Rewards Improve Productivity by RU4pDvu6

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									Compiled by: Chhaya Sehgal                                                                    The Winning Edge


Rewards Improve Productivity.
Case Study on Steel Manufacturing Company.
Ispat Industries Ltd.
Vision
Ispat would like to be a knowledge-based organisation that continuously achieves economic value for
stakeholders by optimising resources through operational excellence, enabled by technology and driven by
continuous innovation to meet customer satisfaction.
Mission
To attain and maintain market leadership through technological and product superiority, at a competitive
cost, to maximise value-addition.

Products
Sponge Iron
Possesses a consistent chemical composition, so users can produce the best quality steel.

Hot Rolled Coils
Superb surface quality, superior width to thickness ratio and accurate coil geometry.

Cold Rolled Coils
Closure thickness tolerances and perfectly flat strips ensured by a computer-controlled rolling process.

Galvanised Sheets / Coils
A range of versatile galvanised products manufactured using the foremost technology.

Color coated sheets
An innovative ready-to-use product that is extremely versatile, durable and cost-effective.

Facilities
Dolvi
The sprawling 1200-acre Dolvi complex is strategically located on the Maharashtra coast.

Kalmeshwar
The integrated steel plant at Kalmeshwar houses state-of-the-art manufacturing facilites.

Manpower
Ispat has a manpower strength of around 2000 employees on permananent employement and more than
3000 manpower on contract / temporary rolls.

Human Resources Dept
HRD Dept is located at Dolvi and there are 40 employees in this department to cater to all human resources
at Ispat.


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Compiled by: Chhaya Sehgal                                                              The Winning Edge


To attract, develop and retain employees, HRD Dept is very instrumental in conceptualizing, developing and
executing suitable reward schemes to increase productivity for every department. Every employee gets
rewards over and above his monthly salary.
All the rewards will be nominated by Functional heads, approved by HODs, certified by Audit and Costing
Department.
How Rewards improve productivity:
Rewards establish a strategic framework for improving productivity
Rewards enhance motivation
Rewards enhance willingness to achieve to desired results and go beyond expectations
Linking rewards to specific goals is a great way to improve productivity.

Reward Scheme
To augment production for achieving Business objectives of the company, put necessary efforts, motivate
and boost employees, Ispat announces Shiftwise Hot Rolled coil production reward & Special reward
scheme. These schemes have been aligned to our Business goals and objectives.
The schemes are effective till new schemes supercede.
Some of rewards schemes applicable to various functions are mentioned below.
       Lime Calcination Plant special reward scheme
       Utility scheme
       Six Sigma
       Monthly Production graded scheme
       MPICC
       Techinical Audit
       Product Development
       Blast Furnace
       Sinter Plant
       Quality Audit
       Security

Following schemes are explained as examples:
1. Suggestion scheme

STAR IDEAS
STAR Idea scheme aims to give opportunity to all employees for participating in continuous improvement
process by giving their innovative and creative idea and getting them implemented for achieving business
excellence. This scheme will act as a platform to all to showcase their inherent talent.

MAIN OBJECTIVES OF THE SCHEME ARE :
To develop creative and constructive attitude & aptitude among employees as well as contractor employees.
    1. To provide an opportunity to the employees to communicate their valuable ideas, creative thoughts,
       develop their talents and achieve cost reduction and increased productivity.
    2. To share benefits resulting from adoption of such suggestions.


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Compiled by: Chhaya Sehgal                                                                  The Winning Edge

     3. To promote employees motivation, boost their morale and give personal recognition. To promote
        greater involvement, participation and ownership of the employees in planning and implementing
        one’s idea.
     4. To improve industrial relations through employees participation. To imbibe a spirit of co-operation
        and teamwork amongst employees at all levels.
     5. To eliminate even small losses and implement best practices.

ELIGIBILITY:
All employees.

SCOPE:
         The scheme invites all types of suggestions/ideas, which will benefit the organization and its
         employees.

