Seeking Ideas for a Production Incentive Scheme in Our Biscuit Factory – How Do You Motivate Your Team?

All friends are requested to give ideas or existing policies for introducing a production incentive scheme in our factory. We are a biscuit manufacturing company with 400 employees directly attached to production. Looking for an early response. Thanks, Vivek.

It depends on the kind of production. I work in a production company as well, and we have a bonus system based on the quality, quantity, and personal performance.

Hi Vivek,

I am also running a manufacturing unit, and we usually give incentives as follows:
- For production up to 'x': Rs. 2 per unit
- For production between 'x' and 'y': Rs. 3 per unit
- For production between 'y' and 'z': Rs. 4 per unit

The total of the incentives above is divided among all the employees.

Depending on the production capacity installed, we have made slabs on a monthly basis as follows:

- From 60,000 kg to 68,000 kg, we give Rs. 2/kg.
- From 68,000 kg to 78,000 kg, we give Rs. 4/kg.
- Above 78,000 kg, we give Rs. 6/kg.

For example, if the January production is, say, 80,000 kg, then the incentive becomes:

(68,000-60,000) x 2 + (78,000-68,000) x 4 + (80,000-78,000) x 6 = Rs. 68,000

If the January production is, say, 75,000 kg, then the incentive is:

(68,000-60,000) x 2 + (75,000-68,000) x 4 = Rs. 44,000

This incentive is divided among all the people in all departments involved in production.

There is one drawback in the above, on which I am working, and that is the inclusion of quality parameters in the calculations. Please advise if you have better ideas!!!

Hi Mohit,

The scheme you have described is an excellent scheme, but can you please give me an idea about how you determined the per unit incentive of each slab?

There is no specific formula to derive the per-unit rate. It depends on how much you are willing to pay for current levels of production and how much the worker should earn to actually motivate them to achieve higher levels. So basically, what I mean is it is at your own discretion.

So, on what dimension did you calculate the per unit price? I am working on a project in the same area.