Making It Work

Economics Economics Questions
1

I know many of us discuss esoteric things, but at some point in time I think we should ‘put up or shut up’. I’m presenting to you a real world list of problems and proposed solutions. I would really appreciate some PRACTICAL, REAL WORLD solutions! Of course the esoteric creeps in to guide us, but it ultimately needs to be transformed into some sort of productive action. (Yes, my ‘Women, What Are They Good For?’ post was/is part of this problem/solution proposal)

This is Part 1 of a list of manufacturing problems and proposed solutions.

Omnipresent Proprietors

If you KNOW Eternal Damnation exists, but you also know certain good behaviors help you escape it, would you behave accordingly? If your spouse knows everything you do on a ‘guy’s night out’, would you behave differently? If your boss is watching or could be watching you every minute you’re on the clock, would you adjust your work ethic accordingly?

I know of a manufacturer that has many, many employees overindulging in idle time and it’s crippling the company. I don’t think they’re aware of it. They keep throwing money at outside companies that are supposed to make them more efficient, but it never works. They always miss the mark. One reason is they don’t intimately know the in’s and out’s of the various processes. They also wrongly assume the employees actually care. In fact, one of the top exexcutives recently lamented the fact that we always seem to make improvements and then somehow lose them. Most of these ‘improvements’ are actually deception. The ‘improvers’ might decide to concentrate on a certain process. They’ll bring in extra ‘human resources’, diverting production from other areas. They’ll many times shorten the process (like changing definitions mid-argument) they’re working on, shifting some of it to other employees. So it’s like they’ll shine a light on a certain area, make it look good but dirty up the unlit area and then move on, allowing the dirt to recollect in the now unlit spot. The executive hears all these good reports and assumes something good is happening.

The hands-on supervisors know about all this, but say nothing. Mostly, they don’t care. The more motivated ones will simply sing and dance when the spotlight shfits their way, hoping for a promotion, all the while knowing the efforts by the outside company are erroneous. They don’t report these problems because they think criticism would hurt their chances for promotion. Once the spotlight is gone, the singers and dancers go back to 1st gear, continuing their draining effects on productivity. You would be amazed at the level of indleness. It has effected everyone from upper management to entry level positions.

(I have MANY additional and/or complementary solutions, so please ONLY respond to the one listed below, if you can. Other solutions will follow)

There is one thing that I know will change this poor work ethic - exposure. Turn the light on and the roaches scurry. I think a camera system would transform production. The idle time would be drastically reduced. The proprietor could have full awareness 24-7. He could use this to discipline idle employees and to improve the processes, ie divisions of labor, etc. Those working under such conditions might not be directly watched very often, but the risk of being watched would make them behave as if they were.

The only slight problem I see is employer-employee relations. Employees would resent the cameras. But the way I see it, that would be hypocritical. They’ve stolen from this company for years, continuing year after year to shirk their responsibilities. They don’t deserve to be trusted.

What do you think would be the best way to use the cameras? Would you simply have a guy in a room that’s constantly panning the screens for unusual activity? But what if he let his own personal feelings about someone influence who he decides to concentrate on? Can he be kept uninvolved with the people he’s watching? What if a computer produced random employees to be watched at random times, so there’s no chance for bias? It might tell him to watch John from 2:15-2:35. Also, I think there could be solutions found by talking w/ companies that deal with security, whether they install the systems or use them. Anyone know the logistics applied to camera use by casinos?

On the Employee Relations part, how can the employer explain the cameras’ presence diplomatically? Yes, in principle they don’t deserve a sugar-coated explanation, but it will/would be given. I would think concentrating on the attempt to improve processes and mentioning as an aside that monitoring work ethic will be a natural consequence or simply part of the ‘monitoring process’, etc.

I think this simple idea alone, even if imperfectly implemented, could take them from the red and into the black. They’re perpetually running 3-4% below profitable levels of efficiency and I can’t see it continuing much longer. They have international operations and they’re relying on them more and more. However, going 100% international is NOT the solution I’m looking for (yea, I’m selfish). I’m looking at how to keep THIS plant solvent. If I owned it, I’d probably be ‘ruthless’ and close it down, but that’s not their desire nor mine!

2

I don’t think cameras are the answer. But keep in mind this post is only my opinion.

