Without a single capital expenditure or hiring any new employees, ready mixed producers in the Pacific Northwest are making strides in a number of common
Without a single capital expenditure or hiring any new employees, ready mixed producers in the Pacific Northwest are making strides in a number of common industry benchmarks: yards per man-hour, on-time deliveries and truck utilization. Besides increased profits, they report enhanced teamwork and improved employee morale and retention. Each of the companies has adopted an employee-incentive program, developed by Bend, Ore.-based Efficiency Solutions Inc., to improve customer service and profitability.
Mindful that performance monitoring and record keeping are obstacles that can deter companies from implementing an incentive program, Efficiency Solutions offers producers a web-based software program to monitor results. Data is entered daily in mere minutes, and the program uses the information to create reports and graphs that help monitor progress in meeting various target goals. Bonus accrued is also calculated on the basis of progress made that month. Records are kept on secure servers, and most companies allow employees password access to portions of the site designed for monitoring their progress towards making a bonus.
Other more sensitive information is protected by additional security layers. Since the program is web-based, it can be customized for any operation, Efficiency Solutions notes, and is proven among big and small, urban and rural, union and nonunion, family-owned and corporate producers
While some companies view workers’ pay and benefits packages as the only incentive necessary, Marvin Prince, vice president at Bayview Redi-Mix in Aberdeen, Wash., claims that besides paying his employees to work, he motivates them to work smarter. They are paid to work and motivated to think, he emphasizes.
When rolling out an incentive program, Don Skundrick, vice president of Materials and Sales at LTM Inc. in Medford, Ore., reminded employees that, although the company was not obligated to add this benefit, it chose to share with them the company’s success. In Bend, Ore., Hooker Creek Ready Mix discovered that employee incentives effectively consolidated two separate, previously competitive operations, creating cooperative and more profitable teams. A full 40 percent of the Hooker Creek dispatch and sales team’s pay is performance based, and the employees would have it no other way.
Since April 2004, when Chief Operating Officer Ted Bowman implemented employee incentives at Fred Hill Materials on Washington’s Olympic Peninsula, employees are acting more like owners, focusing single-mindedly on ready mixed concrete. I enjoy walking into our dispatch office and hearing employees discuss ways to improve our business, instead of the latest sporting event, he affirms.
EQUIPMENT ON TRACK
At over $150,000 for a new concrete mixer truck, producers do well to obtain optimum use of their fleets through employee-incentive programs. To date, several Pacific Northwest producers have increased truck utilization over 15 percent, allowing delivery of more concrete with fewer vehicles. Marty Giudici, president of American Ready Mix in Reno, Nev., is seeing better deployment both of his trucks and technology. Our dispatch and truck-tracking systems were not fully utilized prior to implementing an employee-incentive program, Giudici explains. Now, our employees are using these systems the way they were designed Û to schedule, dispatch and track all orders. Our on-time delivery performance has improved as well.
Operating three plants, Scott Erickson of Quality Concrete in Salem, Ore., notes that on-time delivery performance improved by 44 percent after an incentive program was implemented, as overtime costs plunged. While delivering more concrete, Erickson also was able to sell three trucks, further cutting costs and increasing profits.
Most producers measure yards per man-hour, a benchmark Efficiency Solutions contends should be increased without sacrificing safety and customer service. Since the firm’s program is team based and includes safety incentives, drivers are encouraged to cooperate, instead of racing for the good loads. Accordingly, Bayview’s Prince saw a 15 percent increase in yards per hour, which led to a substantial increase in on-time deliveries. Since his employees are working more efficiently, trucks no longer sit in the yard until the day’s orders are done. A related trend shows a drop in payroll associated with delivery cost.
Proving incentives can work also across the border, Independent Concrete Limited in Victoria, British Columbia, became the first Canadian producer to implement the program. Owner Rod Owen-Flood, has measured a 12 percent improvement in metres per man-hour.
PARTNERING FOR PROFIT
Armed with properly designed and implemented incentive programs, Efficiency Solutions contends, concrete company owners typically have employees who are motivated to maximize efficiency and earnings. Among operators experiencing financial gains by virtue of employee-incentive programs is Fred Hill Materials, whose CFO Martin Blevins saw an 8 percent increase in volume delivered while labor costs dropped 1.25 percent in the first 90 days. A significant increase in the company’s profit margin, he adds, has been realized since the first month of implementing employee incentives.
Beyond financial gains, Efficiency Solutions reports, producers find that incentive programs promote retention of their best employees, while other workers’ performance improves. Taking initiative to boost company profits, employees make more money and work fewer hours because they are performing at a higher level.
And, customers benefit as well: contractors see improvements in service and employee morale as they receive on-time deliveries. LTM’s Skundrick asserts that his customers, noticing the difference, now are ready to pour when trucks arrive, cutting idle time.
Prior to rolling out an incentive program, a baseline of production and customer service performance must be established. That baseline is best determined on the basis of a Îsnap shotÌ of performance over a three-year history, combined with current market conditions. From there, management sets the goals for improvement and, accordingly, the bonuses to be paid. Once a performance measure is adopted, such as Îyards per man-hourÌ or Îon-time deliveryÌ, the program must provide a means of tracking and measuring results to ensure the company is not paying for increases in a parameter that generates insufficient profit to cover the bonus outlay.
Implementation does not have to occur all at once. Larger operations have been successful in adding employees to the Efficiency Solutions program at later dates. Furthermore, managers of specific operations have the option of identifying different performance criteria to target for improvement as well as setting various target levels, depending on baselines and other conditions.
MOTIVATING THE MOTIVATORS
Designing, executing and administering an employee-incentive program can add up to a full-time job, and in smaller operations is potentially cost prohibitive. Thus, Efficiency Solutions offers its services and web-based software under the same parameters that an incentive system uses to motivate employees. If monthly targets are not met with the employee-incentive program, a company’s employees do not receive a bonus, nor does Efficiency Solutions receive a fee. A minimum 5 percent increase in yards per man-hour is guaranteed in the first year, as well as an additional 2.5 percent in the second year, or nothing is paid for services provided. In addition, Efficiency Solutions guarantees improvements in truck utilization and on-time delivery performance.