In my last blog featuring R&R Engineering I talked about the company’s contrarian approach to inventory. R&R carries about 3.5 million pounds of steel at any given time. That practice helps them compete, because they can usually offer same-day shipping if customers need it. But there’s another aspect to the company’s success that deserves mention: the way the owners treat the work force.
Basically, R&R’s approach amounts to nothing more than rewarding employees for desired behavior. Here’s an example. The company wants workers to show up on time and work a full shift. (This is particularly important for R&R, as the company only runs one shift.) To help make this happen, every worker who works a full 40-hour week with no tardiness gets a one dollar per hour bonus. That adds up to about $175 per month, which will buy a lot of groceries. In addition, and even more important, workers get a bonus when the company exceeds profit targets.
These policies ensure that management and labor, traditionally at war with one another, are aligned towards the common goal of productivity.
That’s a huge competitive advantage, and it’s one that is typically more available to small companies than larger ones. If you’re a manager at one of the Detroit 3, to take an extreme example, you are hemmed in by arduously negotiated contracts, practices that have been set in stone for decades and lengthy approval processes for changing what little can be changed. In contrast, as a small business owner or senior manager, you can revamp any aspect of your business, including financial rewards, any time you want. And if you’re not rewarding your workers for desired behavior, I suggest that you seriously look into some revamping.
Compensating employees for productivity isn’t the only way to enforce desired behavior. Often, rewards that are small to the business, like a day off for birthdays (to pick an example out of the air), can be big to employees, and a significant factor in building loyalty. In the first business I ran as an owner, my partner and I not only paid for our employees’ health insurance. We paid their deductible as well. Most of them were young and hardly ever got sick. When they did, the deductible was equal to one medium business lunch, which we could easily skip.
Obviously, healthcare has become far too expensive for this particular benefit to make sense, but others are available. It only takes a little creative thinking. One avenue to explore is using you company’s buying power to obtain discounts at local stores, restaurants or even banks. The details of execution aren’t important. Showing that the well-being of your employees is a priority is what counts.The bottom line is this: In the global economy, productivity is the crucial competitive advantage – and you get what you pay for.