Reduce the Units of Input Not Producing Output

Reduce units of Input (I) available but not producing Intermediate Cost Drivers (ICDs). This action makes Input levels more directly variable with the quantity of the ICD by reducing the amount of the available Input that is wasted or idle. For example, an employee (I) might produce one subassembly (ICD) per day. During that day, the employee spends a total of one hour waiting for parts for the subassembly. If the Company could eliminate that one lost hour of the employee's work day by providing parts in a more timely manner, the Company could reduce the number of employees (I) needed to produce the same subassembly (ICD) by 1/8th.

A. Assist Input in increasing ICDs.

Recognize efficiency.

When people understand that the company is measuring efficiency, they pay more attention to what is measured.

No. Industry SIC Year Notes
1 0 2001 Good employee incentive plans include using worker input in design of the scheme, making sure employees understand the reward plan, having fair and objective criteria, and monitoring the results against profit targets.
2 1623 2007 Even a few outstanding bills can have a dramatic influence on a small company's bottom line. As they do not have the resources to hire full-time collection agents, some are turning to alternative resources. Nicholas & Co. realized that many of their clients took more than a month to pay. In response, the company changed its sales-pay structure to base commissions partly on how much of a sales representative's accounts are current and how long customers take to pay. Previously, representatives received their commissions before customers paid their bills, reducing their incentive to go after delinquent clients. Stricter payment standards were imposed for high risk clients. This has reduced the firm's reliance on borrowing although some staff initially resisted the change.
3 3312 2004 Integrated producers are trying to operate more like non-union mini mill operators such as Steel Dynamics and Nucor. Both these firms stayed profitable in the late 1990s as imports soared. One reason for their success is a compensation program that is weighted towards incentives. When business is great the employees share in the good times; when it's slow, pay levels reflect that. Employees get paid based on prime quality steel produced, typically over 100% above the base pay is paid in bonuses.
4 4213 1998 Werner is near the top of the industry in pay scale and pays its drivers for extras. In addition bonuses are available for fuel and driving efficiencies. So on average a typical driver earns an extra $.02 to $.03 per mile from additional pay and bonus
5 5812 2005 In an effort to reduce high turnover rates among restaurant employees, Applebee's International Inc. reviews and ranks its hourly workers, and then rewards managers for retaining their better workers. The tactic is a combination between General Electric's employee ranking systems and retention bonuses paid to managers in high-turnover industries such as retail and restaurants. At Applebee's managers must divide hourly workers into "A" players, the top 20%; B, the middle 60%; and C, the bottom 20%. The managers are then eligible for merit raises and bonuses based on how well they retain employees in the top 80%. Employers give out small raises for employee loyalty and good performance.
6 7011 2001 Marriott has a well-run incentive program in place for its 153,000 employees in its 2,200 hotels. The program revolves around the white guest response cards and phone-based input. The hotel staff can get bonuses up to 10% of their pay.
7 9611 2008 Many companies show need for broader management strategy that addresses how they are creating, sharing, and using knowledge. The World Bank has nurtured a network of more than 5000 lawyers, accountants, freight forwarders, architects, and public officials across the world to create a comprehensive database of indicators, allowing it to compare the ease of starting sustaining private businesses in 178 countries. The "Doing Business Report" has become one of the most relied-upon tools in the development world.

<<Return to Reduce Input Not Producing Output