Why it pays to be nice

It is tHe day before the handover of a £2.5m care home. Terry Duffield and his fellow joiners are fixing vertical wooden slats to horizontal metal rails at the front of the building.

Usually this would be just the sort of job a chippy would do his best to avoid: it's fiddly, boring, and there's no hope of making a decent bonus. A site manager allocating such tasks would expect to be greeted with groans.

Not on this job. Northern contractor Walter Thompson is building the home, and as on all its sites, a different bonus system operates. Workers are scored on overall productivity plus quality, commitment, health and safety compliance, waste elimination and tidiness.

"It works out better," says Duffield. "In the old system, a lot used to depend on what you were doing. Some weeks you would be getting a good bonus and then there would be so many weeks when it would drop right down."

Site manager Barry Blackett, who admits he was not a fan of the new system when it was introduced, says that he thinks he is getting a better job nine out of 10 times. "I think the quality is better, because they know they cannot leave a job half-done to get the extra bonus."

It is not a perfect system. Productivity still carries the greatest weight, and after the system was launched two years ago, each of the five areas improved dramatically in the first six months and then levelled out.

Walter Thompson commercial director Keith Caygill, who came up with the idea, admits it could be time to revise the system. But he adds: "To my mind, the traditional industry system is so bad that anything is an improvement. I think it is significantly better. We are trying to get people to think about how they work."

The idea was to get the workforce behind Walter Thompson's two corporate goals: less defects, less waste. The way to do that was cash. "The thing we all understand is what goes in our pockets," says Caygill.

The traditional system, Caygill points out, does anything but encourage workers to do a better job with less waste. A brickie will work to the lowest standard he can get away with in order to get as many bricks as possible laid. And who cares if he wastes materials along the way?

"You can go to visit a site and see wall ties lying around all over the place. But if you chucked 20 pence pieces all over the place, they would soon pick them up. It's just the same thing," Haygill adds.

The other issue about the old bonus system is that it is hardly fair. The most vociferous or the site manager's favourites will often get the big-bonus work, and the site managers may have to fiddle the bonus in order to meet a tradesman's bonus expectations – otherwise they will walk.

Pushing for parity
With the new system, Duffield comments that "You get a fair bonus for what you do." However, the site manager is the one who is marking all the categories which could still lead to favouritism. There is an appeals system, which Duffield used successfully when he felt his increased efforts were not being noticed.

The new scheme was introduced in January 2001, after some consultation with the workforce. It received a fairly unenthusiastic welcome from the tradesmen and the older site managers. Some employees left.

the thing we all understand is what goes in our pockets

Keith CaygilL, Walter Thompson

Walter Thompson had already experienced resistance to change a year earlier when it had introduced overalls for all its on site employees. People left then, including one joiner who had been with the firm for 25 years.

The setting up of the new system involved much sweating over spreadsheets and numbers. The starting point was that everybody would initially be receiving the same amount of bonus as before. This would be calculated by multiplying points scored by a rate (48.5 pence).

For each of the five new categories, 10 points is the maximum score. For productivity, the initial points score was calculated so that the bonus paid equated to the worker's average bonus payment over the last three months.

One of the greatest difficulties Walter Thompson faced when it brought in the system was that people would not accept their average bonus figures. They remembered the good weeks and thought of that as their regular bonus.

Every month site managers rate their workers in the five categories, while the productivity score remains constant subject to spot checks.

At the end of three months the productivity score is reassessed and a panel of senior managers decides what each person's point score will be, based on previous results.

On paper it looks good all round. Of those operatives involved from day one, average scores for all five categories have improved by around 30%; waste avoidance scores increased the least at 27%, quality the most at 32%.

Weekly bonuses are up as well, on average from £47.50 to £52.50.

The next moves
So where is the extra bonus cash coming from? Caygill hopes that the reduction in waste and rework has paid for it, but the firm does not have any measurement mechanisms in place.

It does measure client satisfaction in relation to defects which Caygill reports is still unacceptably low despite slight improvement over the past two years. But this doesn't reveal the number of times that things have to be corrected - a major source of wastage.

Caygill's next move could be to lessen the weighting of the productivity part of the bonus to put more emphasis on the other elements. "Men who score marks of eight on quality, for example, say to me 'why should we put extra effort in if the most we can get is a quid?'."

Caygill claims his system is like putting the workforce onto a salary. And despite a local labour shortage (and the occasional better offer from homebuilders), Walter Thompson lost no men in the second year of the scheme.