After a tough year of management last year I have been throwing around the idea of a bonus incentive to boost morale and accountability.
Understanding this can become a recipe for disaster and expectations of receiving the bonus no matter what I have the basic scheme as follows. Looking for thoughts or experience in the same situation. Thankyou
A little about the company:
Myself - sales, design, detailing, send code to CNC, general management
Leading hand - Run CNC, oversee build from start to factory completion, occasional install
Labourer - helps build and install
Installer - mostly installs, occasional factory help
-Figure would be about 4-5% of PROFIT on job determined before job begins.
-Bonus is split between team equally once client has paid final invoice.
-If guys want to use the bonus to buy tools I will add extra 10% to the bonus and company buys the tools for them (theres to keep), figuring this is only going to add to their efficiency and effectiveness on the job.
- Key criteria would be getting job built within the hours allocated, no defects.
this is where it gets interesting:
I want to set up a system so that for each issue with the job i deduct x amount from the bonus, i.e if I go out to inspect the job and spend two hours adjusting and cleaning I deduct 2 x hours of labor off the bonus.
If I go to the factory and a dolley is left on the ground or the offcut wall is an absolute mess I deduct x amount off the bonus of the job they are working on.
I feel like it's a good way to give them a pay boost while showing them how business really works and increasing responsibility and hopefully teamwork to achieve the goal. Just sick of paying an hourly rate and there being no responsibility.
You, like me, are a small shop. The more details you put in your program, the more things you have to keep up with. You could spend more time trying to keep up with what your team is doing wrong instead of what they are doing right and cut into your personal production time because of all the infractions you have to record and log. You may also lower moral with a "hovering" mentality.
Bonus programs are great but most employees see them as entitlements after some time and when the profits aren't there the moral goes downhill fast.
I would think long and hard about putting a program into writing and in place without a LOT of time spent in contemplation and pondering of all possible scenarios.
Not really sure, looks like it though doesn't it ?
We produce a list daily as the needed to complete and ready to ship or prep or pull for the cnc the next day
In all reality, it's just a list to stay on target and the top of the list or most important jobs are the clients that pay in 10 or less and the list goes on from there, so I use use it an account receivable, control sheet to dictate the order of importance as the order of best payees. Over 60 comes off and I call the pm or client and discuss they are off the production schedule, regardless if they are stating there billing cycle is plus 30 to our dates
Metrics would be another word for targets in this case.
At 7:28 into the video they show the components of a value stream map. All the events that currently take place are enumerated on a post-it note.
They could potentially measure current travel distance between each post-it note. The goal could be to reduce distance a gizmo travels during it's fabrication cycle.
If they used travel distance as a constraint they could then pivot improvements around the goal of reducing travel distance. The real benefit would come from the ancillary support systems that need to be in place to reduce this time in transit.
One outcome would probably be consolidation of work stations. This might produce more contiguous open floor space to either reduce how many carts are needed or how much aisle space is needed for the carts. This is space that could be used to hold more dedicated machines that in turn allow for smaller & smaller batch sizes.
Providence Hospital in my town has a side business called "Lean Hospital". They train people from the health industry in how to recognize and eliminate non-valued added steps. They measure this quite literally with a pedometer.
Time spent walking is time not spent providing succor to the customer.
Best thing I found was at the end of the year do a review with each employee and give them a bonus check based on merit through out the year. At that time tell them this is bonus based on performance above and beyond the job description. And also let them know that it was a good year financially and that there attitude and performance helped make it possible.
If it is to ensure that shop problems like the off cut wall is kept organized, that is a management problem. The manager needs to follow up daily and let them know that it is unacceptable. Have them clean it up and keep it that way.
Ensuring that the products are made correctly and fit properly is also a management function. If the employees cannot / will not/ did not build it properly, the problems need to be dealt with. Retraining, better design, better instructions, etc. is the managers job. It is the managers job to get the job done correctly the first time.
Does management make them aware of the problems? Are the problems discussed in a regular meeting that everyone can talk about why there was a problem? Talking and followup can solve a lot of the problems.
TOO COMPLICATED !!!
I'll share my experience: A number of years ago I created a bonus system based on number of sheets cut per day (we do mostly panel processing) and if they made the number each week they each got 50.00 and any overage would be carried over. Thinking this would get there attention, proved to me after 8 years I had made a bad deal as they now have a carry over of 6000 sheets so the bonus is guaranteed for the foreseeable future. So basically i was getting no value from this and suffered with errors and a messy shop. SO, I determined our core problem that effected everything was one item: HOUSEKEEPING. So, a small group of us cleaned and organized the shop over the Christmas break to the "minimum acceptable standard". Now their bonus is a housekeeping and safety bonus (they must use eye and ear protection) By the end of the day friday their respective areas must be cleaned and vacuumed to the "minimum acceptable standard" or they do not get their bonus! There are no warnings and the boundary lines are vague! Well, we are three weeks in on this and I have the cleanest, most dust free efficient shop around! The whole idea here is the bonus must be immediate, measurable and beneficial. To have it too complicated is like trying to train a dog with the future promise of a treat! Does not work. Good luck and keep it simple. John
There is an old saying that the employees will always figure out a way to beat the bonus/system.
Centralized anything has unintended consequences.
