Monday, September 14, 2009

Incentive in Industry

I figure I will warn you from the start that I am an engineer. I know that we have a bad rap on being social awkward and inept but I will try to dispel those myths. I guess I took a different route then some of the others and tried to examine where I had seen incentive used in industry.

I had an internship this summer working in the industrial engineering department at one of the largest part distribution warehouses in the world. Our department was a liaison between the company and the union workers. Our headaches arose from this very concept, incentive. As not to bore you with engineering lingo, teams of employees strove to become more efficient in the way they picked and stored parts compared to historical data.

The teams were rewarded through various means for being more efficient. Certainly Sounds simple but was in fact far from it. Because employees were being paid for their work that they did, they demanded to be compensated accordingly. Maintenance of the “rules of the game” was an everyday occurrence. Being between peoples work and their money is a place that an intern might not always want to be put in but was great learning experience.

The team concept was used so everyone had an equal stake in the work and undoubtedly some still do not see it worth the monetary incentive and continued to work at an unsatisfactory pace. This is more evident in places where they are implementing the new systems, lots of employees are amazed at the pace the incentive employees work at, they simply don’t see it worth that much effort and end of leaving.

By offering an incentive overall efficiency has improved as well as quality. They are to quality numbers that prior to the new system seemed unattainable. The old system allowed for people to take advantage of the system which they did to make almost twice as much as they would normally. They did this by improving their method to that of the engineers (the one they got paid based on). By using the current system both the workers and company share in the continuous improvement. Having been out on the floor for various projects it is very evident that the incentive makes people for the majority very driven to improve quality and efficiency.

Incentive is indeed a powerful tool, I guess I did more economics then engineering this summer.

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