Cameras will only cause resentment if brought in after the employees have been working without them. And you always must keep in mind the power of human creativity. Creativity is the very thing that makes free markets work, and it will cause people to begin spending (otherwise productive-or possibly productive) time trying to figure out ways to game the system. If you haven’t read 1984, please do yourself a favor and buy it for Christmas. The threat of Big Brother constantly watching is what we individualists/libertarians are against. Because it’s a small step, especially for those in power to say: “see how much productivity improved, and how much better people work under the constant threat of being watched by cameras? If it’s good enough for business we should put cameras everywhere, so we can keep the people safe”. That said it’s hard to offer specific solutions without knowing what kind of company you have, but from my experience I will answer you question as best I can. Now if you are not the one who can make these changes then this thread is basically worthless, other than to help you avoid these mistakes in the future.

#1 Hiring - The most important thing, and possibly the only way to have people work at their jobs is to hire only the right people. Otherwise you’ll spend all of your time trying to manage people who don’t want to be there, and it becomes, basically, glorified babysitting. OK so how do you hire the right people? First of all you need to make sure that people really want to do the job, and (gasp) actually look forward to coming to work everyday. Do you think Lew Rockwell wakes up everyday and says to himself “damn, I have to go the Mises Institute today”. This is the hard thing because, well who wants to clean septic tanks, and stack boxes at UPSS? Well, believe it or not, some people do, and a good hiring manager will find them. Without knowing your business it’s hard to make more specific recommendations.

#2 Firing - Lazy employees are like a cancer, like the bad kids in a class that bring everyone else down to their level. Now you need to be very careful about firing people because it’s easy to get sued, especially when they get fired for doing something they’ve been doing all along. You’re going to have to have a meeting to make sure everyone understands their employee handbooks, and which offenses will cause one to be written up. You need to explain your system of (example) 1st offense, written warning, (the warning needs to make reference to which specific policy has been violated and ALWAYS signed by the employee). 2nd offense written warning, possible suspension. 3rd offense possible termination. You need to keep records of all warnings, and each time explain that after 3 offenses the employee will likely be fired. (What if the employee won’t sign? A manager can sign off, and the employee should be written up again for insubordination).

#3 Accountability - I think the best way to keep people on task is to always have individual accountability. This is why you have managers, also it is unfair to expect people to do things without having clearly outlined goals that that can meet, and a manager can check off on. Results are what matter, not how hard people work. So, with salespersons for example, if Joe comes in a 11:AM, sells $1 million in product, sleep at his desk for an hour, takes 2 hours for lunch, and leaves early at 4:00 to play golf, and Suzy comes in at 7:AM, makes calls until 12:30, takes only Min for lunch, and works 'til 6:00, but sells only $200,000 in product who is more productive? Who works harder? You want your workforce to look forward to coming into work everyday. This is also why you have managers, to keep track of those under them (who are accountable to him), and he will have goals and be accountable to someone above him.

Sorry this is so generic, but specific recommendations can only be made or specific situations. I think the main thing is having people who come in to actually work. And having a specific system of what they are expected to do each day (goals), week, month, etc. And to have a way to show if they are meeting or not meeting these goals.

Recommended books,

For small business - The E-Myth, by Gerber

also Good to Great, by Collins

Good Luck!

3

Thank you for your great comments!

I really don’t think resentment will make much difference. They’re all already resentful. Ultimately, they resent having to be at work. The lack of conscience is atrocious. Also, there’s next to zero creativity already, so I don’t think it can be destroyed if it doesn’t exist. And most of the jobs themselves don’t call for a lot of creativity. Don’t get me wrong, I would NEVER underestimate the power of creativity, but it’s a power that’s quite foreign to these people. As far as beating a system, they’re currently beating a broken system to a bloody pulp. A better system might take some bruises, but the net result would be positive. If you only knew the level of sloth, you’d probably be less sympathetic. It’s my natural inclination to think as you do and I’m a lover of freedom in the right context, but almost all sympathy I had for this crew has been destroyed.

What is one of the main reasons for supervisors? One important function to make employees accountable. But the supervisors do almost no accounting! Their supervisors do almost no accounting. This keeps going and going. How effective is a blind supervisor? If one man’s eyes are important, what about eyes that are open 24-7 and are all over the place?

Yes, the pre-qualification process is sorely lacking. But you also can’t base too much on it. It’s hard to predict who’ll be productive and who want. Also, why try to find good human nature or attempt to transform human nature? That’s an endeavour that even God is struggling with! I have an incentive idea, but I’d like to focus on the camera for just a tad longer.

Yup, all this stuff is already in place. It’s fairly subjective. With a camera, you can be objective. You can CLEARLY show an employees actions. Ever seen video introduced as evidence in a trial? It’s very effective. Also, just knowing the video evidence is available discourages legal action. This was a small reason for my suggesting a possible random routine generated by a computer that would tell them who to zoom in on and at what time. The cameras wouldn’t be hidden. That’s part of the beauty of it. Just the cameras’ presence would have a huge impact. I would guess that the average employee is idle 50% of the time! So theyre paying 8 hrs of pay for 4 hrs of work! I can almost guarantee, at least the intial impact, would be to increase the actual work time from 4 hrs to 7++hrs. Yes, some system-beating would creep in via work slowdown, but it would be seen and would still be much more productive than the current situation. But like I said, I have an incentive idea to discourage work slowdown, but I’ll hold it for now.

