Part 2, practical questions and answers about piecework. Dave and Jonathan talk about how piecework works for a company in the “real world.”
For more information about piecework see this article
Piece Work Increases Profitability
In part one of this webinar, we discussed how to motivate your employees and improve productivity.
The best way to do this is to align your goals and your employees goals, subsequently each making more money.
Dave talked about using piece work to accomplish this goal. In addition to increasing efficiency, it can also increase quality of work. Piece work, in summary, is paying by the job instead of an hourly wage.
Today we want to talk a little more in depth about piece work and how, as a result, it can make your company more efficient, productivity, and profitable.
Putting Piece Work to Practical Use
For the employees that you find are hard workers, piece work will drive them to be even more efficient and responsible. Thus, they will start thinking more like you, the owner.
When the employees start thinking like the boss, this can reduce the management time you spend checking up on them. If your crews take extra breaks, it doesn’t hurt your bottom line because they’re not getting paid until the job gets done.
It’s important that you set clear expectations with your crews about how they will be paid. You can pay your employees for shop time, set up, or breakdown if you choose. Exceptions will happen, but those should be kept to a minimum.
Another thing we’ve seen here at CLIP is that equipment maintenance has improved under this system.
For example, hourly employees might be tempted to let equipment fail while on a job because they can take a break. Piece work employees understand they won’t be getting paid until they can complete the job.
You can see this directly on your bottom line. Firstly, there is no lag time in completing the job. Secondly, because proper maintenance usually saves more money than waiting till something totally breaks.
Measuring Productivity Using CLIP
Ensure that you set the man hours correctly for each job. CLIP will even do the calculations for you based on your hourly rate. Be sure to include travel time to be accurate.
The Employee Hourly Efficiency Report will be the tool you use the most to determine pay. You want to look mainly at the budget man hours versus paid man hours column. Any time an employee is over 100%, they’re doing well.
Be sure to check labor laws in your specific areas. A few key things to remember is that the pay per hour must at least meet minimum wage standards. You will also need a signed agreement with the employee.
Starting with a “dual” system can help ease the concerns of your employees. Offer to pay either hourly or piece based on the higher. Showing them the efficiency report will quickly make them believers in piece work.
In conclusion, piece work will help your team see the business in the same light as you do. Increasing productivity can have a huge positive impact on your business.