The McKenzie Mailer
December, 2003	Volume 3, Number 12
WE’RE GROWING!! Welcome to Mike Seitzinger who joined us as a Senior Consultant. Mike has a strong Human Resources generalist background with particular emphasis in the development and implementation of compensation and incentive programs. Special Thanks to Mike for writing this month’s article. John Gray also joined us as a Senior Consultant. He has a wealth of human resource knowledge and experience. His areas of strength include organizational development, training, OSHA and workers’ compensation. Join me in welcoming them to McKenzie & Company Your Solution to Employee Issues	INCENTIVES - YOU GET WHAT YOU PAY FOR It would be surprising if there was anyone who had not heard this phrase. Ordinarily, it infers that if you pay very little, you wind up with a cheap product. It is equally applicable, but has a somewhat different meaning, when it comes to compensating employees. In compensation it refers to the fact that the method you use to compensate employees will result in a certain set of behaviors --- you will get what you pay for. Some employers, however, do not think through the consequences of their methods of compensation. Here are some examples: · A local lending institution compensated its sales force only on the basis of loan volume. Results: A large number of bad loans and the closing of the business. Solution: Incorporate a loan quality component or standard. · An inbound call center decided productivity could be increased by encouraging employees to limit the time they spent on each call. A major component of compensation was “talk-time”. Results: Employees were hanging up on customers to insure they had short talk-times. Solution: Change the weighting on talk-time and/or introduce call monitoring. · A local manufacturing company, with multiple product lines and desiring to fill excess “off-season” capacity, compensated its sales personnel based solely on sales volume. Result: The sales representative sold easy to sell product that was in season. Capacity for in-season product was exceeded and nothing was done to reduce the excess “off-season” capacity. Solution: Establish seasonal quotas. · A local employer, wanting to control absences, added a provision to a plan that if an employee missed two days work during the month he/she would forfeit the month’s incentive. Results: An employee who missed two days work early in the month had no incentive to perform. An otherwise good incentive plan was rendered ineffective. Solution: A compensation program is not a substitute for good management. Remove the attendance provision from the compensation plan and deal with absences though disciplinary programs. Compensation can be an important tool in influencing employee behavior. It is important, however, that employers consider the potential consequence, both good and bad, before implementing a compensation plan. You will get what you pay for; be sure you understand what you will be getting. About the author: Michael Seitzinger is a Sr. Consultant with McKenzie & Company. Mr. Seitzinger has 20+ years of experience developing and managing effective compensation and performance management programs.