity.
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"Four years ago our personnel roster was nearing the 50 mark, though we were grossing less than one-third of our current revenues. We were staffed with too many doing too little. All our energies and monies were spent on training new employees, only to lose others to any factory that hung up a shingle in a nearby town. . . . Only revolutionary change could save us."

So wrote Carol Gordy, president of Natural Decorations Inc. (NDI), a maker of dried-flower and artificial-flower arrangements in Evergreen, Ala. After setting up performance-measurement systems, Gordy instituted some suggestion, attendance, and employee-of-the-year bonuses and got good results. But she was bothered by the piecemeal nature of the bonus systems. "The employees needed to be challenged and compensated for exceptional performance in all areas," she explains. She wanted to reward them for their daily achievements, not just in a competition with others.

She devised a bonus system that operates according to the calculations below; each employee starts with 50 points. Each month NDI's employees receive their personal calculation for the previous 30 days. If the employee ends up with a positive number, he or she receives a bonus check. Gordy made each bonus point worth $1 last year. Some employees earned more than $1,000 in bonuses for the year, on a salary of about $12,500. Gordy hopes to beef the bonus points up to $2 each by 1993.

This plan has had a dramatic effect on the company. NDI's 33 employees are supporting revenues of $3.3 million, although it took nearly 50 people to produce $1 million worth four years ago. The bonus dollars awarded have increased almost every month because employees are taking less time off from work and reworks are at a minimum. Plus, NDI has not lost any designers -- who take the longest to train -- in two years.

+ 50 Points

Tardiness -5 * # of days = _____

Time off -10 * # of days = _____

Absenteeism -15 * # of days = _____

Reworks -5 * # of times = _____

Safety, maintenance, -5 * # of times = _____

& procedural infractions

Production time above +2 * # of days = _____

average

Production time below -2 * # of days = _____

average

TOTAL = _____

-- Ellyn E. Spragins

Last updated: Feb 1, 1992




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