But the manager situation is akin to a political one. I’m not neccessarily addressing corruption, but the slowness of the political process. It’s like saying public schools have accountability to the voters. But what if that accountability was in the form of, ‘if I dont like this school I’m taking my kids elsewhere’? Compare this to the inefficiency of trying to convince a lot of other parents that a particular school or teacher is no good and you want to see changes! If you’re somehow lucky enough to effect those changes it’ll take forever and day and in the meanwhile all sorts of other issues creep in. The school’s knowing you can immediately effect their bottomline is much more effective and effects the school even if the threat is never carried thru on. In this manufacturing situation, it’s basically unskilled labor, so it’s not too hard to tell who’s contributing and who isn’t.

Bottomline to all this is that you can’t make rational decisions until you see things for yourself. They need to see what they’re trying to improve. It’s like trying to run thru an obstacle course during a cloudy night versus a sunny day.

4

OK, well it sounds to me (an objective opinion?) like the “cancer” in your system is terminal (to continue the metaphor).
If you’ve already had business consultants come in and they haven’t helped, perhaps that should tell you something. Did any of the consultants recommend cameras? If so why didn’t you follow the suggestions? If not, did you ask about using them? What did they say (about using cameras)? I’m afraid you really aren’t likely to find the real solution to your problems on a message board, as insightful as we posters may think we are.

Are you really looking for help/answers to your dilemma or only looking to find or convince someone of you proposed camera solution and using this message board for confirmation or just to vent? I would say at this point your only options are to Quit (if you are an employee - because you really don’t have enough pull to make a change), or to “clean house” (do some serious firing) if it’s your company.

I think the answer of a camera system, and you reply is very statist. You may think that people who aren’t misbehaving have nothing to worry about, only those who aren’t working (a common statist argument about many kinds of surveillance). “The beatings will continue until morale improves” say you. You propose the constant threat of being watched, but, if these people are really as apathetic as you claim, I doubt that cameras will “fix” them. OK maybe it will work for a little while, but at some point they will figure they are having to work too hard for what they are paid and quit, or they just won’t care about the camera system and will continue on until they are fired, and likely won’t care about that either. Likely the people who are doing their jobs correctly will be offended and possibly quit (to work somewhere that they are appreciated, and not constantly under the cameras watchful eye), leaving only those who are doing a poor job. And you say your company is losing money as it is, how much is this camera system going to cost? What happens if it doesn’t work? Who will monitor this camera system, and why isn’t he/she already monitoring the supervisors to make sure they are doing their jobs now? Are you possibly looking to fulfill some voyeuristic desire by being able to watch your employees without them knowing (not hidden cameras, just the fact that they can’t see you watching them)? Whose arse is on the line? These are important questions to answer. Good luck to you and this will be my last post as I feel I can be of no further assistance.

5

heres an answer you wont like

efficiency wages…

or a level below; more generally performance related pay.

further, how is the competitions work force? snoop around found out how they do it. finally if you cant compete, quit that and try something else.

6

As most may have already guessed, I’m just a regular Joe. I would be subject to my own ideas! lol.

Yes, I have an idea on incentive pay, but my current idea only relates to the supervisor. I think any incentive pay needs to start out very simple, because in this particular manufacturing setting it’s quite difficult to pin down EXACT levels of contribution toward production by each employee. The supervisors just basically stay holed up in the office 80+% of the time. The owners are investing multiple thousands of dollars a day into the daily operation of this single department and the stewards of this investment are woefully neglectful. I’m just sick of it all.

The supervisors indulge in gross dereliction of duty. They witness gross dereliction of duty. All they know is that they’ve been doing this for years. They’ve heard threats about getting efficiency higher. They’ve seen other companies come thru trying to get efficiency up and defects down. But there they stand, MANY years later, getting their checks and promotions! The company has finally made some moves toward layoffs, etc and believe it or not, the dereliction has grown. To show how you unenlightened these people are, the ones on the ‘ground floor’, they believe that slowing down production will help keep us in business! “They got all that product backed up in the warehouses. If you don’t slow down you gonna work yourself out of a job, boy!” Ha! Do they not know that our extremely high production costs and falling quality is why the warehouses are fill to the gills in the first place??? How hard is it to understand that a quality product at a lower price is going to move??? Nope, we gotta increase operating costs so we don’t “work ourselves out of a job.”

