Uptime: Hourly Compensation Systems — Does Yours De-motivate?

25 March 2014
Bob Williamson, Contributing Editor

Money motivates us—or does it? When we receive higher pay, does it compel us to improve our performance, be more productive or become more loyal? Not necessarily. The perception that our pay is sub-par, however, can be a serious de-motivating factor that affects both performance and productivity.

In the workplace, employees are subject to a wide variety of job classification systems and pay grades that guide the amount of monetary compensation they receive. While some pay rates are negotiated through collective bargaining or are the product of compensation studies, most are based on business needs, comparable job roles, responsibilities and rates in the region. In an era of growing skills shortages, we need to ask: “Is our hourly compensation system a de-motivator? Does it discourage current employees and chase away the best and brightest we need to attract?”

Let’s explore the typical hourly compensation of maintenance employees to see how pay can de-motivate, and what can be done to change this dynamic. Consider the following real-world example from my own archives:

Happy and not-so-happy campers
The XYZ Manufacturing Co. (not its real name) was a preferred employer in the area. A well-established operation, it was staffed with a highly experienced 165-person maintenance workforce for everything from facility and utilities to assembly and production processes. XYZ had two primary maintenance job classifications: Mechanical Maintenance and Electrical Maintenance. Maintenance workers were slotted into one of these classifications from the start of their seniority in the maintenance department.

• Electrical Maintenance work included power distribution, machinery electrical systems and instrumentation/controls.
• Mechanical Maintenance work included welding and fabrication, machining, lubrication/oilers, fork trucks and machine repair.

Each job classification had the same four negotiated pay grades and hourly rates. The lowest pay was for new hires and trainees, the highest was for the most senior maintenance employees. Progression from entry-level to top pay was basically automatic unless penalizing behaviors or habits occurred, which was rare.

After 15 years, all 165 maintenance employees were at the top pay grade and receiving top hourly pay, including those who hired on within the previous five years. While the most senior maintenance employees received top pay, those with lower seniority quickly caught up with them. This made XYZ’s compensation system easy to manage. Annual across-the-board raises and contract negotiations were relatively straightforward. But the monetary increases affected all maintenance employees exactly the same way because all were at top pay.

The not-so-happy-campers were those employees who performed highly skilled instrumentation/controls and machine-repair work. They were stuck at the top pay grade along with those in markedly lower skill-level roles. Electricians, lubrication/oilers and fork truck mechanics, for example, were paid the same as machine repairmen and instrumentation/controls technicians.

The electricians, oilers and mechanics felt that pay was NOT an issue: They could focus on their work. However, the machine repairmen and instrument/controls technicians—whose jobs required continual skills and knowledge upgrades every time new automated machinery was installed in the plant—were highly de-motivated by their pay and disgruntled about their workloads.

Breaking the camel’s back
De-motivation among the top-skilled machine-repair and instrumentation technicians came to a head when XYZ’s primary processes were upgraded in a major engineering project. “Why should we master new technologies again and again,” they asked, “while our fellow maintenance workers get the same pay we do and don’t have to continually learn new technologies?”

Further complicating matters, XYZ was unable to find new, highly skilled machine-repair and instrumentation/controls technicians, despite the fact that new hires would start at the top pay grade. The company was unable to attract the best and brightest it needed to maintain, calibrate, troubleshoot and repair the new automated manufacturing technologies. In a practical sense, something had to be done to recognize that certain maintenance jobs required higher, frequently changing skills and knowledge. Stalemate.

The skills shortage was the real eye-opener for both the personnel department and the maintenance employees. Though XYZ’s top-performing maintenance employees ranked as senior personnel, they started to look for work elsewhere. Their skills, knowledge and experience were increasingly in demand.

Pay-for-applied-skills to the rescue
It was necessary to find a way to “stratify” the maintenance job-performance skills sets required at XYZ. This had to be done in a way that would provide advancement opportunities for all who were interested without penalizing anyone. A new, opt-in training and advancement program was created, which proceeded as follows:

A detailed duty-task analysis was performed to identify job-performance requirements (skills and knowledge) for current as well as higher-level skilled job roles (machine repair and instrumentation/controls).

Three new pay grades topping out at more than a $2.00-per-hour increment were identified with specific requirements for advancement. The new pay grades reflected opportunities for crossover skills where instrument/controls personnel would acquire certain critical mechanical skills, and machine-repair personnel would acquire certain critical electrical/electronic skills for a “multi-skill maintenance” approach.

Aptitude and ability “assessments” (not “tests”) were required to begin training, and for all higher-level job classifications. Assessments included mechanical aptitude, learning ability and computer literacy, plus reading, writing and basic math. Individual scores were to be reported only to the person being assessed and the training manager.

The existing skills and knowledge of those entering the training program were identified. Maintenance employees wishing to train for higher-level jobs then reviewed the detailed duty-task analysis of the higher-level skills and knowledge as a “self-assessment.”

Also, several highly skilled machine-repair and instrument/controls and employees were selected and trained to be instructor/trainers. Their first assignment was to construct training devices with actual plant equipment that would duplicate the critical new-technology machines and controls and some essential prerequisite skills. Following their “self-assessments,” employees were asked to demonstrate their abilities to perform the identified duties and tasks on actual plant equipment or on the training devices. This performance demonstration was observed and monitored by the job-specific instructors/trainers, a supervisor and another hourly maintenance person.

Training began on critical skills for improving existing manufacturing processes, as well as those needed for emerging technologies. A variety of approaches were used, from self-study to classroom and vendor/OEM to on-job coaching. All training conformed to the duty-task analysis. Written testing was not used to verify job skills and knowledge. The same hands-on performance demonstration process—according to the duty-task lists—was used after training to assure proper job performance.

Pay no longer a de-motivator
The new job classifications, training and compensation at the XYZ Manufacturing Co. reflected the top priority needs of the plant. Pay was no longer a de-motivator for top-skilled maintenance employees. Maintenance-job roles and performance requirements were stratified.

While everyone had the opportunity to participate at the higher skill levels, many opted for improving their skills and knowledge with regard to their current job roles. Those who had reading, writing or math deficiencies for their job roles received individual tutoring and participated in skills-improvement programs.

Within a few months of completing the first wave of training and qualification, a major, chronic problem area in the plant stopped having problems. Machine performance improved and breakdowns rarely occurred. Engaged with their new work, XYZ’s former not-so-happy campers were celebrating—along with the labor union and plant management.

As aging Baby Boomers exit the workforce and younger workers try to fill their shoes, it may be time to rethink your own hourly maintenance compensation system. MT&AP

Robert Williamson, CMRP, CPMM and member of the Institute of Asset Management, is in his fourth decade of focusing on the “people side” of world-class maintenance and reliability in plants and facilities across North America. Email: RobertMW2@cs.com.