Piece Work and Productivity

Some shop owners find it pays to pay by the piece. February 13, 2013

I am tired of paying employees by the hour just for showing up. There are days that the quality that shows up and gets rejected at the loading dock has passed by five or more hands and requires rework. Does anyone have a suggestion for an incentive program, piece work, or sub-work combination base pay plus bonus payment structure that creates an environment where workers "own" the work?

Recently I offered a flat rate item to a great employee. I allowed him to select whoever he wanted to work with him to manufacture the work. The employee had little risk, he would make his standard wage, and the balance would be paid as a bonus. To boot, I made him install the product. He did it in half the time it would have taken should it have worked its way through the various departments. He picked a fellow worker that was very hard working and I allowed them to create the split as a mutual agreement. I requested they present it to HR in writing to remove any misunderstanding.

The work was produced quickly and with very high quality. There were quiet mutterings by some of unfairness and that everything should have been done piecework. Trust me, some of them wouldn't make enough money to pay the lunch truck.

The issue here is that we are a large shop with over 50 employees. How do I establish this on a larger scale, while still running my shop? I donít want to get stuck by "double dipping" from those who would ruin it for everyone if someone got caught working on the piece work items during the scheduled hourly work.

Forum Responses
(Business and Management Forum)
From contributor T:
Set reasonable, attainable goals and quality standards. Train your employees. Hold your employee accountable for their job performance. Fire any employee who does not meet or exceed your goals and quality standards.

From contributor L:
I second all of these. "Set reasonable, attainable goals and quality standards." We do work for a Japanese company that is known for quality. They have photos and samples of acceptable and not at each work station. The next person on the line can reject any or all parts and stop the line. If he passes the work on he is responsible for the quality. "Train your employees." If they won't meet standards they should go to work for the government. "Hold your employee accountable for their job performance." See the first item on passing work on. "Fire any employee who does not meet or exceed your goals and quality standards." This may adjust the attitude of the rest! Management determines quality standards and is responsible for the result!

From contributor K:
"If he passes the work on he is responsible for the quality." The very definition of quality control - don't have an eye out for the level of quality we are looking for, it's time to find someone who is. EDGE (Educate, Demonstrate, Guide Enable) - the first three are on you, the last one is on him.

From contributor M:
I love piecework and my shop fully pays that way. It encourages efficient production. I have helpers making $80 to $150 per hour sometimes simply because they are cranking out the pieces in batches quickly. Since nobody is paid hourly I donít care if they stop to talk, take breaks, eat, need to make phone calls/text, etc. (provided that doesnít distract others). People can work short days with great pay if they focus for a few hours and produce great output.