If the supervisor came in each night and KNEW his standard of living w/ be in direct relation to efficiency and quality, he would be a new man. His interest and the interest of the owners should be in one accord. This is why I made the statement earlier about using the nature of man instead of fighting it. They’ll try all the various ideas on their supervisors, trying to transform their nature. Why not use their rational self-interest instead of fighting it??? Now when the supervisor sees dereliction of duty he’ll TRULY see what it means! He’ll be on the floor wanting to know what’s going on. This would eliminate a lot of the need to try and micromanage every little thing. The supervisor’s commonsense would effect what’s needed and would also find longer-term solutions because it’s in his own interest. Otherwise, he does as little as he can, whenever he can because there’s no cost associated with it.

It would be much more difficult to base regular workers’ pay on production because they’re are so many variables involved. I could see MAYBE allowing the supervisor a very small budget where he uses his own discretion to add small amounts of pay to those that he sees as being most contributing toward his wallet. But this has problems.

No, I’m about as far as you can get from statism. In fact, I find anarchy quite interesting. Just ask my friends how anti-statist I am! The cameras would be employed by a PRIVATE company on his PRIVATE property. He is investing multiple thousands of dollars everyday into this one dept., doesn’t he have the moral right to know exactly what’s going on? Why would you want to obfuscate the truth? How can he make the most rational decisions if he’s a blind man? If you were laying down gobs of 100 dollar bills in a warehouse and every night they were being stolen, wouldn’t you feel justified in looking to see who is stealing from you? These people are risking tons of dollars everyday and they’re losing. Shouldn’t they be able to cut thru all the noise and see what’s happening for themselves??? Solutions can only come if you can ‘see’ and know. These are the first steps. Fortunately, cameras, in my opinion, are both solutions and solution finders. If they’re offended by cameras they should be offended by the supervisors watching them or the computers monitoring production. All of these are ways to gather information.

As far as the cost, It’d depend on how they implement it. I’m a BIG believer in incrementalism when it comes to employing solutions. They’d probably need about 15-20 cameras to get perfect surveillance, but they could start out w/ around 4-6 in high-traffic areas. I think that just their presence would effect a major uptick in production. This small start might cost $5,000-$10,000? Might be a lot more or a lot less, I dont know. They have LOTS of in-house people that could probably get it done. But to give you an idea of how little investment that would be, it’s my understanding that their monthly power bill is well over $1,000,000,000!

P.S. As far as the vouyer comment…I’m just a regular guy, out there with all the other Joes and Janes. I don’t forsee me leering at TV screens in an effort to see Ethyl’s 60 yrs old behind! This isn’t an office setting or a sorority. This is the real world and very few halfway attractive women come to work here. When they do, it’s like theyre a bunch of prisoners, “WHOA-MAN! WHOA-MAN, WO-MAN!” lol Besides, wouldn’t your assumption that guys wanna gawk be considered sexist?

7

Also, one tactic that might be employed in the ‘supervisor incentive idea’ is ‘fear of the unknown’. If a supervisor sees that he’s running at an efficiency that’ll result in his getting a good paycheck he might relax his efforts. Although, I think the way the incentive plan is devised could go a long toward remedying this tendency. There could be a slightly higher rate of pay increase as it gets higher and a higher rate of decrease as it gets higher, both falling on each side of the sweet spot. Back to my tactic and ‘fear of the unknown’.

I think that keeping the numbers that directly determine his pay hidden would tend to make him assume the worse. There would still be egads of info that would allow him to rationally monitor production, but the overall numbers of efficiency and quality would be unknown until the pay period is over. He would obviously have an overall good impression of how things are going and would be able to spot problems by checking out the current efficiency for particular pieces of equipment, but he’d have to go to great lengths to determine the most important numbers, great lengths that would serve him better on the production floor.

I think the incentive pay would also tend to expose the weak link. You’re going to have more competent supervisors take advantage of the incentive pay, i.e. succeed. I contend that this will create a significant gap between competent and incompetent supervisors and and a smaller gap between motivated and unmotivated. This would make it easier to see were managerial problems lie.

8

There’s your solution…

I would dust off the old resume and start hitting the pavement if I was you because your job doesn’t seem to have a bright future.

It could be intentional after all because they want to move the operations overseas and are just slowly idling the workforce as the work gets shifted.

Big difference between laying off the workers due to outsourcing and laying of the workers right before Christmas…

But you’re not going to make a difference if the problems are institutional and you’re just seen as a troublemaker causing everyone else extra work especially if they don’t give you the specific job of increasing efficiency in the workforce.

