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  • #27666

    sreedher
    Member

    Can any one help me with providing some information on ‘wage incentive plans’. Any information pertaining to this will be appreciated.
    Thanks in advance
    Sreedher

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    #68073

    Kevin Mader
    Participant

    My advice: don’t use incentives.  They work to do the opposite of what you expect.
    Regards,
    Kevin

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    #68079

    Peter Richards
    Participant

    Hi again,
    Are you talking about incentives for Black Belts or for the whole organisation? I may be able to provide some information around what we have introduced to progress Six Sigma within this organisation for BB’s. Refer to my other e-mail that you responded to for my address.
    Cheers.

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    #68118

    Anonymous
    Participant

    I encourage others to post what their companies have done / not done for their BB. Personally, I believe incentive plans work.
    At the successful completion of training we were given stock options for 1,000 shares vesting over a 4-year period. There was no break on the strike price of the stock (it was granted at existing market price), so it remains to be seen if this really turns out to be a benefit.
    We were then given an “Incentive Plan” based on division 6 Sigma financial objectives (75%) and individual project objectives (25%). Each objective has min-target-maximum payout amounts. There is no payout for results below the minimum. Total Target award is $ 4k.
    Some of the problem we have with the plan is that individual objectives have not been clearly defined.
     
     

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    #68124

    Kevin Mader
    Participant

     
    For those following this thread, I would like to refer you to Alfie Kohn’s book, “Punished by Rewards: the problems with incentive plans, gold stars, ‘A’s, praise and other bribes”, 1993.  He offers compelling arguments against many of the myths associated with the need to bribe employees, students, and our children with “Carrots and Sticks” to do things.  Kohn expands on the works of many great psychology experts and challenges Skinner’s pop behaviorism.
     
    Incentive plans work for the short term while robbing associates of intrinsic motivation.  Incentives lead to more incentives.  What will be enough?  Treating people like rats or pigeons is not the answer.  Great harm can be done to a System by dangling carrots in front of people, all of which run in directions not necessarily pointing at a common aim.  In order to get a prize, one might resort to less than ethical tactics.  Additionally, rewarding BBs while ignoring the many other people in the System indicates that these folks are the only ones worth rewarding.  This is simply not true.  It also leads to ill will throughout and is predicated by those who generally benefit more than anyone else in the system anyway.
     
    I have noticed many threads over the past year asking about Incentive Plans that work.  Stop looking: they don’t exist (at least not in the way you might think they do).  While anyone can be bribed for a period, the fact is simple: we want motivated workers, not ones that have been bribed.  Stop treating people like rodents or stop being treated like one.
     
    Regards,
     Kevin

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    #68125

    melvin
    Participant

    I agree.  Monetary incentives for individuals is not the way to make improvement programs succeed.  The incentive should be seeing the results of a project contribute to the top-line/bottom-line of the company where all employees win because the company is succeeding (surviving!) and everyone has a job, may be getting benefits from increased stock prices and/or corporate-wide profit sharing etc.
    The real problem to be solved is without management actively championing the projects, projects stall or fail.
    Individual incentives should be in the form of recognition so that the individual feels like a true professional.  The hopefully others in the company will follow the leader.  

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    #68132

    sreedher
    Member

    Yeah that is true…but there should be bare minimum financial benefits for the ‘people contributing to the bottom line’ well ofcourse there has to be recognition as well. What matters is by the end of the month what you carry to your house! hope that is agreed! May be a optimum combination of both!will do in a best way.
    sreedher

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    #68143

    Kevin Mader
    Participant

     
    Sreedher,
     
    Who in the organization contributes to the bottom line?  Who does not?  Interesting questions when you think about it.  How many line workers, all of which contribute to the bottom line, will receive a bonus this project?  How about this year?
     
    Bonuses are generally reserved for the people in the highest places, the same folks who have enjoyed better than fair salaries for the most part.  They view themselves as a ‘better class of people’ within the organization if not outright, subconsciously.  Title like: the risk takers, money makers, and shakers are passed around.  Now, I see that the trend of “carrots and sticks” has infiltrated the ranks of BBs.  Everyone wants a piece of the action, but only some will get it.  Questions of adequately defining project goals, creating targets beyond statistical limits, and many, many assumptions taken for fact create a lottery system for only a select few but apparently growing population.  Does this sound fair to all the other folks who contribute to the success of the organization and get nothing?  What lessons will they learn from all of this?  Will this motivate them?
     