To Employees
            i.   Make the job/working easier
           ii.   Decrease fatigue
          iii.   Remove unnecessary operations
          iv.    Use simpler methods
           v.    Improve better and safe working conditions / environment
          vi.    Stimulate interest in their job. Introduce a fun element in their work environment and reduce
                 the stress level.
         vii.    Innovation and new ideas impacting the individual in a positive manner.

To Organization
   i.    Improving methods and procedures by making them more attractive, easier, more interesting or less
         time consuming.
   ii.   Making the working conditions safer
 iii.    Saving the organization in terms of money, human effort, time, energy and materials.
  iv.    Improve operating efficiency and productivity
   v.    Cost reduction.
  vi.    Quality improvement.
 vii.    Areas of new initiatives like Six Sigma, TPM etc
viii.    Break down control and Reducing machine down time. Improvement in working and environmental
         conditions including removal of hazards to health and possibilities of accidents.
  ix.    Reduction in the frequency of idle time or repairs and maintenance of machinery,
   x.    equipment or tools.
  xi.    Conservation of materials, energy or time in processes or their utilization for
 xii.    better purpose.
xiii.    Speed of delivery -without compromising on quality.
xiv.     Positive and good attitude towards work and colleagues.
 xv.     Safety Environment and pollution control.
xvi.     Also include the suggestions which enhance performance culture (work culture) and bring
         continuous improvement even though it may not have a visible monetary benefit.
xvii.    Innovation and new ideas impacting the company in a positive manner.




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Compiled by: Chhaya Sehgal                                                                   The Winning Edge
PROCEDURE:
               a. Dedicated HR person to be appointed as the Scheme Co-ordinator for the successful
                  management of the scheme.
               b. Suggestions to be made by an employee should be neatly written (in English or Hindi or
                  Marathi) given in the prescribed format and put it in suggestion box kept at various locations
                  in the Factory premise. A suggestion Box will be kept outside the Office of following
                  HOD’s :-
               c. Time Framework

                                                            TIME LINE
          st
         1 Wednesday               Collection of the Ideas by the Scheme Co-ordinator
                                   Consolidated List of the ideas collected to be mailed to the Respective
         1st Thursday              HODs
                                   i) Feedback of the HODs (rejected or approved with reasons for the
         2nd Friday                same) to be given to the Scheme Co-ordinator
                                   ii) Based on the feedback the initial status [rejection or
                                   recommendation to the Star Idea Scheme Committee (SISC)] to be
                                   sent to all the employees who have submitted their ideas with
                                   registration number for his/her future reference.
         3rd Wednesday             The Ideas recommended by the HODs to be submitted to the SISC.
                                   The SISC committee will meet 3.00 p.m. in Ground Floor Conference
                                   Hall. The team will be consisting of following members
                                   Status of the Ideas (rejected or approved with their feedback)
                                   presented to the SISC to be communicated to the Scheme Co-
         4th Wednesday             ordinator.
         1st Wednesday of          The ideas approved and status of the same by the SISC to be
         the ensuing Month         communicated to all.

                  1. The Star Ideas Selection Committe (SISC) committee will consist of HODs.
                  2. Employees whose more than 3 suggestions are approved in a Quarter will get special
                     award over and above reward payable as per this scheme.
                  3. Employees whose ideas have been approved will be felicitated through a function held
                     every Quarter.
                  4. Co-ordinator would keep record of all accepted suggestions in a register or computer,
                     progress in implementing, present status, savings envisaged vis-à-vis savings actually
                     /would be achieved. Such records would be made available to the SISC as and when
                     required.
               Have a track of the suggestions received:
                  1. Department wise suggestions received and implemented.
                  2. Recognition and shield to the best department for contributing maximum to the
                     Improvement Suggestion Scheme in terms of number of suggestions, percentage of
                     employees covered and benefit achieved.
                  3. Difficulties faced and Suggested Improvement Action Plan
                  4. Suggestions would be processed /examined with the Suggestion Number without
                     disclosing the suggestor’s name.

TERMS AND CONDITIONS:
        i)        Suggestion will be accepted from the individuals or a group of employees.
        ii)       All decisions of the SISC shall be final and binding on the individual/group of employees
                  concerned.

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Compiled by: Chhaya Sehgal                                                                             The Winning Edge
           iii)   If two or more employees/group of employees submit substantially the same suggestion
                  separately at the same time and suggestion is adopted, a single award shall be made for the
                  suggestion and the award shall be distributed suggestion-wise on equal shares.
           iv)    No employee shall claim monetary reward/benefit as a matter of right.
           v)     All awards are subjects to Income Tax deduction applicable under the Income Tax Act.

AWARD:
      Suggestions which are acceptable as worth implementing on prima facie evaluation, the SISC will
    recommend for award as below:
             a) Rs. 2,000/- for suggestion, implementation of which results into improvement in
                 production, environment, safety etc. better upkeep and/or monetary gains.
             b) Rs. 3,000/- for suggestion, implementation of which results into improvement in
                 production, environment, safety etc. better upkeep and monetary gain Rs. 50000/- p.a.
                 minimum. If the suggestion is good and saving is not measurable, committee can still
                 recommend for award under this category.
             c) Rs. 5,000/- for suggestion, implementation of which results into productivity / quality and
                 reducing the cost of production and recurring monetary gain upto Rs. 10 lacs p.a.
             d) Rs. 10,000/- for suggestion, implementation of which results into productivity / quality
                 and reducing the cost of production and recurring monetary gain above Rs. 10 lacs p.a.
      A Suggestion Certificate to be given to all employees whose idea goes to the SISC.
2. Human Resource & General Services
    Monthly Special Reward / Incentive scheme - General Services / Employee Relations & HRD deptt.

     S.No.                                 Criteria for Reward                                 Reward amount

       1              If employee's satisfaction Index on Canteen Management is


                                          a) From 50 % to 60 %                             1000/per person / month
                                                b) > 60 %                                  3000 / per person / month

       2           If employee's satisfaction Index on Drinking Water Management is


                                            a) > 60 to 65 % %                              1000/per person / month
                                             b) > 65 % to 70%                              2000/per person / month
                                          c) more than > 70.1 %                            3000/per person / month

       3           If employee's satisfaction Index on Hyginic & Availability of Toilets
                                            a) > 60 to 65 % %                              1000/per person / month
                                             b) > 65 % to 70%                              2000/per person / month
                                          c) more than > 70.1 %                            3000/per person / month

       4               If employee's satisfaction Index on Transport Management

                                            a) > 75 to 80 % %                              1000/per person / month
                                             b) > 80 % to 85%                              2000/per person / month

                                          c) more than > 85.1 %                            3000/per person / month
       5                     If employee's satisfaction Index on HR services
                                            a) > 80 to 85 % %                              1000/per person / month
                                            b) > 85 % to 90 %                              2000/per person / month

                                           c) more than > 90 %                             3000/per person / month



       6            If employee's satisfaction Index on Housing / Rent Management
                                            a) > 80 to 85 % %                              1000/per person / month
                                            b) > 85 % to 90 %                              2000/per person / month
                                           c) more than > 90 %                             3000/per person / month



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Compiled by: Chhaya Sehgal                                                                     The Winning Edge
   7                         Completion of PMS - Quarterly / Monthly
                                        a) > 80 to 85 % %                            1000/per person / month
                                        b) > 85 % to 90 %                            2000/per person / month
                                       c) more than > 90 %                           3000/per person / month


   8                    Statutory Compliences as per Act( Returns etc. )
                                       a) 90 % complaince                            2000/per person / month
                                       b) 100 % complaince                           3000/per person / month


   6          If employee's satisfaction Index on services given by Medical Centre
                                            a) > 85 %                                2000/per person / month
                                            b) > 90 %                                3000/per person / month



  12                Recruitment : Co-ordination with HR & GS as per the plan

                                            a) > 80 %                                2000/per person / month

                                            b) >90 %                                 3000/per person / month




  13            Organisation of Community Development Programme as per plan


                                            a) > 80 %                                2000/per person / month


                                            b) >90 %                                 3000/per person / month

  14                  Office TPM Activities In HRD & GS Office at Dolvi Site

                                          a) 70 % Score                              2000/per person / month

                                          b) 80 % Score                              3000/per person / month


  15             Office TPM Activities In HRD & GS Office at Casablanca Office
                                          a) 70 % Score                              2000/per person / month