9

Resume? What resume?!? This is the reason for my finally being on the cusp of handing these and many other ideas over to a top, no nonsense executive. I’ve seen this crap go on for yrs and now that competitors are consistently and solidly beating us and the housing market is suffering…screw chain of command! Forget worrying about the risk of being a renegade. I plan to initially do it anonymously. If he takes a REAL interest and wishes to try some things out, then I’ll introduce myself. Who knows, I might be catapulted from manure to king of the manure. :slight_smile: But that’s not my goal. My goal is to save OUR jobs and secondarily to see if what I think are good ideas can be proven in the real world. These people in production, along side of me, may think they’re onerous, but much more onerous is them losing their jobs. Also, theyre easy jobs, it’s just that they might have to go from working 4 of 8 hrs to working 7.5 of 8 hrs. Is that really too much to ask?

No, I definitely dont believe its intentional. The person running the place is kin to the now deceased founder and theyve been striving for yrs to make this place work. Theyre very upfront about things and very employee/family oriented. A religious person as well. And THEY aren’t slowing things down, it’s the people running the machines. It’s not some sort of concerted effort either.

Well, they can work a little harder or not work at all.

Hopefully the strength of the ideas will convince them. But these ideas aren’t going to the guilty parties. They’re going to the next highest executive. He’s fairly hard-nosed and will make some changes if he believes my case has any merit. I’m asking him, if he likes any of them, to use them as his own and to leave me anonymous, at least for now.

10

That’s your problem right there. If the proprietors don’t understand their own business they won’t be able to fix it. Hiring an outside consultant won’t help because the consultant only gets a cursory view and they don’t know enough to instruct him.

Senior management needs to become acquainted with their processes and then with the specific problems impairing efficiency. Only then can improvements be made. Perhaps a thorough report with specifics and recommendations would get their attention.

I take the view that inefficiency is a symptom of bad management. The proprietor owns the assets and pays the wages. It is up to him to direct and motivate his labor force.

I don’t think cameras would improve morale. In my experience (and I have turned around a company with serious morale problems) cultural problems are not solved mechanically. Senior management seem to have their heads in the sand. I doubt they have the will to discipline recalcitrants–otherwise how would this situation have arisen? There has to be a willingness to demand performance, reward compliance, and punish idleness. Management has to be willing to fire anyone who is not performing or who shows a negative attitude. Perhaps not easy, perhaps a departure from long standing practice, but necessary. You cannot achieve efficiency when you have troublemakers undermining your efforts.

Do they want to hire a consultant who will sort things out for them? I’m available… :wink:

11

Assessing the Division of Labor
The Convergence of Supply and Demand

Currently, employees are assigned to a certain location where they’re responsible for a set number of machines. Let’s pretend they’re responsible for 20 machines. How well the machines will run on any given day is unpredictable. Also, there are times when machines are down for maintenance. An employee could come in, go to their section and have a very easy shift because the machines are ‘behaving well’. However, the employee beside them might be having a bad shift because their machines are acting up. So you’ll have one employee having more work or demand than they can meet, while another has lots of free time. The company NEVER benefits when an employee has all this free time.

(I refer to the employees as ‘supply’ and the work that needs to be done as ‘demand’)

You have these constant missed opportunities. The employer has invested in all these supplies (employees), trying to meet these demands, but they’re not coming together. I propose that the supply be unimpeded and allowed to flow to where there’s a demand. The only problem with this is that whenever you allow this free-flowing the employee loses a sense of what I call ‘geographical ownership’. We all know the benefits of ownership and how incentivizing it is. If an employee is restricted to a certain section of machines, there’s a sense of ownership, pride (yea, right!) AND accountability, since the supervisor can immediately know what the efficiency of each section is. Of course, as I’ve said before, our efficiency is way too low and this so-called accountability doesn’t seem to be enough. However, I do readily admit that, in principle at least, this sense of ownership does motivate employees.

So how do you keep a sense of ownership AND allow for the unimpeded convergence of supply and demand? Well, the main statistic that reflects how well a particular section of machines is running is ‘run time efficiency’ - what percentage of the current shift have they been running? However, I think a sense of ownership can be approximated by tracing the contribution each newly mobilized employee makes. There are computers assigned to each section of 20 machines. You can scan your name badge on each computer and enter info. You can track how many machines each employee starts, how long they ran after being started and how many ‘department tours or rounds’ the employee made.

There could be any number of formulas devised to determine how much credit an employee gets. For example, if an employee starts a machine and it only runs, let’s say, 5 mins., then the employee might not receive credit for that start-up. They can’t just sit there and start a machine over and over that keeps breaking down (cameras are afoot as well). They wouldn’t get credit. Also, the need to restart a machine too many times in a certain period of time calls for a technical employee. I won’t get bogged down in the details of all that, unless it’s warranted.

