Turnover and labor shortages in the manufacturing and distribution industries continue to impact the operations of companies of all sizes. With that, the use of pay for performance or incentive programs is almost certain to escalate as employers search for ways to provide more competitive wage programs while boosting  both labor performance and employee retention.

According to PayScale,  most companies report “retaining top employees” as their primary compensation objective. And “attracting new talent” was a close second. These goals are echoed by senior business leaders surveyed by Deloitte, where 78% rated employee retention and engagement as either urgent or important.

Building a Pay per performance program

An incentive program will achieve the best results if it is part of an overall productivity initiative. The program should be built on a foundation of best practices and engineered labor standards and be supported by a labor management system to accurately measure and analyze performance metrics.

An incentive program won’t be a quick fix to productivity issues. But incentives, combined with targeted training, coaching and communications, will encourage correct behaviors that will lead to better performance

A well-crafted incentive program:

  • Communicates the plan and the results openly
  • Looks at all aspects of performance
  • Make incentives attainable, measurable and fair
  • Make incentive goals as inclusive as possible
  • Identifies and promotes better processes
  • Ensures that performance standards reflect changes in your operations
  • May offer other incentives than money
  • Is self-funding

Recognition is such a simple thing to do, but it is often overlooked in the rush of day-to-day activity. All too often, feedback is provided too late to change behavior. Labor Management Programs provide accurate and detailed feedback each day, if not multiple times throughout the day. Employees appreciate knowing where they stand and how they are progressing towards achieving the desired goal before the end of their review period. Assuming your labor management software is integrated with your other systems, feedback can be provided “on demand” for each employee.

Contact TZA today to learn more about how labor management and incentive programs can transform the productivity of your operations.

To find out how an LMS can help identify improvement opportunities within your organization

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