Executive Briefings

How Incentive Pay Programs Pay Off

Labor incentive programs can work hand in hand with your supply chain strategy by improving such things as productivity and quality. But, says Tom Stretar, senior project manager, enVista, employees must see the benefits to them if these programs are to succeed.

Success in implementing labor incentive programs really turns on two things: first, there has to be a stated goal, such as boosting productivity or reducing costs per case; second, that aim has to be aligned with employee acceptance of the program. The latter is absolutely crucial, of course.

"It could be additional pay in their pocket, it could be a gift card or something like additional time off," Stretar says. "That's the tangible part that the employees must see. You have to have a win-win for the customer and for the employee in order to get them to work."

Stretar feels such programs should be integral components of a company's supply chain strategy. Looking at productivity alone, increases of five to 30 percent are common. The value of incentive programs is reflected in other metrics as well, such as enhanced quality, reduction in shipping errors, and improved turnover in one's facility.

Reduction in the labor force can't be overlooked. The cost of onboarding an employee can run from $2,000 to $5,000, Stretar says. If that kind of money can be saved through incentive programs that reduce the size of the workforce, that's a significant win for the company.

Best practices can ensure the success of incentive programs, but neither the practices nor the programs are do-it-yourself in nature, Stretar says. "You've got to engage the employees up front. It helps to have outside consultants to build a foundation of methods and standards. That's something a lot of companies don't have experience with in-house, so they call upon consultants."

Stretar says employees can see more money in their paychecks immediately, and employers will likely see increased productivity within four to eight weeks after implementation.

To view video in its entirety, click here


Keywords: SC Finance & Revenue Mgmt., HR & Labor Management, Business Strategy Alignment, Global Supply Chain Management, Technology, Employee Performance Incentives

Success in implementing labor incentive programs really turns on two things: first, there has to be a stated goal, such as boosting productivity or reducing costs per case; second, that aim has to be aligned with employee acceptance of the program. The latter is absolutely crucial, of course.

"It could be additional pay in their pocket, it could be a gift card or something like additional time off," Stretar says. "That's the tangible part that the employees must see. You have to have a win-win for the customer and for the employee in order to get them to work."

Stretar feels such programs should be integral components of a company's supply chain strategy. Looking at productivity alone, increases of five to 30 percent are common. The value of incentive programs is reflected in other metrics as well, such as enhanced quality, reduction in shipping errors, and improved turnover in one's facility.

Reduction in the labor force can't be overlooked. The cost of onboarding an employee can run from $2,000 to $5,000, Stretar says. If that kind of money can be saved through incentive programs that reduce the size of the workforce, that's a significant win for the company.

Best practices can ensure the success of incentive programs, but neither the practices nor the programs are do-it-yourself in nature, Stretar says. "You've got to engage the employees up front. It helps to have outside consultants to build a foundation of methods and standards. That's something a lot of companies don't have experience with in-house, so they call upon consultants."

Stretar says employees can see more money in their paychecks immediately, and employers will likely see increased productivity within four to eight weeks after implementation.

To view video in its entirety, click here


Keywords: SC Finance & Revenue Mgmt., HR & Labor Management, Business Strategy Alignment, Global Supply Chain Management, Technology, Employee Performance Incentives