Cash For Quality

A small change in the process can dramatically affect the performance of an expensive piece of equipment. Shops that know this look for ways to refine their process variables. And most of these shops would agree: The employee is also an expensive part of the process, and employee performance may also be affected by a relatively small change.

Tru Tech Systems (Mount Clemens, Michigan) recently witnessed this. The company makes grinding machines, including a small precision grinder the company itself uses for contract work with demanding tolerances. One noteworthy feature of this machine is an interface that allows it to be programmed effectively without a knowledge of G code.

But Tru Tech had a quality problem. In 2001, the company shipped 40 machines, and 40 percent of these required service soon after the sale. Repairs were costing time, money and goodwill. So company president Steve Smarsh decided to change the system. He approached employees about linking their compensation to quality.

They were receptive to the idea, he says. In fact, they were surprisingly receptive, given that their base pay would have to go down to make room for quality bonuses. The employees’ condition for accepting this was that the bonuses had to be large enough to let them effectively earn a raise for themselves—surpassing their previous pay level if quality dramatically improved.

And quality dramatically improved. In 2002, Tru Tech shipped 52 machines, only one of which received a customer rating below “excellent” or “good.”

Customer ratings are what drive the bonus program. Each customer is paid a small sum to complete a one-page survey detailing the performance of both the machine and the Tru Tech personnel. The survey’s overall rating determines whether a bonus is paid.

All employees of the machine division (about 35) share in each bonus. The system recognizes that every employee plays a role—not just the assemblers of the machine, but also the receptionist who greets the customer’s phone call and the cleaning person who prepares the office and showroom for the customer’s visit.

As is often the case with a positive process change, this one delivered unanticipated benefits. Mr. Smarsh says one such benefit is the attention employees now give to customers’ needs even after the bonus is paid. Employees recognize that every current customer is a potential repeat customer, offering an opportunity for additional bonus pay later.