Employee motivation system

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Employee motivation system

Highly motivated employees are one of the key factors to a successful business.  Performance-related bonuses, based on paying employees for their hard work and not for their presence, provide greater incentive and thereby increase employee productivity.  Pierau Planung is currently supporting a mail order company in the introduction of a bonus payment system in its logistics as well as its configuration.

“Bonus payment systems are being used more frequently in logistics as an added incentive for low-paid jobs where the competition is strong,“ says Henrik Baltzer, senior consultant at Pierau Planung.  “They offer growing companies, in particular, the chance to make their previous work organization fit for the challenge.“  Pierau Planung has developed just such a system for a mail order company, which is currently in the implementation phase.  This E-commerce company has several hundred employees and ships from its logistics centre in Germany to various European countries.

The initial situation

The mail order company was planning to introduce an individual performance-based pay bonus with a quality premium.  In this case the aim was for the employees to be able to increase their own wages, which would correspond to a simultaneous performance increase by operational staff of between 10 and 15 per cent.  It was implemented by Pierau Planung in accordance with REFA Methodology (REFA Association for Labour Studies, industrial organization and corporate development e. V.) and has been accepted by both employees and employer alike.  A big advantage is the clarity and transparency of the bonus payment.

While the basic rate is fixed or time-based, the incentive pay is a requirement and performance based wage, modelled on an objectively constructed normal working performance.  It is calculated on a premium wage curve, which is configured in such a way that it does not provide any excessive or unhealthy incentives.

The concept phase

The introduction of premium systems requires a structured and methodical approach.  Therefore, Pierau Planung initially selected only workflows that were suitable for bonus payments.  The deciding factor is when the employee has a significant effect on the working result and the impact on operating problems should be minimized.  For a bonus payment, the working system must be able to be reproduced which includes, amongst other things, personnel or group related results that can be measured and evaluated.  Conditions and possible actions relating to the works council must also be taken into account.  “Employment law issues relating to a bonus system in the framework of a commercial environment and including IT requirements must be resolved early on,“ says Baltzer.  Joint workshops with different contact people are conducted for the customer.

Structuring the premium wage system

Based on this data, Pierau Planung can determine the specific premium wage system that represents on the one hand the mail order company’s targets and on the other, the interests of employees and the works council.  The long-standing current company framework agreement sets out the basic rules for bonus payment by specifying who is entitled to premiums.  For the ongoing implementation phase, an experienced REFA professional was engaged to make the initial time measurements and detailed working operations studies.  Pierau Planung recommends that two of the client’s employees receive training in REFA methodology for ongoing maintenance and development of the system.  Once all the logistics activities have been adapted to the business growth, the bonus payment system will be introduced for a large part of its operational activities with further independent development within the company.  In this way the E-commerce business can enhance its capabilities by operating a continuous process of improvement.

The benefits of performance related bonuses

“In addition to the main aim, we have a win-win situation where improving the performance of the bonus payment system serves as a basis for work studies, which often leads to an improvement in work organisation and ergonomics as well as best practice standards within the company“ says Henrik Baltzer.  In general, improvements are evident even before the actual timing analyses for subsequent bonus payments from performance improvement – with a simultaneous easing of the employees’ workload.  Processes are defined in detail to a standard that allows for a transparent and comparable performance appraisal. Additionally, the training of new staff together with the simplification of employee zones is also optimized.


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