Hourly Pay plus Piece-Rate Bonus
Gregorio Billikopf Encina
Some decisions require a degree of boldness. There are no compromises. Those who watched the equestrian events at the most recent Olympic Games could not help but note the required coordination between horse and rider to clear the jumps. The obstacles had to be taken without hesitation. Lack of unity between horse and rider-or not permitting the horse the right number of strides before a jump-can lead to potentially disastrous consequences, the most serious of which is lack of confidence or trust in each other. There are similarities in terms of how crew workers are paid.
Growers agree that when workers are paid by the hour the fastest crew worker tends to work at the speed of the slowest one. Farmers also agree that one of the dangers inherent in piece-rate pay is the potential for poor quality. Research has shown, however, that piece rate does not automatically result in poorer quality than work paid by the hour. Furthermore, there are specific steps that can be taken to safeguard quality while paying by the piece.
Over the years I have worked with numerous farm employers who have implemented an hourly pay system plus a piece rate bonus. The idea in each case was that of safeguarding quality while motivating employees to work faster. The long term results tend to be disastrous.
A California farmer shared with me a letter he received from employees that essentially stated, "Please remove the weight from off our shoulders and change the way you pay." The letter was signed by all employees. This grower kindly permitted me to share some of the details of his pay system. The base pay at the time was $7.25 an hour for up to 75 pounds of produce handled per hour. The bonus was that of $0.055 per pound for every pound over this 75 pound base.
Table 1 shows that workers who process 130 pounds per hour earn $10.28 per hour in contrast to, say, someone earning $7.25 and handling 50 pounds. What may not be immediately evident in these numbers, however, is that the pay per effort (pounds processed) diminishes with increasing performance levels.
Figure 1 represents dollars earned per effort (pound processed) shown in the Y axis, and pounds processed in the X axis. This is a graphic representation of the diminishing earnings per effort made.
Most farm workers do not need to pull out their calculators or computer spreadsheets to intuitively realize that added effort is not compensated evenly. A straight piece rate is much more motivating to workers. For more information on how to design a piece rate pay approach that will benefit farm employers and farm workers in the long run, contact the author at email@example.com or download Chapter 8 of the book Labor Management in Agriculture: Cultivating Personnel Productivity.
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15 November 2004