West rum was concerned about maintaining the quality of the new homes being built by his Blue Bell, Pa., firm, Westrum Development Co. It seemed to him that the five-year-old company had lost sight of three quality-control fundamentals: customer satisfaction, on-time delivery, and budget control. In response, Westrum adopted an incentive program suggested by his employees. The incentive's are based on how well the entire team of employees is able to meet goals that have been carefully established for each home built. Under the program, an average of 81,000 per house is allocated to an incentive pool. Each home-construction job is divided into 10 stages, from the initial notice to build to the end of the one-year warranty period. When the company meets the goal for a given stage, the employee team collects 10 percent of the allocated amount.
In a typical quarter, $17,000 in incentives is distributed among the company's employees. From April 1995 through this April, the employees earned $78,000 of a possible $150,000. l i want that money to be paid," says Westrum. "As a business owner, the more I pay out, the more exceptional work we are doing." He says that "at first the goal was to have everyone in the company know what the performance standards were and how to meet them," but now the application has become more far-reaching. Employees use the system to anticipate potential problems on any .uiven construction pro ject and make the changes required to avert them.
Westrum, who at first was reluctant to start the program because1 of the sizable cash outlay required, now can't say enough good things about it. "Self-esteem is phenomenal. It lias raised the level of professionalism to one that allows us to compete with any company in the nation," he says. It has boosted quality, financial controls, and customer satisfaction and lias cultivated a team spirit that, I think, is second to none. "You'd be surprised how people lift each other up when everyone is working toward the same goal and they see someone needs help. It has provided sanity in a very intense business."
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