Company Innovation: Repairing the Disconnect Between Employees & Ownership
Grand Canyon University: ENT-435
Innovation of Employee Work and Salary System
One study developed indicated that employee retention is higher with job satisfaction, organizational commitment and prestige, constituent attachments, and extrinsic rewards. All of these previous items were frequently mentioned as reasons for staying (Hausknecht, Rodda, & Howard, 2009). This seems to be the consensus among the field technicians within my organization. However, this is also what they are not seeing. There is a large disconnect between the owners and the field technicians and both sides argue that the other side is where the problem lies. Hausknecht, Rodda, & Howard, (2009), said that low performers and hourly wage earners (which is most of the field technicians within our company) cite extrinsic rewards as a reason for staying with a company. The field technicians do the majority of the hard work within the company, much of which can cause adverse health effects, can be extremely nasty and dangerous at times, and often times, the hours they put in each week can be very long with no overtime pay. They have said numerous times that they do not make enough for what they do and feel underappreciated and ownership on the other hand, feels that the employees take too many breaks, already get paid too much for the work they do, and the company which has had financial troubles for years, cannot afford to pay overtime wages. This disconnect is the problem and the way to fix it is to restructure the wages of the employees and change them over to salaried personnel and introduce a bonus incentive program for job production and excellence which would in turn increase revenues and profits for the company and solve overtime compensation issues.
Due to the nature of the industry the employees work in, their hours fluctuate every single week. One week they may work 30 hours, the next week they may work 65 hours and the next week may have them turning in 40 hours. Basically every week shows them turning in a different amount of hours. Hence the new innovation, called “Employee Compensation and Incentives Program”, will be created in an attempt to address not only the issues regarding field technician complaints, but also as a secondary effect of the innovation, to increase company revenue and profits, give a more stable weekly idea of payroll payouts, cut down on overhead costs, and ensure each job goes more smooth than before while increasing customer and client satisfaction. Before the identity of the innovation is brought out, it needs to be understood that the innovation is a compilation of existing policies, federal regulations, and new innovative programs meshed together into one new program, which it has been determined, after speaking to many franchises and independent companies across the country, that whose companies in this industry do not employ this system of compensation and incentives. According to the U.S. Wage and Hour Division, (2011), there is a system designed that is titled “Fixed salary for fluctuating hours” which describes what the field technicians are currently undertaking. This system along with the other innovative ideas are listed as:
Due to the proficiency of the work being completed by the technicians, this will give the company a leg up on marketing. This structure system will entice customers and insurance companies to send work out to the business. They will not see the inner workings of the system, but rather see the fruits of the system by how well the jobs are processed and the satisfaction of the customers. Time delays on these types of jobs are killers and following through with this system will aid in cutting down and eliminating time delays.
- Example: Employee A is salaried at $400 per week. This is not based on any set number of hours though. The employee works 40 hours in week 1 and at $400, the employee’s hourly rate is $10 per hour.
- Example: Employee A then works 60 hours the next week. This week the employee makes $400 for 60 hours and the employee’s hourly rate this week is $6.67 per hour. Under other systems, the employee is entitled to time and a half for the additional 20 hours worked. However, under the salary of fluctuating hours, since the employee has already made $6.67 per hour for 60 hours, the employee is only entitled to half time for those additional 20 hours in the amount of $3.34 per hour x 20 hours for an additional $66.80. This week the employee would make $466.80 which gives them additional money on their check while saving the company in overtime pay.
- Example: Employee A works 30 hours the next week. This week the employee will make their base pay of $400 and work less hours. The employer must alternate the employees weekly hours in order to maintain balance and not overwork the employee.
- This will allow the company to manage payroll much better if they know that they have at least a certain amount each week to cover and possibly a little extra on half time pay.
- The employee will also receive an incentive program along with salary which is listed as follows:
- Any after-hours call (After 5:00 P.M., before 8:00 A.M., weekends, holidays, and PTO, the field technician will receive a $50 bonus.
- Each field technician will be a crew chief and is accountable for their jobs from start to finish, including: physical labor, managing, estimating, and collecting. If each job goes as planned without any issues, is complete within 8 days (reasonable time in our industry), estimated and invoiced within 3 days after 8 day completion, the technician will receive an additional bonus. Any job up to $5,000, the employee receives $50, up to $10,000, the employee receives $100. For every $5,000 increase in job total, the employee receives an additional $50.
- This could add upwards of $500 or more at the end of each month when incentive bonuses are handed out to the employees but contingent on the fact that all criteria are completely met. If one criteria is not met, the employee forfeits the incentive bonus.
- The incentive bonus ensures the employee will cover every item possible as a means to increase revenue of each claim. This will not only affect their bonus, but also increase profits for the company, increase job production, cut down on extended times on jobs, and increase customer and client relations.