Here’s a way of illustrating the losses involved when supply is hindered from reaching the demand:

We’ll assume each employee is a good little boy or girl and goes to meet the needs of their section as soon as is logically possible. The total demands of a section are based on an 8 hr shift. If the demands of the line and the supply (employee) are ‘perfectly’ matched, the demand will be 8 hrs. If the demand is low, it’ll be < 8 hrs and if the demand is high, it’ll be > 8 hrs.

Section Demand (hrs)
1 8
2 10
3 6
4 12
5 4

OK, we’ll assume that in Section 1 there was perfect efficiency - perfect level of supply to meet the demands. (0)

In Section 2 there is a demand for 10 hrs of supply but each employee only has 8. So Section 2 has a surplus or unmet demand of 2 hrs. (-2)

In Section 3 there is a demand for 6 hrs of supply. There is plenty supply for this demand, with 2 hrs of supply left over. (+2)

In Section 4 there is a demand for 12 hrs of supply. Each employee represents 8 hrs of supply, so the unmet demand is 4 hrs. (-4)

In Section 5 there is a demand for only 4 hrs of supply. This leaves a 4 hr supply surplus. (+4)

Even though we could easily calculate -2-4+2+4 and get 0 or ‘perfect’ efficiency, we are unable to because these numbers are kept separate.

In a perfect world, this could all be worked out. The total supply and total demand are equal, but since they’re not one entity and are divided up into sections, the perfect supply can’t perfectly meet the demand. You have Sections 2 and 4 languishing from unmet demands and the efficiency takes a big hit. Sections 3 and 5 amply supplied. The 16 hrs of supply at Sections 3 and 5 represent 6 hrs of surplus supply. The 16 hrs at Sections 2 and 4 represent 6 hrs of unmet demands.

These ‘supplies’ can’t be saved for later use, they’re temporal. Once an employee’s 8 hr shift is over, that excess time he had will vanish. The excess supply has to be employed immediately or it’s lost.

Like I said, there does exist at least a residual sense of ownership by assigning each employee to a particular section of looms, but it really just boils down to being able to hold someone accountable. I submit that there are MANY various ways to assign accountability beyond that of ‘geography’. In fact, this particular class of employees, entry-level, are the only ones restricted to a certain area. The technical employees move to where the demand is.

This entry-level position has other duties as well, but I believe these duties need to specialized. One employee can do a particular duty full-time and one employee can perform the other duty full-time. This would remove the employees discretionary power. These employees currently have the power to discern between performing an essential duty (starting machines up) or a secondary duty (cleaning, for example). The employee will almost EVERYTIME either fully engage in secondary, non-value adding duties or will to some degree postpone performing their essential duty, starting a machine. Why would someone leave the solvency of their company in the hands of someone deciding between sweeping and producing? It’s insane to expose yourself to the whims of those with their own self-interests!

(There’s a STRONG culture of non-innovation. If someone attempts to make improvements their ‘audience’ is unconstructively critical. You can’t even discuss ideas without nearly every single person you talk to rolling their eyes and immediately hating you! Never mind the company and their jobs are in deep doodoo. Typical response, “They ain’t hurtin’. They got millions.” lol)

12

I want to be clear. This sense of ownership via accountability doesn’t have to perfectly assess an employees contribution. Yes, anything closer to the truth is good, but the point I’m trying to make is in the ‘sense’ of ownership. If there’s a systematized stat-tracking device, along with sensory evidence (camera, supervisors), it’s mere existence will influence an employee’s actions. The current ‘sense of ownership’ or accountability via ‘geography’ has several formulaic weaknesses as well. For instance, it doesn’t account for machine downtime that the entry-level employee is not responsible for. Machines down for maintenance, though they’re the responsibility of technical employees, are still on the entry-level employee’s account. I don’t want to make the choices sound as though they’re between a perfect sense of ownership and a nebulous, deranged, non-sensical one. If everything was equal and the demands of each section of machines happen to always be the same, then yes, the current sectionalization would be better, but the benefits of ‘supply meeting demand’ far outweigh any associated costs, in my estimation.

13

i think your 2 main points are sound.

1)if the most glaring problem is a misallocation of labour resources vis-a-vis- entry level machine operators, i .e. two many idle hands ‘working’ section A, whilst section B is struggling to keep ticking over because of a lack of hands, then i would abandon the geographical assignments at the level of the operators. Better to have a market in machine operators, which the managers can buy from. have managers assigned geographically to sets of machines, they are responsible for their areas efficiency + cleanliness etc. Then they bid against each other from a common pool of machine operators, to get as close to meeting their own targets as possible.