    Fair compensation is a must if anyone plans to retain employees but money does not motivate the employee (unless it is to satisfy the very basic of Maslow’s Hierarchy of Needs: safety, food, and shelter).  Who is closer to these basic needs?  Executives, BBs, or line folks?  For the most part though, money only meets a hygiene factor as is presented by Fredrick Herzberg.  The best form of compensation, beyond a fair salary, where all participants in the component of a system are fairly addressed is Profit Sharing.  Sadly, profits are generally doled out in the form of bonuses for Executive/Director levels and in the form of Dividends to the Stockholder.  The line worker is most often overlooked.  Now BBs and Champions want a slice!!  Shouldn’t everyone get a slice?
     
    On your point about Recognition: Recognition is often touted as being a good substitute for rewards.  It is amongst the list of Motivating Factors as identified by Herzberg.  It should be noted though that not all forms of recognition are positive.  For that, I refer you to Alfie Kohn’s views on this.  Rewards and Recognition are very similar, albeit pats on the back will not buy you much at the store.  An optimal balance of fair compensation and recognition (not public recognition) will help to create an environment that will foster Motivation.  Still, more is necessary.
     
    As Herzberg has stated (please do a search for “One more time: how do you motivate employees?” original release in 1968, reprinted by Harvard Business Review in Sept 1987 and posted on the net), salary meets a hygiene factor.  Hygiene factors must be met in order to create no dissatisfaction (notice my careful wording as no dissatisfaction does not equal satisfaction).  Motivational factors such as: pride in work, advancement possibility, growth, recognition, and achievement will bring a person satisfaction as there absence will bring no satisfaction.  Money will create movement, but not motivation, there for, not bring satisfaction (perhaps it is fair to say that money might bring a short-term happiness, but soon fades).  Aren’t we after a motivated workforce?
     
    I assert that using bonuses and incentives in organizations do exactly opposite of what we expect them to do.  We continue to tie into false assumptions and failing paradigms by precipitating the madness in the hopes of organizational success (oh, and let’s not forget about the stockholder).  But how could we know?  Pop-behaviorism is so widely accepted and practiced in our lives.  We chase carrots and run from sticks with great regularity.  It even seems normal to us.  Sadly, Six Sigma feeds into this false assumption and robs associated of intrinsic motivation.  Bonuses and incentives, threats of holding back advancement unless one is a BB, and pleasing the stockholder and the organization ahead of the customer are blatant and obvious examples.  BBs are human beings, and are victimized the same as anyone else.  Their intentions for the most part aren’t to hurt folks, but do a good job.  But sadly, best of intentions won’t help create constancy of purpose, put food on the table and offset the terrible harm of greed and the Western Management Philosophy.
     
    I agree that I need a monthly salary to survive and like to think that I earn a fair living.  However, there are many ways to satisfy this need, some illegal and others immoral.  Making money at the expense of someone else’s right to pride in work and fair compensation is not one of them for me.
     
    Regards,
     
    Kevin

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    #68144

    Kevin Mader
    Participant

     
    Bob,
     
    You raise a good point.  Management must champion causes in the organization.  You even imply leadership – a necessary ingredient for success or survival.  Your point about survival should be well taken by those following this thread.  We will not always be in a prosperous time and ‘survival’ will be the rally cry.
     
    Recognition is a tricky thing.  How many times have you been in a situation where somebody was patted on the back for doing something you see as quite routine while you received nothing for staying late and working hard?  How did you feel?  I’ll bet ‘not good’ and this is why public recognition fails.  One person will feel good (for a little while) while many others do not (and for a much extended period).  We often fall victim to the assumption that we must offer positive reinforcement so we offer praise and recognition.  The assumption is that we need to tell folks that they are good or otherwise they will not feel that they are.  Is this true?  Recognition should be doled out in a very discreet and subtle manner.  Hitting at a subconscious level is ideal, but not always possible.
                    
    People build their own self-esteem; you and I cannot build it for them.  Nevertheless, we still try to because we have been told that we can (“go motivate your people!!  They can do it!!).  The lesson we must learn is about what the word ‘intrinsic’ really means (especially how it is connected to our learning and motivation).  Sadly, we resort to competition and rewards to create intrinsic worth.  Both do exactly the opposite.  Why do we use poison to cure people?  Because we have prescribed if for so long, we think it is the right thing to do.  We are caught in a paradigm!
     
