Incentive-Based Payment Programs

You are about to implement an incentive program. Here are the questions you should be asking:

How do incentives work, when should we implement them, and what are the true impacts to productivity, utilization, and safety?

How do we put together an activity-based compensation program? What are the pros and cons?

Where can you apply these programs in your supply chain – just inside the four walls of the DC or as well as transportation, retail, customer service?

What motivates your workforce?

Supply Chain Workforce-Incentive Based Payment Programs

Benefits to Activity Based Compensation

  • Employees focus on completing value-added activities
  • Become aware of lost-time (ext. breaks, talking, etc.)
  • Rewarded for above average performance
  • Become self managing & inform management of barriers to productivity
  • Morale improves
  • Focus changes from “How long am I at work?” to “How much work can I complete today?”

The 4SIGHT road map to Incentives

  • Establish the “right way” to perform activities through best practices and preferred methods
  • Communication programs and leadership training for the front-line supervisors/managers to ensure culture alignment
  • Development of Engineered Labor Standards to establish performance baseline (average)
  • Systems selection, design and implementation to ensure right technology for initiative
  • Effectively use preferred methods and coaching to get workforce to baseline
  • Creation of ABC and incentive programs to reward performance above baseline and overcome plateau-effect

Practices