  1. specialization /division of labour would have obvious benefits. a good manager (see above) would want to ensure he has the right number of operators to operate, and the right number of cleaners to clean on any given day, if an operator and a cleaner can be the same worker, it should be the managers discretion as to what the employee does. but the managers have to be held accountable for their decisions , ultimately by their own managers giving them appropriate targets and incentives, and discipline.
14

actually; another way to do it would be to have say 90% of all operators assigned to set machines, as before, but then create a new ‘floating’ team made of the other 10% of operators (or whatever percentage split is reasonable). with their own team manager, that the other managers can beg help from , to plug gaps.

15

Something similar to incentive pay: employee stock ownership. Employees with a stake in the company doing well are generally going to want to do their part better. You don’t say how big the company is, or what kind of company it is (or maybe I missed it), so I don’t know how practical an ESOP would be, but this isn’t too far-fetched an idea, and would offer greater incentives to the employees.

16

They’ve tried profit sharing. It’s just too far removed. If they’re only 1 of 1,000+ employees, they see no benefit from putting forth more effort. On top of that, they’re being held responsible for all the other variables involved in determining a company’s level of profit, e.g, housing starts, competitors, raw resources costs, fuel costs. So they have an infinitesimal 1/(>1,000) input to begin with and it’s further diluted by the vicissitudes of the market.

Plus, they don’t correlate the size of their check with the company’s actual profits but rather correlate it to the size of the company’s greed. Unfortunately, this tortured correlation is always a lose-lose for the company. A smaller check means the company is being greedy and not sharing the wealth. A larger check validates these suspicions by proving the company was indeed being greedy. [:^)]

17

'When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.’

sounds to me you could taser every second employee, download the clip to youtube, and still have systemic problems. bail out now, you’ll save precious time, and having a liquidated company as your last c.v. entry ain’t a good look. the above quote is one of my favourites from warren buffett.

18

OK, it’s been a while. Thought I’d add some more details. I’m trying to finalize some things and thought I’d post some comments here.

Incentive Pay Logic

If a coach takes over a football program mid-season, the day before their next game, how much are the results of tomorrow’s game a reflection upon his coaching ability? Very little, correct? This is an analogy of the supervisor’s level of influence upon the department in which he’s employed. At the end of the first hour of his shift, he hasn’t had a lot of time to exert his influence. Of course, that level of influence would be much greater than the coaching analogy above, but in principle, it’s the same thing. As the games, weeks, months and years pass for the coach, the results of each successive game could be said to be a better representation of his ability than the game, week or year before was. As he accumulates a record, as his philosophy and efforts are exerted upon the program, we more strongly tie the program’s success to his abilities. Each minute that passes in a supervisor’s shift, the more time he has had to do what he will do and what he can do. Also, after a coach leaves a program, his influence doesn’t simply disappear. It’s a gradual process. The same is true for the supervisor. The actions he takes, the decisions he makes, will have an influence upon the next shift. If he doesn’t maintain certain standards, the next shift will have to compensate, if that shift’s supervisor wishes to be successful. Also, in the supervisor scenario, if you don’t hold the previous supervisor, to some degree, accountable for the next shift or the next few hours following his shift, he will tend to make decisions that can be counterproductive for the department as a whole. He may choose quick fixes over long-term fixes. However, it’s also obvious he can’t be held responsible for too many of the hours following his shift, since he’s not there.

With these ideas in mind, I’ve constructed an incentive pay chart. It considers his last hour on the clock as the greatest representation of his work. From this 8th hour, you can go back 1 hr and say that the 7th hour is the next best representation of his work. The 6th is next, then the 5th, 4th, 3rd, 2nd, and finally the 1st. But what about the following hours, the hours where his influence is still felt, even though he’s off the clock? Of course, the first hour after his shift has ended will reflect his efforts more so than each succeeding shift. In my particular incentive pay chart scenario, I took this ‘sphere of influence’ concept into the 6th hour. This would allot 14 hrs as being significantly influence by him. This is in no way a perfect assessment. He could make personnel decisions that last for weeks. He could make manufacturing decisions that have lasting effects. However, the pay plan must also maintain it’s incentive effect. It must motivate the supervisor by keeping the consequences of his actions manageable and directly correlated with his standard of living.