    I thank the original poster and the many who have taken time to respond to this thread.  For me, this is one of the most important factors that must be discussed and understood for the success of any company (regardless of Six Sigma, TQM, etc.), school system, or even your families.  I can’t recommend enough the contributions of Alfie Kohn in his many books on the topics of Competition and Rewards (he has also written several books on other myths we hold to be ‘facts of life’).  I am also very grateful for the contributions of W. Edwards Deming, Peter Scholtes, Tom Coens, Mary Jenkins, Fredrick Herzberg, Douglas McGregor, and A. Maslow who have transformed the way I think about human behavior and psychology.  Reading their message is the beginning steps of unraveling the damage caused by the predominant pop behaviorism popularized by B.F. Skinner for more than 50 years of his life and unfortunately for almost a century with the bastardization of many of Fredrick Taylor’s management principles that are buried in the Western Management Philosophy.
     
    I wish you all good reading!!
     
    Kevin

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    #68161

    Anonymous
    Participant

    It looks like this thread has created some discussion, mostly on the negative side of incentives for BB, so I feel the need to expand on what is happening at our company especially as it relates to line workers.First everyone but management is on a profit sharing plan based on profitability. This plan also has min-target-maximum numbers and no payout below the minimum. So, assuming the numbers are met, there is something for the workers on the line.Management and sales have their own plan(s) and do not participate in the above plan. I won’t go into the details here unless I need to. Naturally more money is involved and the plan has more elements than just profitability.Now come the BB. We were told we would work as BB for 1 to 2 years and then return to our previous job or some other job. The BB incentives mentioned in my earlier post are on top of whatever incentive plans we already participate in.This being the case, then the BB “extra” benfits are limited to the one-time stock options (over a four year vesting period) and two incentive payouts which may or may not materialize. I see this as a way to motivate other employees to aspire to be BB.Remember, the line workers still get something, that something being based on profitability. Successful Six Sigma programs contribute to profitability and therefore benefits the line workers as well as upper management.I haven’t read all of the books mentioned in the posts so can’t comment on their contents. I am familiar with Maslow. I do agree that the best situation is a motivated and dedicated work force without the necessity for incentives, but I don’t see management ever giving up theirs. The best we can hope for is that there is something for everyone (like our existing profit sharing plan).Compensation for BB is discussed in the book “Six Sigma, The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations” by Mikel Harry and Richard Schrodeder. A quote from the book is “In companies where success of Six Sigma projects are heavily dependent on the Black Belt’s team members, not only should Black Belts be rewarded in the ways discussed above, but 20 percent of the total project savings could be distributed among the team members. Companies that do not have a competitive financial compensation package in place when they implement Six Sigma will not just lose Black Belts-they will not see Six Sigma reach its full potential.” Later in the book it states “…financial compensation is a powerful reinforcement tool in helping organizations implement the Breakthrough Strategy and retain their Six Sigma players. Compensation levels tell employees what managment considers important, and is a way for senior management to reinforce their words and show commitment to a vision.”Based on the above it seems there are some valid reasons to provide BB incentives.The discussion may continue with a debate on the worthiness of incentives in general but what I would like to see is feedback on what other companies are actually doing in terms of incentives for BB (and others) and how effective these seem to be.

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    #68176

    A. Different Annonymous
    Participant

    I’m afraid I’ll have to agree with Peter. The “rewards” promised to BB’s in my organization have been major stumbling blocks in gaining the (essential for success!) cooperation of team members who will not be getting the same incentives.  Over and over again, when recruiting for a BB project team, I hear “Why should I help you?  You’re the one getting the stock options and bonuses, not me.”   In the cases where I can get them to give me a chance, fulfilled promises of recognition such as letters to their boss, gift and award certificates, team members making the presentations to top management, and buying the team pizza at major milestones help a little.  But every time I start a project in an area where I have no personal track record, the problem arises again. I don’t need this headache – it certainly isn’t worth the $5-7,000 over 3 years that the incentives will provide at best.  And the options promised to BB’s are deep under water (option price is higher than current market by more than $5 / share as I type) and expected to stay there for one to two years past their expiration.  What a great incentive that is – NOT!
    Our organization did have relatively universal profit-sharing on top of regular adjustments to base salary, but for all the salaried employees, that has been changed in the past 2 years (co-incident with the introduction of 6 Sigma, but not directly related, as far as has been announced) to individually determined “performance bonuses” with the amount of the bonus pot available company-wide and for each department determined by overall company performance.  For the low and middle level managers, it’s even worse – your “performance bonus” is based not on how well you met your assigned objectives, not on how well your department or division did on achieving their goals, but on where you, personally, fall in a force-ranking process covering a group of 50-75 people at the same level but for a variety of bosses – some of whom had very different (potentially unrelated) assignments and objectives.   So everyone is in direct competition with his or her peers in the rest of the organization for even cost-of-living raises and bonus money, and no one really knows what the final criteria will be for the forced-ranking.  
     In this climate of fear, uncertainty and doubt, teamwork and cooperation, never excellent in this organization, have been totally destroyed.  This is at least part of the reason that my company’s Six Sigma program has not been as succesful as expected by our top management (the same top management who changed the compensation plan!).
    I also agree that what an organization should be trying hard to foster is intrinsic motivation.  People do, by and large, want to do a good job. And people value recognition from those they respect as being able to recognize the difference between an excellent job, a good job, a merely adequate job, and one where the letter of the specification may be fulfilled, but the spirit is violated.  When you have evidence that your boss can be easily fooled into celebrating mediocre performance, when the reward for excellent performance is more and harder work AND  increased expectations so that it’s harder to get any additional rewards- well, let’s just say that few people have the strength of character to keep doing their best or help others to do the same.

