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.

09/01/1998


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."





No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.