You Ain't Play'n With My Money

That’s what she said as she walked out the door. Never to return! She was one of the three that quit that first night.

We were already having trouble getting the work done every day. How were we going to get the work done? Deadlines were a joke. We were missing deadlines by 4 or 5 hours everyday and I was Getting to the office at 3AM was tough enough, but having to work 12 hours a day 6 days a week.

“Maybe this isn’t the best idea, ” I remember thinking.

it was December 1st 1996, in Philadelphia Pennsylvainia. I was asked to take over management the data entry side of an office run by Unibase Data Entry (later to be bought by Affiliated computer services). Unibase had a contract that helped a multinational package company key in bililng information of hand written air shipping documents. We were doing the final QC check before submitting the information back to the company.

I had arrived in the office to work with a very young manager who was 19 years old. She had been there over 6 months and things were just getting worse. The shift started around midnight. and should have been done by 8 or 9 in the morning. Even though the deadline was at 10am. All of the employees were paid about $8 an hour. The first thing I did when I arrived was call HR and have them put an ad in the local paper to let people know we were hiring. I also tried changing a schedules. I wanted to have the people come in at 2AM or 3AM. But with the metro trains in philly not running from midnight until 6AM only some of the employees could change their schedules.

One of the problems I also discovered was this was a second job for many and they had to leave between 8 and 9 to get to their other jobs. Some had children they had to get to get ready for school. So between 8 and 9 everyday I was losing most of my work force. I hired as many people as I could. I had been managing Data entry for a year now and luckly I was not tempted to hire people who could not pass the keying test that required you pass with 12,000 keystrokes per hour minimum. We got a few people hired and we were between 25 to 30 employees after two weeks.

I realized something more needed to be done and I knew what it was. Unibase had a long policy of pay-for-performance with data entry. I had used it on a couple small jobs in the previous year with great results. But it had only been a few keyers at a time. and never this consistent volume of work. We were processing between 40 to 50 thousand records each day. All of it had to be done. None could be held over to the next day. I always wanted to do that. However, because of the way the system worked it wasn’t worth trying to hold over work.

after two weeks of 12 hours a day the other manage left and I could concentrate on transitioning to pay-for-performance. I first talked to my boss. He was managing 15 other sites all doing the same thing. He was worried it would not work out and I would burn. He basically told me I was going down with the ship if this didn’t work. I needed some tracking software developed and he was willing do get that approved and written.
The first thing I set about doing was setting a rate for each document processed. I brought in Treats held contests to see who could get the most done in an hour. the documents were in bundles of 50. The most bundles anyone did during the contest hours was 22. 1100 documents an hour. That was fast. at that speed I should only need 50 man hours a night I was burning 150 to 200 man hours a night. It was costing me about $32,000 a month for payroll my salary included.
I think most of the employees knew something was going on and only did 11 to 12 batches an hour during the races. The reality was each employee was doing 200 to 250 an hour.

I needed to set a rate to figure out what neede to be done. I asked my boss what we could afford. He said we can pay them $.01 per document. One penny doesn’t sound like much. Remember everything counts in large amounts check out my story about gluing rocks. At the fast speed one person had shown me she would be making 11 dollars an hour. Which was fine by me. However, I’d worked with pricing a couple of other jobs, and from my own pay-for-performance experience, I knew people would get faster. I thought we should set the rate at $.005 or half a penny for the rate.

One of the rules never to be broken with motivational pay is you can never lower a rate. unless you are willing to replace your whole work force.

I wanted to get it in place by November 1st but not all the programming was done. But as things worked out it started officially December 1st. I did not do a very good job of explaining to the employees how this could benefit them. I heard a lot of “how can I make any money when I am only getting half a cent.”
Not having done work for a shipping company before I was not prepared for the increase in volume right before Christmas. It was not the best time to start a new program. The volume of work the two weeks before Christmas basically doubled.
I was constantly trying to hire new people, But wasn’t having much luck. But we were getting our work done everyday. I was still working 12 hours everyday all the way through Christmas and into the new year.

First week of the new year when our volume dipped a little. I noticed we were finally getting close to finishing all of our work by the 10 am deadline. By the end of January thing were running so smoothly most of the work was completed. by 8 am and only me and a couple of supervisors were there at 10am to clean up the work for the day. We were now down to 12 people working and most of them were not working 8 full hours.

I finally got the financial reports in the second week of February. I was amazed at what I saw. The payroll expense had dropped from $32,000 in November to just $16,000 in January. And in January we had more days and actually did about 10% more work. about 90,000 documents. This was a huge success. They rolled out the program to 15 other offices. I did get a promotion and they doubled my pay. The funny think I didn’t realize until after I left the company and I started figuring out how much profit I made them. With on the conservative side, It was over $1,000,000 that’s right a million dollars of profit a year. That savings went on every year for 8 years before the contract changed.

Philadelphia was one of the 4 big offices. and there were 4 reall small offices. But there were 15 offices. Lets just make the assumption they made on average an exta $9000 dollars a month extra profit X 15 offices is $105,000 a month x 12 is $1,260,000 a year.

At first the quality actually got better. However over time people started getting sloppy because they were going too fast. So a grading system was also implemented. A B C. Every thing they got paid was based on a grade. People with A grades got paid higher on every bit of work they did. B grades got them paid less. And if they were at the C grade for over two pay periods they were warned and if after two more pay periods they had not improved their grade they were terminated.

Another problem that Unibase/ACS never addressed the issue of competition between the employees. The competition between the employees with this type of Pay-for-Performance encourages employees to horde work so they get what they want. The problem is if some hoards too much work and the others leave and deadlines get missed. Or on days were there isn’t enough work to go around someone gets more than their fair share.

This same type of behavior was prevalent in the peach canning industry in California from 1910 to 1949. This was encompassed in a report done by Harvard that I read and reported on in a research project. But that is for another day.

Please leave your comments and let me know what you think.

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