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    #68182

    Anonymous
    Participant

    Thanks for the reply. I can certainly see where you are coming from. If team members in our organization start having responses and feedback like those in your organization I may well rethink my position. For now, we don’t seem to have that problem. Quite the contrary. Team members have been anxious to “make a difference”. They want the opportunity to improve the way we do our business.Six Sigma is relatively new here and the first round of projects are starting to close and be implemented. The real danger for us is that management will not implement and, believe it or not, there has been some resistance. When / If this happens all motivation for the program will come to a screaching halt.I guess a little more time will tell the tale.

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    #68204

    Brad
    Participant

    All,I have been following this thread quite closely over the past days/weeks. My company has adopted the DMAIC methodology of Six Sigma and sent me for training during the 1st half of this year. We have completed our first project and are partially into the second. When I accepted this ‘pilot position’ back in November 2000 it was presented as an incentivized position. This has not occured as of yet, but many conversations have taken place regarding how the compensation plan should be structured. I am ‘on the fence’ with this incentive concept. I am a strong believer that incentives work (I come from an environment where hourly incentives were used) to motivate people to achieve the desired result. I also believe that an incentive system that is percieved to be unfairly applied will fail miserablely. That said I am an advocate of some kind of a mixed incentive plan where the entire team (BB & GB’s) is rewarded based on the results of the project(s). Maybe some kind of ’70/30′ shared incentive. The BB is trained, manages the project(s) and expands the application of the methodology but there is also a direct relationship between the success of the project(s) and the contributed expertise of the team members.Can anyone provide a 30K foot level synopsis of the incentive plans applied at their organization?Brad

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    #68260

    A. Different Annonymous
    Participant

    Minor error in the item I posted earlier – It’s Kevin’s position I agree with and wished to support with a repot on what has happened in my organization, not Peter’s.

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    #86425

    DColvin
    Participant

    Incentives are an important part of successful organizations.  There may be no ‘one’ particular incentive program that can satisfy every employee, but there are mutual incentives that we all seek.
    I agree that fair compensation is more important than bonuses.  This allows you from the beginning to feel appreciated and perform to the level expected.  Ther is no doubt that our base desires must be fulfilled: need for shelter, the need to satisfy hunger, the need for love, however, once these baser desires are satisfied we continue to search for greater satisfaction.
    There was mention that ‘line workers’ were not incentivized.  I agree that there is probabl some restructuring that should take place in most organizations.  Most bonuses are there for that extra motivation to work harder and go beyond the expected ‘norm’.  Most employees working on the line are hourly.  Hourly employees are paid overtime (generally time and a half, sometimes double time) for putting in extra work.  Although it may not take into account the quality of work it is an incentive form of compensation for the extra effort that is dedicated to the job.
    Most BB are salaried and do not receive overtime.  These bonuses serve as an incentive for the BB to put in the extra time or effort required to exceed any established goals.  Although the ideal would be for the employee to be motivated by self satisfaction, this is not always the case.
    Nearly every company uses commissions for their sales teams.  These have proven to be effective motivators for most companies.  In fact you will find that the greatest performers are often the most supportive of the commission based structure.
    Very few of us would work for free.  Most of us are working to better our quality of life.  In the US that increase in the qualiy of life is often related to making more money rather than more time off, etc.  As long as that is held as the primary motivating factor for the work we do, bonuses will always be an integral part of the most successful company incentive plans.

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    #86436

    Ropp
    Participant

    Kevin,Are you a CEO??? You sound like a high level talker to me. 

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