Bottom up anything is self organizing.
That is not to say that you can do away with a centralized organization i.e. you need to have a bookkeeper, salesman, foreman etc. but getting the most out of your people requires that you utilize the bottom up dynamic. As in cabinetmaker's video, check out the foreman's attitude.
It's now very clear that such a scheme won't likely have a positive effect and only create more work for me and conflict between myself and the team, and the team members with each other.
To answer a few questions
What do we make? custom mid high end joinery, frameless.
Puzzleman mentions it's all management problems. I am the manager, I realise I need to provide a firmer hand in this instance. I set up a procedure and don't follow through with it because I am always so busy! MAKE TIME!! I'm sure you are thinking.
I'll watch the videos and read the books (read e-myth and it's great). As Pat mentioned there will surely be a more effective and less risky way to motivate employees.
For interests sake, does anyone give key personnel incentive based bonuses based on the performance of the department they manage?
"For interests sake, does anyone give key personnel incentive based bonuses based on the performance of the department they manage?"
No, it is a job they signed on for. I give bonuses on performance and not any given interval to make damn sure they don't come to expect it.
I have been where you are at, and it sucks. I know the sinking ugh feeling and money is not always the answer.
Managers are to manage systems you put in place. Here is a story of our granite shop and a phone call that comes in-
Hello, may I help you ?
The edge of our countertop has a huge chip in it and your installer left and didn't notice and it needs to be repaired
What is your last name ? I will pull your file
It is Mr Smith
Mr Smith, I can see here by the Install Punch List we send with Installers, dated x, Mrs Smith signed off the line item of the entire edge of the top was inspected by her and she initialed it. Also, the comment section below has a comment that she loved the check sheet and how nice it was that she was asked to comment on our work and the installers went over every detail with her
Hmn Do you think the appliance people could chip an edge ? or the movers ?
System in place and no one called the installers, Mrs Smith answered Mr Smith's questions and my office staff did not bother fabricators or installers one bit.
Here is another system - for our edgebander.
Every morning the person starting the edgebander, turns it on and uses a checklist stating the pc booted, he turned the air on to the machine, checks the glue level and whether or not he added to it. Then, after the pc boots, he records whether or not the machine demanded for a "Homing" procedure".
Once the machine is ready for work, he checks the box where required for dust collection pick up check making sure each station has no obstructions and the collector is doing its job he lists the job run, and the quality off the tests. These are recorded daily
Our shipping to jobsite checklists include fillers, cabinet pulls, trash cans, grommets, etc all listed along with the adjustable shelves
The checklists are constantly being refined. Including the building a frameless cabinet, face frame, corian top, p-lam top or whatever as more items are coming off the cnc or we add a Tiger Fence It is always a continued improvement
Yes, I love the added profits, but I like the no phone calls, "Where the F.... are my adjustables...." But the biggest take away is the employees know hat to expect, what to make, and have a reference to go off of
I know you are asking about bonus incentives, but you already offered them a job. Pay them well and let them do their jobs
It actually was from a granite shop in Mississippi that deals with home centers and has low margins. They have to make every action count and can't afford rework. (Apparently, they refuse to install without the homeowner or person paying the bill is there to check the work and sign off)
Apparently it also forced the installers and fabricators to ship complete
"How do you blend the E-myth with Lean?"
It's a lot of blending of the same thing in different perspectives.
You can't set up a system with chaos and lack of cleanliness and keep the cleanliness in place without systems, it just doesn't work
Forcing yourself to write a process or set up procedures in simplest form to produce an end result requires cutting all the crap from the floor or offices, trucks or the jobsite. It is what it is.
I have a two headed Butfering sander. When the machine was being installed I was told that the protocol for turning it on was to let the first head get up to full RPM then turn on the second head. The method for monitoring this is to watch the amperage needle spike then drop then spike again. When that cycle happens you are ready to turn the second head on.
The factory technician who set the machine up was an ex-navy electrician. His job was to keep torpedoes tuned up and running. He said that failure to observe this protocol would result in the breakers all getting burned up.
I hired a new guy. After 5 months I noticed that he just turned them both on simultaneously without waiting for the amperage to settle down. A few months after that we had to replace all the front breakers.
I can't necessarily prove that this fellow caused the breakers to fail. I can prove that this was what the install technician said to do and I can prove that the new fellow turned them both on simultaneously. I can only infer that it was this lack of following protocol that caused the breakers to be replaced.
As I recall, he was trained by a young kid named who also ran the sander. I can imagine the training being similar to as follows: "You know how to run one of these? Yeah. We had one in my old shop. Great! You're good to go!"
This lack of formality almost cost me my $30K sander. You can use the time honored tribal-elder system to train & choreograph people or you can use a more formal way.
The difference in outcome is kind of like Nancy Reagan's eggs in a frying pan scenario when she was talking about drugs. This is shop with tribal-elder culture. This is your shop on Lean.
The tribal-elder system works great when the economy is booming. After all, If it ain't broke, don't fix it!
You would be better off controlling quality by building pride. Is your crew proud of where they work? Do they brag to their buddies about the great place they work? You cannot buy that, you cannot force it, you have to earn it. Once you have that, (pride) you will find production and quality will go up then you can raise the wages.
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