If you recall we left off with our business owner being told by the sales rep, all the other customers pay their employees based on the time they log against the tickets, in fact, most bill their customers based on the time logged against a ticket. The salesperson couldn’t recall another customer whose using it to track estimated time against actual time, but it should work fine, tell your employees to do it, they work for you, don’t they?
Seems right, they ought to do as they are told. So, all the employees assemble for a two-hour meeting (15 people at $30/hour for 2 hours, $900) and it’s explained why we are doing this to improving estimating, what the expectations are and that its mandatory, you need to do this.
The first couple of days things appear to be going better; the majority are logging times that seem reasonable, then it starts to fall off. One of the individuals who had been doing a great job didn’t log any time at all for two days, so you call him, he lost his phone. Another said he kept forgetting his phone in the truck and didn’t want to take the time to go back to the truck. A third said his charger wasn’t working and his phone goes dead at the end of the day. The fourth said, sorry, he’ll try harder.
At wits’ end the owner calls another company meeting, (another $900) while no one directly stated any of this, what he clearly understood was, no ever asked them to do office work before and they didn’t think doing office work is what they are paid for and they didn’t want to work for free. He also understood that his staff didn’t want their phone for company business.
One suggestion was to buy them a phone and pay for their service, a cost not considered when he decided to implement the system ($300/phone * 20 employees = $6,000 plus replacements when they break and $35 monthly * 20 employees for service = $700/month or $8,400/year).
A few employees said they didn’t see the use for doing it and weren’t interested; another suggested that they should be paid for doing the extra work.
It was clear he wasn’t going to get compliance without either paying more one way or the other, so he tried implementing an incentive plan, $20/week for anyone who submitted their work orders accurately and timely. $20/week * 20 employees =$400/week, roughly $20,000 a year. He still didn’t get 100% compliance, and after a few weeks, he dropped the program and the work order system. It didn’t work well enough to get the benefits he wanted at a cost that made sense. It certainly didn’t improve morale or accountability.
What could have been done differently to achieve a better outcome? An extreme approach would have been to tie their pay to the hours reported on the work orders. No hours no pay, inaccurate hours would be the same as cheating on your time card, you get fired The challenge with this approach is that it would require implementing new pay policies, a much greater effort with much higher risk than what he had contemplated and challenging to implement without risking affecting costs. The major challenge to this approach was his best employees, the ones he knew were focused and working hard reported about 35 hours of work a week, while the middle of the road employees reported more than 40 hours even though they didn’t work any overtime. Some of the employees only showed 20 hours of working on tasks in a 40-hour work week. The challenge of coming up with an equitable pay policy based on the work order reported hours seemed impossible.
Not being the type to give up, here’s what was finally implemented and is in practice today. The owner meets with the supervisor before the project starts and they agree on milestone dates based on the project plan used by the estimator. If the crew meets the target dates, they earn an incentive as a group. The supervisor recommends, and the owners approve the distribution of the incentive. The supervisor may retain up to 50% of the incentive for himself and must recommend and justify the distribution of the remaining amount distributed to each member. The incentive plan is generally funded at $20/week per employee on the crew.
Here’s why this approach is working.
It works because the employees see the connection between the incentive and getting the work down, it doesn’t require any paperwork or use of their personal property. It works because it doesn’t require any hard technology
Integral to this incentive plan is the communication between the owner, supervisor, and crew. During a morning meeting, the supervisor explains to the team the goals for the day which are to meet the longer-term milestone deadline for incentive payout. As part of a brief meeting every morning the supervisor informs the crew if they met yesterday’s goals and if they are on track to earn the incentive milestone. The crew gets frequent and consistent feedback on their performance, and the owner receives this information as well when the supervisor makes the recommendation on the distribution of the incentive payout.
The lesson from this is that applying information technology to a bad process won’t solve the problem. If a process in your company isn’t working well, take the time to understand what process is broken and fix the process using the least amount of new technology. If you cannot identify the bad methods yourself or determine how to fix them consider hiring a consultant. After it’s fixed, if you want to make it faster better and cheaper, new information technology should be considered.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. Check out these some more posts that you may find helpful:
