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We've seen a 200 percent increase in productivity!"
A 200 percent increase in productivity! Not possible you say? The Procurement and Support Services Division (PSSD) of the Minerals Management Service (Department of the Interior) has experienced such an increase! How? One method it uses to improve productivity has been implementation of a group incentive award program.
PSSD is a fee-for-service acquisition organization that helps managers from all agencies buy information technology products and services. To improve employee productivity and reduce costs, PSSD established a group incentive program that grants awards to employees if group productivity goals are met. PSSD uses the number of contracts awarded and the total number of actions taken in FY96 as its baseline productivity measures for goal setting. Payouts are based on meeting the goals.
Currently, about 20 employees participate in the incentive program. All participating employees must receive a satisfactory (equivalent to Fully Successful) performance rating, and they must provide support for procurement activities. These activities include administering contracts, promoting franchise activities, improving procurement methods, promoting customer participation, and improving customer satisfaction. Incentive awards are paid quarterly to participating employees if group goals are met.
The PSSD incentive program is a self-supporting program, with all funds supplied by franchise activity fees. (Franchise activity fees are the administrative costs that the customer pays for services provided by PSSD.) Management places approximately 10 percent of the monthly franchise fees into a pool. The pool is divided into funds for awards based on group achievement, which are distributed to all participants, and awards based on individuals' exceptional performance.
PSSD employees want to improve their performance and productivity because they want to participate in the incentive program. Employees realize that everyone must pull together in order to reach PSSD performance goals. They recognize that sharing experiences and exchanging ideas help not only their clients but themselves as well. Finally, because employees were involved in designing the award program and understand its features, PSSD has had no problems with poor performers.
Senior management buy-in and getting employees involved in program design were crucial to the success of the program. Keeping participants fully informed and up-to-date on all aspects of the program also is important to program success. Managers have found that the program keeps employees focused on goals and increases their productivity.
David Sutfin, Chief, Procurement Operations Branch, offered these suggestions for anyone creating a group incentive program:
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