Re: Quality in Piecework Pay?

["Anton O. Tolman, Ph.D." <ANTON@wsh.state.wy.us>]

On August 4th, Aaron Jones wrote:

> For discussion sake, I have recently taken a job for a major furniture
> manufacturer as a project manager and have finally been able to attempt to
> apply theory to practical "reality."  This is where everything becomes very
> interesting.  At the plant, we have around 700 plant employees paid on the
> piecework or "incentive" pay system.  As you all could surmise, they all
> work like hell and get out of here, and as a result the same old
> story--poor-(er) quality.

Ouch!  And more ouch!  I shudder to think of the poor employees working
there.  Piecework pay was started or invented by Frederick Taylor and others
at that time as a natural result of breaking down the work into tiny pieces
that required almost no skill to perform.  In order to create "incentives"
for employees to perform better under the new system which was a radical
break from the guild system, they offered pay per piece.  Linking pay to
piecework was not only successful in dramatically increasing production, it
helped to disembowel the opposition to this way of work that was coming from
the guilds because its members became concerned about maximizing their pay.

However, there are multiple examples, many of which have been posted on the
DEN of similar situations where a change in the pay system resulted in
dramatic improvement.  The most common example I can think of is incentive
pay or commission for sales folks.  This is no different than piecework pay;
you get paid the more work you do or bring in.  There have been multiple
examples, and hopefully some DENizens can make more specific references,
where switching to salary pay has not only improved morale of the sales
force, improved teamwork and customer satisfaction, but has resulted in
dramatic improvements in the bottom line.  This type of example might be
useful down the road as you work to make changes.

I also like JD Kromkowski's suggestion about the red beads, although I would
again caution you, as did Henry Nimon, about moving too quickly.  There was a
very good reason Deming advocated that change had to begin at the top!  You
could easily get caught in the middle.  Lacking understanding, employees may
become irate because you are trying to cut into their bonus pay; lacking
understanding, management may brand you a heretic and eliminate your
authority to initiate changes.  Remember PDSA, I would move cautiously,
define your boundaries and circle of authority, and begin to test out small
projects here and there as you find allies.  Probably a major initial step
would be to obtain official permission (with the consent and involvement of
those who would be involved) to try a pilot study on one part of the plant,
or one team in the plant or one line of product, to tinker with the pay
system along the lines Deming advocated.  This should be accompanied by other
quality changes in the system of that work area, in the teamwork processes,
etc. along the lines of quality.  It is in preparing for that step and
launching that step that the red beads example from JD might become quite
useful as would the other examples you could glean from the DEN and
elsewhere.

Then, make sure your own Plan phase has been carefully thought out with the
folks involved in the pilot.  Make sure you have concrete and meaningful
outcome measures that folks from all different levels of the company will pay
attention to (perhaps overtime, perhaps cost per piece, perhaps turnover
rate, perhaps customer perception of the product) and make sure the data is
collected with fidelity.  You can then involve the Team in taking credit and
making the announcement of the results.  You will still have to be alert to
potential sabotage from senior managers and others, but if you've laid the
groundwork carefully with establishing solid relationships and have built
trust in your thinking and approach, you should be OK.  One way to make sure
you've covered the bases with the pilot is to use deployment flowcharts and
system diagrams like Scholtes' SIPOC to make sure you've involved all the
relevant players.

This is a tough nut.  I wish you all the best.  I think it would be wonderful
if you would present a monthly or period status report on how it is going for
all of our learning!

Anton Tolman, PhD, CPHQ, Psychological Services Manager &
Quality Management Coordinator, Wyoming State Hospital
P.O. Box 177, Evanston, WY  82931-0177
Anton@wsh.state.wy.us    (307) 789-3464
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