How Manufacturing Can Make Better Use of Piece Rates

Author: Suntech Consulting Bao Honggang

I often say to the bosses on many occasions: In our factory, those that can be counted are not timed, those that can be timed are not fixed. The management of piece rate wages is a core factor of our manufacturing site management, so how can we make better use of the piece rate system?

To do a good job in piece rate wages, we need to do three prerequisites:

1. Formulate the standard of piece rate: standard working hours. That is to say, we need to obtain the standard working hours of each process and measure the standard working hours. There are no more than several methods: on-site time measurement, process statistical analysis, action and time research based on IE, calculation by MOD method, etc.

2. To analyze the difficulty coefficient of the process, in professional terms, it is to evaluate the process, that is, to analyze the difficulty of each process through factors such as technology, physical strength, environment, and basic ability requirements, evaluate, and finally get a salary factor.

3. The process level, that is, the unit price of the standard operating time determined by the factory, can be determined according to the peers or similar types of work in the same region.

Why do we need a piece rate system?

1. It can improve the enthusiasm of employees and improve the production efficiency of enterprises. Because more work is more rewarding, employees earn wages entirely by their own ability, so as long as they are really working people, they will generally not be lazy!

2. Piece-rate wages will encourage employees to take the initiative to improve labor methods and improve labor skills! A strong competitive atmosphere is formed on the scene, so that employees can form a mentality of chasing each other and PKing each other.

3. Make the expenditure of the enterprise relatively clear, which is conducive to cost control and effectively control the hidden waste.

4. Allow employees to clearly know how much the salary is for each job, and feel more motivated.

Of course, there are advantages and disadvantages. To implement piece rate wages, we need to pay attention to:

1. It is easy for employees to only talk about quantity, not quality. It is easy to have confrontational emotions for quality requirements. Therefore, it is necessary to implement a piece-rate wage system linked to quality.

2. The formulation of the piece rate standard may cause uneven phenomena, resulting in contradictions. If not handled properly, it is easy for employees to fluctuate. Therefore, we need to handle three preconditions.

3. Small batches and multiple varieties of orders. For enterprises, the batch factor must be considered when formulating standard working hours. Otherwise, the enterprise is prone to the problem of large workload and small effect.

4. Every time a new product is launched, it must be treated with caution, and the requirements for management personnel are much higher.

In summary. We need to pay attention to the following when implementing the piece rate system:

1. Accurate and authoritative assessment by managers is required - managers who are proficient in craftsmanship and workers.

This is the primary condition. The so-called diamonds are not diamonds, so don't work on porcelain. The person who sets the wages must be well-informed, and must be a person who has rich industry experience and professionalism from the front line. He also needs to have a brain proficient in calculation, and the depth of a person's calculation exceeds the sum of the calculations of all the front-line workers of the company! Such people need to be cultivated by enterprises themselves, which is more difficult. The piece-rate wage system in many of our enterprises is not well implemented, which is directly related to this.

2. The piece rate wage standard needs to be reasonable.

The benefit of the enterprise needs to be considered: if the profit is high, it can be appropriately high; but if the benefit is average, it does not need to be too high, but the level of peers and the same region needs to be considered. Because once the piece rate system is formed, the only workers who can stay in the enterprise for many years are basically skilled workers in the industry. Unreasonable wage standards will lead to inability to recruit and retain people, and many things are difficult to rectify and implement.

3. In enterprises that implement the piece-rate system, the key is the rationality of on-site operation arrangements

Don't have a situation where there is too much difference between high and low. We all know that there is no problem of widowhood, but unevenness. Workers are very competitive. The average salary in the surrounding area is 3,500. The minimum wage for piece-rate workers in your factory is 6,000 and the maximum is 10,000. The theory says it's fine, but in reality it's going to be a big mess. There are 8,000 workers and 3,000 workers. It is necessary to evaluate whether it is reasonable internally. If it is unreasonable, the internal unfairness will lead to confusion in management.

4. Strictly observe the work and rest time.

What workers care about is how much money they get. Enterprises that implement the piece rate system still advocate strict work and rest time. Go to work when it’s time to go to work, and rest when it’s time to go off work. We often have such a misunderstanding among managers: anyway, workers are based on piecework, and the more they work, the more they get, and the more they work, the more they can make their own decisions. If this is the case, it is a big mistake. The system of the enterprise is still necessary. Loose workers will inevitably lead to loose management, and loose management will inevitably lead to loose quality and service. In the end, there will be violations of regulations and orders.

5. The piece-rate system is not just about setting a unit price.

As the management of the enterprise, we must be well aware of the disadvantages of the piece rate system. That is to say, the wages set by the high-level wage-setters will have a certain level, which is impossible. Even if you can achieve the absolute average in the theoretical state, because workers are divided into diligent and not diligent, there are differences in strength and strength, and there are natural differences in movement speed.

6. Implementing the piece-rate wage system, we must ensure the authority of wages.

This is the case in many companies. As soon as the wages are made public, the workers will make trouble and make trouble, and the management staff will add one extra in order to calm things down. Smart managers will deliberately set a low price at first, and when the workers are in trouble, they will bargain and increase it little by little. Make business management like a small business hawker. Every time a new product is launched, there is a commotion. If the control is not good, it is a mass strike.

7. Piece-rate wages must be open and transparent from the beginning.

Especially for those companies that frequently change new products, it must be announced at the beginning. In many enterprises, the managers are not professional and they are not sure about setting wages. The usual method is to do it first and see, and then set it according to the efficiency of the workers after a few days. If so, over time, workers will surely find out. Before they know the wages, they will definitely do it slowly, and they will work hard when you make a decision.

8. Quality control.

The piece rate system is the most prone to quality problems, and workers only focus on quantity and not quality. This is a big problem. Can it be solved? can! Certainly! But pay attention to the method. Managers should constantly promote the concept of quality. In fact, high quality and high efficiency are incompatible. It can be said that without high quality, there will be no high efficiency.

High quality is the foundation of high efficiency, and workers must understand this. Every time a new product is launched, the quality requirements must be explained to the workers in detail, and every employee must be aware of it. During production, employees must have quality inspectors to conduct continuous inspections, and the operators of the next process should be responsible for the quality inspection of the previous process. As long as the various systems are implemented in place, there is no problem with good quality control. This is a conceptual issue, not a piece-counting issue. Piece counting can't control quality, and timing can't control it either!

9. Adopting the piece rate system, it is easy to form an atmosphere for workers to chase after each other.

If this happens, managers need to be careful. To control the labor time and intensity, it is impossible to exceed the limit of everything. The workers are too tired and too hard, and there will be no problem in the short term, which will bring benefits to the enterprise. If time goes on, after all, people are not made of iron, they will get tired and tired. Therefore, it is necessary to master the degree well, and everything should be done in moderation, otherwise it will not be conducive to the sustainable development of the enterprise

10. While implementing the piece-rate system, a policy of supplementing the arrears should be formulated.

Enterprises will have low and peak seasons, and in peak seasons, piece-rate wages will fluctuate greatly. During the peak season, all staff are at full attendance or even work overtime, but in the off-season, they will be fishing for three days and drying the nets for two days. Therefore, while implementing the piece-rate system, a policy of supplementing the arrears should be formulated. During the peak season, properly keep some in the company's account, and in the off-season, keep the peak season to compensate for the insufficiency. Of course, the policy of supplementing debts needs to be adaptable. To gain the understanding of the workers.