Trade Overtime For An Incentive-Based Reward System
Many consider having their employees working overtime to be a badge of success, that it is the mark of a smart business man. They believe it means that there is so much demand for productivity that it can only be met by paying employees time and a half to work beyond their regular 40 hours. They think is makes them more successful. This makes no sense at all. It sounds like bad management and low productivity to me. That’s not to say there isn’t a time and place for overtime, I am just not sure where and when that may be.
My definition of overtime is rewarding your employees for not producing enough during the 40 hours allocated, which is both possible and a reasonable expectation. Overtime means paying your workers extra to work slower. This does not make any sense to me at all. Let me say it very clearly, productivity is the issue and paying employees more to produce less is not a way to increase productivity. It’s simply a way to give your employees more of your profits than they deserve. I have visited too many businesses where the owners adore their employees, claiming they have the best, when the truth is they don’t, as evidenced by the fact that they frequently have to resort to overtime to get the job done. The owners argue that overtime is to be expected and that it’s better than employing too many people. Interesting logic.
Most of America works at the productivity rate of 30-45% Believe it! At best, you are getting 20-30 minutes out of every hour in meaningful production. Now, this is not to say your employees are purposefully working slower than they could, or producing less than possible. It is to say, however, that with concepts like overtime and hourly wages, you are training them to work slow and rewarding them to produce less.
So what does work? An incentive-based reward system. It works fantastically well in increasing productivity and has many more advantages. If properly designed and implemented, productivity can increase by one third or more. This means profits increase dramatically and some of the increased profit is returned to the employees as a reward for outproducing the stated objectives or current standards. Both the company and the employees make more. What a great concept! This will occur without an additional dollar being invested in additional employees or equipment, and without overtime. In fact, you may even be able to trim the payroll, then hit the accelerator with incentive rewards and outproduce prior benchmarks by 0ver 50% with fewer employees! That works for everyone. Everyone is on board, everyone is pulling together, everyone earns when extra profit is made, not when it isn’t. That’s fair. In addition, it provides an opportunity to implement a number of additional directives into your incentive-based reward system, all of which contribute to your bottom line. This equals better quality of life in the business and greater longevity of the employees and your business.
Some other advantages and benefits are less absenteeism, increased skill sets, better attitudes, more peer-training, better customer relations, fewer mistakes, higher quality workmanship, better appearance, and a happier crew overall. Whatever you want your business to be, it will happen when enforced by the requirements of participating in the reward system. When work requirements become part of your incentive-based reward system, they will be achieved. It’s a career path for an employee, not just a job.
It’s your choice–more profit, happier employees, a better business, or pay more in overtime for less productivity. What will it be?