                                          b) 80 % Score                              3000/per person / month



  16                                    SLA Rating for GS
                                            a) >70 %                                 2000/per person / month




                                            b) > 80 %                                3000/per person / month

  17                                    SLA Rating for HR
                                            a) >70 %                                 2000/per person / month



                                            b) > 80 %                                3000/per person / month


  18   Training & Development:Training as per agreed plan
       a) >95 %                                                                      2000/per person / month
       b) > 100 %                                                                    3000/per person / month
  19   Training & Development: Effectiveness Index                                   3000/per person / month

       a) >75 %                                                                      2000/per person / month
       b) > 85 %                                                                     3000/per person / month




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Compiled by: Chhaya Sehgal                                                                                                The Winning Edge

3. Total Productivity Maintenance (TPM)

    TPM brings maintenance as a vital part of business.
    Maintenance is no longer regarded as a non-profit activity
    The goal is to hold emergency and unscheduled maintenance to minimum.

WHY TPM
        Avoid wastage in a quickly changing environment
        Producing goods with zero defects
        Reduce costs
        Reduce cycle time
        Produce a low batch quantity at the earliest possible time
        Good sent to customers must be non-defective.

                                  TPM Monthly Reward Scheme 2007
            Title of the                                                                                        No.of
S.No                                                             Criteria                                                       Amount
               award                                                                                           awards
                                                                                                                          Rs.500 per team and
        One Point Lessons for     Max. no of OPL’s prepared in the month (Min. 10 nos. per
   1                                                                                                           No limit   Rs.75 for every extra OPL
        the month                 team/area/equipment ).
                                                                                                                          prepared
        Max.no.of Fuguai
                                 Min. 50 Fuguai’s should be identified & 45 fuguai's rectified as a baseline
        Identified & Attended by                                                                               No limit   Rs.500 /team
                                 for a month.(Duly updated in SAP & verified by department head)
        a Team

        Max.no.of Fuguai         Min. 100 Fuguai’s should be identified & 90 fuguai's rectified as a
        Identified & Attended by baseline for a month.(Duly updated in SAP & verified by department            No limit   Rs.1000 /team
   2
        a Team                   head)


        Max.no.of Fuguai         Min. 150 Fuguai’s should be identified & 135 fugai's rectified as a
        Identified & Attended by baseline for a month.(Duly updated in SAP & verified by department            No limit   Rs.1500 /team
        a Team                   head)

                                  Any PM theme related to repetitive failures, MTTR, MTBF and
        Successful
                                  Maintenance cost completed and duly filled in Kaizen idea sheet with in
   3    implementation of PM                                                                                   No limit   Rs. 2000/ team or person
                                  reward month and Proposed by Departmental Heads and certified by PM
        themes
                                  Pillar chairman.
                                  Any Kobetsu Kaizen /KaizenTheme completed and duly filled in Kaizen
        Successful                idea sheet and sustained for atleat three months whether has tangible or
   4    implementation of KK      intangible benefit (Savings less than Rs. 2 lacs per month)and Proposed      No limit   Rs. 2000/ team or person
        themes                    by Departmental Heads and certified by KK Pillar chairman. Savings duly
                                  validated by Costing

                                  2 to < 5 lacs(Criteria as above)                                             No limit   Max. Rs. 3000 / Team
               Successful
           implementation of      5 to < 10 lacs(Criteria as above)                                            No limit   Max. Rs. 5000 / Team
          KK,PM, QM or Gemba
          Kaizen themes in the    10 to < 20 lacs(Criteria as above)                                           No limit   Max. Rs. 10000 / Team
          month. This includes
   5
          themes from Sales &     20 to < 50 lacs(Criteria as above)                                           No limit   Max. Rs. 15000 / Team
         Marketing and Supply
        chain management Pillar
                  also.           50L to < 1 crs(Criteria as above)                                            No limit   Max. Rs. 20000 / Team
          (Savings per month)
                                  > 1 crore(Criteria as above)                                                 No limit   Max. Rs. 40000 / Team




