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.

Pay according to varying levels of efficiency: Pay for specific group performance:
Other

No.	Industry SIC	Year	Notes
1	3241	1991	Lafarge established incentive-driven compensation programs to increase worker efficiency.
2	3312	1992	Nucor has self-managed teams that have led to breakthroughs competitors believed impossible. Teammates enforce each other's performance, and all get identical bonuses determined by the group's performance.
3	3312	1986	Production workers at Nucor work under a group incentive system. Production standards are established for each group of 30, and if the work exceeds standards, the members receive weekly bonuses.
4	3462	1996	Intermet has been reducing costs through decentralization and incentives for plant management.
5	3571	1994	IBM is tying 40% of sales-force commission to customer satisfaction, showing its focus on service to the customer.
6	3845	2000	Not every company starts out fostering teamwork. Some found they needed to change their self-destructive ways. "We need to stay focused on the customer," said president of Guidant's $1.2 billion Vascular Intervention Group in Santa Clara. "so we developed a team bonus structure that rewards employees for delivering great solutions, not for what area of the company they work for or what they do alone. Guidant's bonus system is now based one-third on reaching product milestone goals and two-thirds on performance of products in the market. All employees get the same bonus, which is based on a percentage of their base salary. Last year it was 28 percent. In 1998, a banner year, it was 50 percent.
7	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.
8	6141	1996	MBNA motivates employees to perform good customer service by pooling money toward bonuses, based on performance.
9	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.

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