A Million Dollars a Year

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I am hoping it will change your life?

ACS, was on the brink of losing their biggest customers, because they couldn’t complete work on time.

This account was bringing in over $10 million dollars a year. Needless to say, losing this customer would devastate the company.

I was assigned to help fix the late problem.

Unbeknownst to me over 15 people had unsuccessfully worked on the problem for several months with out a breakthrough.

I was asked to go fix the problem in the Philadelphia office. At first I thought we need to hire more people. But I remembered a job I had a few years earlier being a rock artist, basically I got paid to glue rocks together. I got paid 1 cent for every two rocks I glued together, that’s right $.01, one penny. The people working there were averaging 400 to 500 per hour. $4.00 to $5.00 an hour. I was a bit hungrier. Within a couple of weeks I was gluing 800 an hour, and by 3 months I was averaging closer to 2000 an hour, $20 an hour in 1988 as a recently graduated high school student. I was living large.

I theorized if I tied pay to performance some people would catch fire. I hoped this would fix the problem.

I spent a couple of weeks coming up with a plan and working out details.

Unfortunately was naive and unexperienced. I did not know how to explain the benefits properly to the people in my department. I announced to the 25 people working with me we were going to start paying everyone differently. Most people were upset, I had three people quit the first night. My boss even told me if this fails you are taking the fall. Now failure was not an option for me. I pushed forward.
Within a month we were making our deadlines, within two months we were beating the deadline by two hours.

Amazingly, while half of the staff had quit, we were able to beat the deadline with the 12 remaining people. The average wage had gone from $8 an hour to $12. So the people were happier

The month before I implemented my plan the company had paid $32,000 in labor costs, my salary included. When I got the financials for the second month, with my new pay for performance process in place, the labor costs were $16,000, and we had done 10% more work than in the month before the new plan.

There were 14 other office doing the same work. Of course my plan was implemented in all of those offices. The net effect for the company was over $1,000,000 more profit every year for the company.

Yea I got a raise.

At first I thought it was a fluke, I was wrong. That happened in 1997, I’ve been involved with several pay for performance implementations, and studied many, many other implementations of pay for performance from as far back as 1870. Most with very similar results. Companies like Toyota, Walmart and Necor steele use pay for performance strategies to beat the competition, pay better, treat their employees respectably and deliver extraordinary value to the customer.

At first I thought these things were pretty obvious, they are to me. However, I started realizing there were lots managers, over 15 in the story above, in the company with the same opportunity to see the solution, but they didn’t. I have also spoken with hundreds of managers in other companies about these concepts. Most understand what I am saying, some have tried unsuccessfully to implement their own pay for performance system, some have partially implemented systems, and many say they can but still haven’t.

check out what it costs to put one of these in place in your situation. Pricing

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