Off the Cuff: Evaluating and Compensating Production Employees, Part II

Establishing specific criteria for pay scales defines goals for production employees and provides a fair and equitable framework for compensating them.
Jan 18, 2008

By Mark Venit, MBA

Under what circumstances should an employee be awarded a raise? Whatever the circumstances are, the company should have firm — written — policies about raises and fundamental expectations about the employee's value and performance on the job.

The primary objective of such considerations is to remove as much arbitrariness and emotion as possible from making decisions about who gets a raise, for what reasons, and when. Above all, the system should emphasize fairness — fairness to all — and connect wages to performance, not merely rewarding an employee for showing up and “doing his time.”
 
The best solution for setting pay scales for production employees is to definitively state the criteria for evaluating each individual as well as a schedule of potential compensation upgrades.

The system I've developed and used in hundreds of client screen printing and embroidery companies consists of five key categories (each one scored from 0 to 20 points) for evaluating employees. Let's look closer at each aspect of the system, which includes both subjective (the manager's judgment) and objective (quantitatively measurable) factors.

1.  MATURITY (Maximum 20 points. Each aspect of this subjective category is worth 0-5 points.)
a.  Judgment — Demonstrates the capacity to choose between alternatives.
b.  Initiative — Attempts non-specified, non-mandatory tasks without being told
c.  Innovation — Uses imagination to solve challenges, lower costs, increase profits,
create efficiencies; makes helpful, intelligent suggestions
d.  Educability — Understands new material and assimilates training by putting what's
learned into practice
 
2.  ATTITUDE (Maximum 20 points. Each aspect of this subjective category is worth 0-4 points)
a.  Appearance/Orderliness — Wears clean clothing and demonstrates proper grooming and personal hygiene, maintains the orderliness of his/her work and work area
b.  Courtesy — Demonstrates respect for peers and management along with showing cooperation willingness to help accomplish goals
c.  Cheerfulness — Exhibits a friendly disposition around others
d.  Compliance — Respects managerial directives and policies
e.  Loyalty — Respects and supports company leadership, protects the company's integrity
and reputation

3.  RELIABILITY (Maximum 20 points. Each aspect of this category is mainly empirical and worth 0-5 points.)
a.  Attendance Record — How well the employee follows stated company norms
b.  Lateness Record — How well the employee follows stated company norms
c.  Overtime — The employee's record shows a willingness to accept reasonable overtime assignment and help when help is needed
d.  Daily Effort — Puts in a full day's work for a full day's pay
 
4.  KNOWLEDGE (Maximum is 20 points. Mixes both subjective and objective factors. Each aspect is worth 0-5 points)
a.  Demonstrates the ability to integrate skill level, training, education and job-related work experience to improve quality and/or output
b.  Demonstrates the ability to diagnose and remedy technical challenges and can complete daily assignments on time
c.  Has the ability to train others (at least at the employee's own skill level )
d.  Validates the company's and the individual's investments in continuing education

5.  VALUE (Maximum 20 points. The criteria in this category allow the person making the evaluation ample subjective and objective room to award points for matters not necessarily addressed in previous categories.)
a.  Comparative level of output and quality in relation to company standards performance
of fellow employees
b.  Overall accuracy
c.  Team spirit
d.  Intangibles

You should set your own overall “grades” as the overall scores will mean different things in different companies. In effect, you'll be grading “on a curve.” However, as a general guide, these “grades” will approximate the following observations:

Scoring
 90 – 100 = Outstanding
 80 – 89 = Superior
 60 – 79 = Adequate
 40 – 59 = Measurable Improvement Required Quickly
 Below 40 = Unworthy of Secure Employment and Lacking Explanation for Sustained Support*
*(An acronym for “useless”).

All this work obligates a company to determine what exactly are its performance standards; to develop hands-on and written tests to measure performance; to clearly state — in writing — what's expected of employees in terms of behavior and attitude; and to make a commitment to monitoring employee performance on a proactive basis.

The latter issue — monitoring employee performance — comes down to conducting frequent and formal employee reviews. I note that reviews in our industry, if done, are typically conducted only on an annual basis.

The fact of the matter, though, is that most companies don't conduct formal reviews at all. Excuses for not conducting employee evaluations in most companies are commonly expressed in terms such as “I know what each of my employees is doing and what he/she's worth” . . . “I talk to them every day, so we really don't need to do reviews” . . . “We're not big enough to do them.”… and “They'll use a review to try to get a raise out of me.”

In Part III, which will appear in the Feb 5, 2008, edition of the Impressions Newsletter, we'll look at when to schedule employee interviews and what questions to ask.
 
Mark L. Venit, MBA, is president of Apparel Graphics Institute Ltd., Ocean Pines, Md., which provides management and marketing consulting and proprietary research to apparel graphics companies throughout the Americas and Europe. He is also the chairman of ShopWorks Software LLC, a provider of industry-specific business software. Venit teaches pricing, strategic marketing, salesmanship and other business management topics at the Imprinted Sportswear Shows. You can reach him at markvenit@cs.com.

Click here to read “Off the Cuff: Evaluating and Compensating Production Employees, Part 1.”

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Decorators interested in expanding their business or replacing old equipment can rejoice in the new round of government incentives designed to help small business owners.
Earlier this year, Congress passed, and the President signed, the Economic Stimulus Package of 2008, a $168 billion economic “rescue” package that included rebates for taxpayers and tax breaks for businesses. In addition to those tax rebates, the heart of the package, there also were tax breaks for businesses such as decorated apparel operations — breaks retroactive to the beginning of 2008!
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