North Central Business Journal News
CHANGING EMPLOYEES' MINDSET
(October 2001 issue)
by Sandra Kay Neal, Ph.D.
A reader contacted me with a problem often
experienced by manufacturing companies during an economic crunch time.
Due to reduced orders, this company had to lay off a number of employees.
The problem this reader was facing was that those employees who were left
seemed to be producing at a lower rate, which was preventing the company
from being able to effectively compete for new orders. If this slow
production continued, the company would be unable to stay in business.
This common problem stems for the mindset of
employees that the way to make more money is to work longer. To address
this problem, the company needs for the production employees to change
their mindset. They need to think of making the company profit as
the way for them to make money for themselves.
Business owners, of course, know that the only
way to make money is to make a profit. But ordinary employees donít
think that way. They assume there is an unlimited supply of money
which they can only tap if they work longer.
To get employees to think in terms of profit,
companies need to connect efficient production with employee paychecks.
Employees need to be financially rewarded for working faster while at the
same time keeping quality high.
This particular readerís company is a job shop.
That is the easiest organization type to have if one wants to get employees
to connect their efficient work with profit. With modern computer
software, companies are able to track each aspect of a job. They
can produce a chart which indicates the expected cost of each job, the
actual cost of producing each job, and the selling price of each job.
All of the production employees need to receive
a bonus when jobs are actually produced at a significantly lower cost than
that which was expected (assuming that the expected cost was accurate).
It is important that all production employees receive the bonus so that
they will exert peer pressure on their co-workers to work at an efficient
level. This bonus should also be affected when jobs are produced
in excess of expected cost, thus costing the company money instead of making
The way companies can use this tactic is to
produce a monthly summary of jobs indicating which ones were done exceptionally
well and which were done exceptionally poorly. Employees would then
receive a percentage of the profit as a bonus. The bonus checks would
come a month or so after the fact. This would help employees think
long-term rather than short-term. The immediate feedback would come
from a simple chart. It would take about three months for this tactic
to translate into improved efficiency, but once employees begin to think
of their work in terms of company profit, they will develop more efficient
techniques to do their job.
The readerís initial reaction to this suggestion
was ďI already pay my employees to do quality work. Iím going to
lose profit if I pay them a bonus.Ē This is an understandable reaction,
but it is short-sighted. The company is already losing profit because
the employees are working inefficiently in order to ensure they get their
full paycheck. The bonus system provides that the company pays a
bonus only when it is making a profit. The percentage of profit spent
on the bonus system will be more than offset by the increased overall profit.
To get employees to work efficiently (producing
quality at a fast pace), employees need to change their mindset.
They need to connect their efficient performance with company profit.
They also need to connect their paychecks with the quality work of all
their co-workers, and put peer pressure to a positive result.
Sandra Kay Neal holds a Ph.D. in Industrial/Organizational
Psychology and has 19 years experience helping organizations solve human
resource issues. Her company, Synergistic Organizational Solutions,
specializes in aiding small businesses. Dr. Neal can be reached at