In a production job, payment of an employee is based on number of items produced: piece rate. Of course, it does not functions as it is but in combination with a fixed time-based payment. This time-based compensates for the problems that are not under the control of the employee and can affect his pay.
The performance is created by adding a wage incentive plan. For an incentive plan to work, the employee must want more money and perceive some effects:
- Good performance leads to more pay and does not have negative consequences
- Their effort leads to improved performance
- See the other colleagues getting desired rewards based on the results of their good performance
The manager will have issues related to the wage incentive plan:
- Low quality – even if you have in place a system that monitors quality, the employee will find ways to increase productivity on the expense of quality.
- The access to resources – if a group of employees has access to resources at the expense of other groups, it will be perceived as an unfair advantage, decrease motivation and affect the work environment.
- Diminished cooperation – the tasks that are not related directly to production will be neglected
- Incompatibility – if a team is to large or an assembly line to complex is difficult to define the individual contribution
- Productivity restriction – the employees will have an interest in define a limited work output for a workday, in the interest of transferring a part of the real work output under the incentive plan
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