Can you change incentive rates unilaterally?
A selective group of electricians at a Boston plant whose assignments were highly repetitive had been working for years under an incentive plan.
A selective group of electricians at a Boston plant whose assignments were highly repetitive had been working for years under an incentive plan. One day, Plant Engineer Cal Duffy remarked to Maintenance Supervisor Lou Crouse that the group's incentive earnings had shot up more than 15% in recent months.
"That's no surprise," Crouse replied. "The introduction of new tools, technology, and engineering changes make it a lot easier to get the job done faster."
"My thinking exactly," Duffy said. "We ought to revise incentive rates downward."
Crouse agreed. When the new rates were posted, a storm of protest erupted.
"It's unfair," a spokesman for the group told Crouse. "You can't change incentive rates unilaterally."
The foreman disagreed. "The purpose of incentive rates is to motivate employees to work faster and more efficiently. The increased productivity in recent months is a byproduct of new tools and techniques, not faster, more efficient performance by employees."
"If the company benefits from those changes, we should share in the gains," the spokesperson maintained.
"Not so, but I'll pass along your thinking to Mr. Duffy and get back to you."
Question : Is management within its rights to unilaterally reduce incentive rates?
Duffy's decision: "The changed rates remain," Duffy ruled when brought up-to-date on the workers' protest. "The whole idea of incentives is to give employees extra money for above-normal performance. Under the new rates, nothing actually changes; the same incentive remains. This rate is simply an equalizing adjustment to make the same incentive conditions apply."
Annual Salary Survey
After almost a decade of uncertainty, the confidence of plant floor managers is soaring. Even with a number of challenges and while implementing new technologies, there is a renewed sense of optimism among plant managers about their business and their future.
The respondents to the 2014 Plant Engineering Salary Survey come from throughout the U.S. and serve a variety of industries, but they are uniform in their optimism about manufacturing. This year’s survey found 79% consider manufacturing a secure career. That’s up from 75% in 2013 and significantly higher than the 63% figure when Plant Engineering first started asking that question a decade ago.