In order to bring this innovative idea to fruition, it has to go through the implementation process to make sure it is beneficial to the organization. The method used to accomplish this will be the RADAR method. RADAR stands for Results, Approach, Deploy, Assess, and Refine (Sokovic, Pavletic, & Pipan, 2010). Knowing what the issue is makes it rather easy to target the results the company is looking for, develop an approach to injecting the new system into the company, assess the innovation as it moves forward, and refine it as needed. Since this is a big problem there should not be any kickback in these areas. The issue of obstacles and resistance is going to come into play during the deployment process. At first, the employees may fight it due to being shifted to salary and only receiving half time pay for hours worked over 40. However, when they see the balance of hours and the added incentive bonuses added to their checks, their mindset should change. Under the FLSA law, which regulates overtime hours, if the employer chooses to implement this system, they have to alternate the hours the employee works each week. If they work 40 hours, then 50 hours, then 45 hours, the employer has to fill in weeks where the employee works less than 40 hours and try to make it balance out. The employee can see the benefits of this when they have days off, yet still receiving their base salary. This time off could also allow them to complete part time work somewhere else to add more income at the end of that week. Now, the company ownership should see the benefits right away with payroll decreasing, job totals increasing, and production at a much higher level.
The RADAR matrix is designed to be set into 5 different columns and each column is designed to achieve a certain degree of performance (Liviu, Diana, & Diana, 2013). If ownership and employees alike understand what each column is trying to achieve and follow through with each of them, any obstacles can be overcome. Other than this, the only other issue that will need to be addressed is that if the company goes through with the new salary compensation program, both parties, ownership and employees, have to come to a mutual understanding on the new salary compensation. The owners cannot just decide to implement this without first consulting with the employees and obtaining their understanding (U.S. Wage and Hour Division, 2011).
Measuring the Innovation
The impact of this innovation could be groundbreaking for not only our company, but also other companies within our industry, especially since there is a high turnover rate. Before implementation can take place, the impact of the innovation has to be measured. The SNIFF method will be utilized to do just that. The SNIFF model stands for Strategy, Need, Impact, Feasability, and Feel (Culton, 2010). The most important portions of this method in regards to measuring the impact will be the strategy, which looks at how this innovation will further the vision of the company, the need, which does not directly impact customer need but rather impacts the need of the company to fix detrimental issues, and finally the impact, which covers not only the impact within the company but also the impact it will eventually have on job production (Culton, 2010). Using this measure to see if the innovation will even have the slightest possibility of working, it will initially help to determine the results and approach of the RADAR method (Sokovic, Pavletic, & Pipan, 2010). The SNIFF model seems rather basic and simple and within our company, simple and basic is what is needed. Most of the employees, including ownership did not graduate from high school which causes large issues when it comes to business planning. Using these models can eliminate hasty decision making and give the owners a sense of organization that has been lacking so much from this company.
Innovative Future for the Company
Now assuming that this innovative system takes hold, the owners and field technicians alike follow through, and it continues from here on out, this change in mentality for all involved can produce an even better mentality and one that encourages, promotes, and develops even further innovation. Seeing how most all other changes and programs over the past 20 years, and there have been too many to count, have not worked, either by poor management decisions, no accountability, no follow through, loss of business, or whatever the case may be, if this innovation works, it could pave the way for future changes in other areas. One major area revolves around bookkeeping, invoicing, and taxes, items that the administrative staff deal with. If those that work in this department can see the changes that have been made with the field technicians, it could entice them to start brainstorming ways to improve their department. There again, their issues also arise from disputes with ownership and how business should be handled. One other area that needs a major overhaul is marketing. While we maintain consistent business acquisitions from numerous insurance agencies and property management companies, new streams of business have been lacking for several years now. The marketing department needs to find new ways of bringing in new customers. Now this may be aided by the implementation of the new program with the field technicians (greater and better production can bring in new business), however it may take some time before this is witnessed. Something needs to happen now instead of waiting on the new innovation. Finally, in the production field, keeping up with technology has to be at the forefront. This can bring time delays in jobs down dramatically, ease the burdens on employees, lower the costs and expenses on jobs, and also increase revenues. Within this company, it seems that every department needs a drastic overhaul, however it will not happen until everyone has a willingness to change their mentality and have a good vision of what they want to see happen in the future.
Hausknecht, J. P., Rodda, J., & Howard, M. J. (2009). Targeted employee retention: Performance‐based and job‐related differences in reported reasons for staying. Human Resource Management, 48(2), 269-288.
Liviu, I., Diana, P., & Diana, B. (2013). APPLYING THE EFQM EXCELLENCE MODEL AT THE GERMAN STUDY LINE WITH FOCUS ON THE CRITERION” CUSTOMER RESULTS”. THE ANNALS OF THE UNIVERSITY OF ORADEA, 1486.
Sokovic, M., Pavletic, D., & Pipan, K. K. (2010). Quality improvement methodologies–PDCA cycle, RADAR matrix, DMAIC and DFSS. Journal of Achievements in Materials and Manufacturing Engineering, 43(1), 476-483.
Culton, D. (2010). The Innovation Blog The “SNIFF” Test – Criteria for Early Innovation Decision Making:. Retrieved from: http://www.creativerealities.com/you-get-what-you-play-for-blog/bid/45561/The-SNIFF-test-criteria-for-early-innovation-decision-making
U.S. Wage and Hour Division. (2011). Regulations Part 778: Overtime Compensation. Retrieved from: https://www.dol.gov/whd/regs/compliance/WH1262.pdf
Click following link to download this document
Company Innovation Repairing the Disconnect Between Employees & Ownership.docx