I’m basing this incentive pay scenario on a 14 hr scale. The largest portion of his pay will be a result of the efficiency at the end of his shift. Here’s how I did the math. I added the 14 hrs together: 1+2+3+4+5+6+7+8+9+10+11+12+13+14 = 105. 105 will be the denominator. The most important hour, the 8th, will be given the largest numerator, 14. So the 8th hour will represent 14/105th of his pay. As you creep back toward the beginning of his shift, you have:

During Shift
7th hr = 13/105
6th hr = 12/105
5th hr = 11/105
4th hr = 10/105
3rd hr = 9/105
2nd hr = 8/105
1st hr = 7/105

After his shift ends, the largest portion will come from the end of the 1st post-shift hour, 6/105.

Post-Shift
1st hr = 6/105
2nd hr = 5/105
3rd hr = 4/105
4th hr = 3/105
5th hr = 2/105
6th hr = 1/105

Here’s the fractions as percentages:

During Shift
1st hr 7/105 = 6.7%
2nd hr 8/105 = 7.6%
3rd hr 9/105 = 8.6%
4th hr 10/105 = 9.5%
5th hr 11/105 = 10.5%
6th hr 12/105 = 11.4%
7th hr 13/105 = 12.4%
8th hr 14/105 = 13.3%

Post-Shift
1st hr 6/105 = 5.7%
2nd hr 5/105 = 4.8%
3rd hr 4/105 = 3.8%
4th hr 3/105 = 2.9%
5th ht 2/105 = 1.9%
6th hr 1/105 = 1.0%

Here’s some various ways to look at it:

80% of pay is from During Shift efficiency
20% of pay is from Post-Shift efficiency
37.1% of pay is from last 3 hrs of shift

I really like this 37%. I think the effect is: “I better keep the ball rolling on this shift because every hour becomes more and more crucial. If I let things slide, I’ll get hit hard.” Also, this should get the next shift off to a good start.

As I stated in a previous post, I think it’d be a good idea to keep the overall efficiency of the department inaccessible (kept secret) until the week has ended. If a supervisor sees that his efficiency/pay, is going to be an acceptable level, he might tend to reduce his efforts. However, if he’s not sure of the efficiency, he’ll tend to maintain his effort so as to avoid any surprises. I see the effects of efficiency awareness all the time. If we’re running especially bad, he’ll be much more likely to be on the floor looking around, trying to get things going. The higher our efficiency, the more likely he is to be holed up in some unproductive state, which is pretty often in the current environment. I guess they don’t realize that having an even higher efficiency can help combat the lower efficiency hrs. There would still b plenty data available to him, such as individual machine efficiency, but he’d not have any definite knowledge about the overall efficiency. I like to call it, “Fear of the unknown.”

In my mind, I think it’s VERY important to determine how the pay level is going to be adjusted in relation to efficiency. I believe the pay curve needs to have a fairly steep upward trajectory as it nears the company’s point of profit. That carrot needs to start getting pretty fat and pretty orange as the efficiency levels take the company from the red and into the black. Of course, they’ll need to consider how much of their profit would be negated by the increasing incentive pay. But I do believe in aggressive levels of compensation when someone is doing really well.

A couple of other things.

Some people, no matter how perfect the situation, simply aren’t going to rise to the occassion. It’s obvious they’ll have varying degrees of success in varying environments. Think about how much less successful you’d in all likelihood be if you were in a communistic country. The vast, vast majority of the communist population are going to be equally poor. And with some sickos out there, that makes it a just system. “Hey, we all eatin’ dirt.” They have a problem with a free societies unequal results. Nevermind that 99.99% of the people in a freer market economy are much richer than those in a less free society. All they see are folks making $200/wk compared to those making $2,000,000/wk. I think and I hope that this inequality of result will show itself in this incentive pay plan as well. In a situation where great dividends are offered for superior effort, like in a free market, it will attract better talent. You will recognize the better talent by the differences in their income. Unfortunately, there are only 3 supervisors (hands-on management) in this department, so it’s not exactly a vast continent of competitors. :slight_smile: I wonder if it might not be a good idea to offer these supervisors a chance to swap out with a supervisor from another department. If they don’t like the new pay plan and wish to maintain the status quo and there are supervisors in other departments that would love the chance to make a fat check, this might free up more talent or potential talent. The problem would be that the supervisors changing departments would have less knowledge about their new environment than they did in their old. Heck, maybe the crummy supervisors will simply quit and make room for an intradepartmental promotion. (You’d be amazed at how effective someone can be with the right situation/incentive)

There are also quality of product issues that must be part of the pay plan, but I’ll add that tomorrow, I hope.

Do you think it’s a good idea to devise the pay plan the way I have? Do you see anything you wish to comment on?

Thanks!

P.S. I also plan to add some comments about the purpose and effectiveness of paper work, especially as it relates to a de-bureaucratized system.

19

Made a small mistake. The correct sentence is in bold and the bold and underlined word is the changed word. It originally read, ‘shift’.