Dealing with reduced overtime for an extended period of time

Production in our second factory has started to become consistent. We can now manufacture about 700 meters/day in 8 hours. A few months ago, we were making about 780 meters in 11.5 hours of work.

meters hours meters/hour
May-July 780 11.5 67.83
August 700 8 87.50
Percent Improvement 29.01%

In the month of August, we did not need any overtime. So.. while the workers were about 30% more productive, they did not get any benefit infact, they lost all their overtime pay. So.. what should we do as a factory owner? It seems easy to say that we should give them some discretionary pay. Here are the drawbacks of this approach:

  • Workers believe that they deserve the money irrespective of the work they do
  • Workers believe that overtime pay is their right and they are guaranteed to some of it every month

If we dont award the workers for their work then we are not rewarding good behaviour and this leads to following issues:

  • Workers feel that we dont care.
  • Workers may go slow
  • Workers may decide to leave since they are making less money than before
  • Workers may threaten to strike and then we’ll have to pay.. just to keep things going

So I’m not sure.. we are leaning towards paying them 25% of their overtime pay as a reward for consistent performance and hope that it helps them deal with the downturn. And, so that we dont have to deal with stoppages, etc. You could say that we are doing this out of fear. I dont know what to say about that.. some of it is based on fear. Maybe we just dont know what’s the right thing to do in this case.

Just so you know.. this is not the peak season for our business and we are additionally dealing with a sluggish economy.. hopefully things will pick up soon.


I feel good

Its been a while since I’ve felt this good.

I’m firing on all cylinders and accomplishing a lot both at my job and at my dad’s manufacturing business. New products, that I’ve developed seem to be taking hold and I know enough about them to fix issues that arise during production. Further, I was able to find a good vendor for VKE to help us bring our new analog meters to life. This vendor seems accomplished and should be able to allow us to differentiate significantly from the competition.

So yeah.. I feel good.