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Establishing Wage Levels for the Production Floor

(October 2002) posted on Tue Nov 26, 2002

Find out how to set up a wage scale that reflects worker skills and motivates employees to climb the ladder toward positions of greater responsibility.


By Terry Combs

On every screen-printing production floor, as growth takes place and the operation develops from a small job shop into a professional production facility, management will face unfamiliar challenges. The new realities will range from scheduling and maintaining complex production schedules to developing and growing a production staff that can keep pace with the demands placed on the business. Among the pitfalls of such success is that employee wages can also grow out of control. That's why every business needs to standardize pay scales and develop a hierarchy of positions to which employees can aspire. Losing control of wages When your company is small, you make decisions based on immediate need--today's need, this morning's need, this hour's need. As your company grows, you begin to look more closely at your operation, including your staff and the functions each employee performs. What you discover is that you have workers who are being compensated above their value, both in terms of the return you get from the payroll investment and the normal pay range for similar positions within the screen-printing industry as a whole. The truth is that you're probably stuck with the wages you're now paying--it's difficult to back off wages you've already committed to. But at the very least, you can prevent more bleeding of cash through your payroll by bandaging the wound. All you have to do is frame the positions in your company with base and maximum wage levels. Those employees who are beyond the wage cap for their position will have to be content with that level of income or take steps to move up in position. And any new employees that join the company will understand from day one they need to keep developing their skills if they want to move beyond the pay limitations of their current positions. Whenever the issue of wage caps comes up, I'm usually confronted by opposition. The argument I usually hear is "You can't limit an employee's potential for growth or the value of his loyalty." I certainly have no intention of limiting anyone's growth, and I absolutely appreciate loyalty. However, consider this: You may have the best screen cleaner in the world, and he may have been faithfully cleaning screens at your company for more than 20 years. But the fact remains that he's just cleaning screens, and that function has a finite value to your screen-printing business. It is not your obligation to compensate a low-level employee at a supervisor's wage just because of his or her longevity with your company. So how can you quantify pay rates? How do you establish a scale that is fair and understandable? How do you make raise time less stressful and less mysterious? The answers lie in the tier approach to wage setting, which establishes a hierarchy of positions in your organization with wage ranges that correspond to the job skills required at each level. The tier approach Within any department, you'll find employees with varied levels of expertise and experience. A press operator who can print a six-color job for you has value. An operator who can set up that same job has greater value. And an employee who can troubleshoot that job when something goes wrong is of greater value still. Increased skills or abilities translate to greater benefit for your organization. On the other hand, employees who level off in growth also level off in value. Developing a tier structure will help you clearly define the value you assign to specific skills and job knowledge and control your compensation program. The following list demonstrates a basic tier structure you might apply to your own business: Tier I - entry Tier II - apprentice Tier III - qualified Tier IV - lead Tier V - department head Tier VI - supervisor To give meaning to this tier structure, you need to define the specific training, knowledge, and skills that employees at each level are expected to demonstrate. This way, workers get a clear understanding of what you expect from them at each level and how you expect their development to progress over time if they want to grow within your organization. Given this clear direction, you may be surprised by the employees who step up to the plate for you. Very often, lackluster performance is more an indicator of misdirected effort (and confusing leadership) than a sign of low interest in the employee or a lack of motivation to grow. Setting up the system This project will take a little time. First, you must define what departments exist in your operation. They should be fairly obvious with a few exceptions and tweaks based on your own business and structure. Your list will likely be: * art * screen preparation * inventory/procurement * print production * inspection * shipping/packaging * miscellaneous support For each department, define all the skills and responsibilities that must be present for that department to complete its mission. Include not only the skills that are presently represented by employees, but also list additional skills that you would like workers in that department to master. Drop each of these skills into the tier level that you feel is appropriate. Make sure that as you work your way up the tier structure (toward positions of greater responsibility), you broaden the level of job knowledge you expect from employees. At the top levels--department heads, supervisors--knowledge should go beyond the specific functions of the department, and the individuals should be able to demonstrate good understanding about the workings of other departments. Next, pencil in where each of your current employees fit within this structure, and note their current wage. I recommend that each tier level have a minimum and maximum hourly wage rate that differ by no more than $2.50. If the min and max rates cover a wider wage range, the skill level and knowledge that define the tier likely aren't specific enough. In such situations, the best solution is to create an additional tier that makes a clearer distinction between skill levels. Once you set your base wage and maximum for entry-level positions, the wages for successive tiers will fall into line very quickly. And after you've plotted out the wages for each level, you will find it easier to define what you expect of employees in order for them to move up from one tier to the next. Don't hold back here. There's nothing wrong with having high expectations, especially toward the top of the ladder. I've often heard that you get exactly what you expect. If you expect to lose, you'll lose. If you expect to win, you'll win. Raise the bar high, and expect employees to clear it and excel. Also remember that you can't set high standards without giving employees the means to reach them. The tier system must be backed by training, mentoring, and advice to help employees make it to the next level. Implementing the system The wage ranges and requirements for each tier should be published and either be posted where all employees can read them or included in the employee handbook. To move from tier level to tier level, employees must demonstrate proficiency in all requirements of their current tier and aptitude toward the skill required in the next tier. Be very specific about how employees must demonstrate their skill and proficiency. If an employee moves up more than one tier during a given period, his or her wages should be adjusted to the base rate of the highest tier reached. You can structure these adjustments around quarterly, semi-annual, or annual reviews. New employees who bring experience to the job need to be assessed in the same way as existing employees and brought onboard at the tier that matches their particular skill and knowledge levels. On occasion, you may have good employees who have reached the top end of their wage levels but have not developed the skills to advance to a higher tier. To avoid losing dependable help, your wage policy might provide for "cost-of-living" wage increases in addition to those raises that occur as the result of promoting employees. This cost-of-living increase could be a fixed percentage increase that any employee in good standing can expect on an annual basis. If your shop uses part-time or seasonal help, these individuals may be hired outside the normal parameters of your wage policy. Just make sure these exceptions are also detailed in your policy. Your policy should also cover special compensation issues. For example, you may have employees who demonstrate proficiency in more than one department. It is always advantageous to have employees who are skilled in multiple tasks, so that when a key employee departs, a cross-trained employee can step in to help fill the void. These cross-trained workers should win extra compensation. One way this could be handled is to adjust the minimum and maximum wage range for the tier at which the employee conducts his or her primary job function. Your policy could include a provision stating that the base and maximum limits for such workers are a particular amount greater than the standard wage range for a tier (adding $0.25/ hr to both the base and maximum limits might be a reasonable amount). This can be a nice incentive and will bring out the people on your production floor that are motivated and aggressive about their careers. While the bulk of this discussion has been about hourly wage earners, I'd like to add one final note about those employees who are at the highest level of responsibility on your production floor: salaried managers. Floor managers, assistant production managers, and production managers should all be compensated at a rate that's on par with other managers in your organization, including sales managers and other front-office managers. Just make sure you don't add management positions as an excuse to promote employees. Don't waver on wages Once you establish a skill-based tier structure for your employees and a corresponding wage policy, make sure you stick to the plan. Employees will appreciate the fact that advancement in your company isn't arbitrary and that they aren't aiming at a moving target when they work to earn a promotion. Outlining your expectations in this way will help you identify workers who have the most to offer your company while giving those workers a clear path to grow in your organization. About the author Terry Combs is plant manager of KNC Marketing, a garment and ad-specialty printing company based in Waldorf, MD. With more than 20 years experience in print production and business management, Combs is a veteran of the screen-printing industry. He has written numerous technical and management articles for industry publications and spoken at a variety of screen-printing trade events.


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