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Compiled by: Chhaya Sehgal                                                                                                       The Winning Edge
                                                                                         Crossing 70% Ist time in
                                                                                                                               Rs.2000 /team
                                                                                         Audit score

                                    Dusty Areas                                          Crossing 80% Ist time in
                                                                                                                               Rs.3000 /team
                                                                                         Audit score
                                                                                         Crossing 85% Ist time in
                                                                                                                               Rs.5000 /team
                                                                                         Audit score
                                                                                         Crossing 80% Ist time in
                                                                                                                    No limit   Rs.2000 /team
                                                                                         Audit score
                                    Less Dusty area
            Improving the House                                                          Crossing 85% Ist time in
                                                                                                                               Rs.3000 /team
   6       keeping of areas using                                                        Audit score
            the 5S methodology.                                                          Crossing 80% Ist time in
                                                                                                                               Rs.1000 /team
                                                                                         Audit score
                                    Enclosed area or Offices(Non Dusty)
                                                                                         Crossing 85% Ist time in
                                                                                                                               Rs.2000 /team
                                                                                         Audit score

                                                                                         Dusty Areas                           Rs.2000 /team
                                     Sustenance of 5S score (Continuous score 80 Less Dusty                                    Rs.1500 /team
                                                                                                                    No Limit
                                      % and above for continuous three months
                                                                                         Enclosed & no dust area               Rs.1000 /team

                                                                                         30 persons and above per              Rs. 500 to Departmental
                                                                                         training                              Trainer
                                                                                         20 persons and above per              Rs. 300 to Departmental
                                    Imparting On The Job / Class Room /Training          training                   No limit   Trainer
   7     TPM Training
                                                                                         10 persons and above per              Rs. 100 to Departmental
                                                                                         training                              Trainer


                                                       Participants score more than 90% in the test                 No limit   Rs 300 / person




   8     Photo Fuguai               Improved after photographs against before condition (Min 20 photos)             No limit   Rs.1000 for 20 photos




Note: Reward to be proposed by HOD and certified by HOD/Section Head /Divn.Head/Jishu Hozen Chairman



Notes:
1) Fuguai – means fault, error or not in a desired condition. Fuguais are captured through photography all
   over the plant by TPM Dept. One person from TPM department follows up with the concerned person
   who is responsible to rectify the fuguai. There is an album (hard + soft copy) which is maintained by
   TPM dept for before and after photos.
2) 5S program focuses on having visual order, organization, cleanliness and standardization. It is part of
   Kaizen, a system for continual improvement.

5 S indicate
Sort – first step in making things cleaned up and organized.
Set in order – organize, arrange and identify

Shine – cleaning and maintaining,
Standardise – simplify and standardise
Sustain – maintain what has been accomplished.

    4. Sponge Iron Plant – special reward scheme
Iron is vital ingredient in making steel. Possesses a consistent chemical composition, so users can produce
the best quality steel.




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Compiled by: Chhaya Sehgal                                                                  The Winning Edge
                             Sponge Iron Plant monthly special reward scheme 2007
  SN                          Criteria for Reward                     Reward                   Coverage
        DRI Production Mt/day
   1    3001 Mt - 3100 Mt                                        Rs   100/-   person   SIP - ( Opns & Maint.)
        3101 Mt - 3250 Mt                                        Rs   200/-   person
        3251 Mt - 3400 Mt                                        Rs   300/-   person
        more than 3401 mt                                        Rs   400/-   person

   2    NG consumption- Avg/ day
        2.39 Gcal                                                Rs 50/- person        SIP - ( Opns & Maint.)
        2.38 Gcal                                                Rs 100/- person
        2.37 Gcal                                                Rs 200/- person
        2.35 Gcal                                                Rs 400/- person

   3    Propane consumption at SIP- avg. of the week
        More than 130.01 mt/ day                                Rs 1000/- person         SIP - ( Opns & Maint.)
   4    Metallic Fe more than 85%- Avg. during the week         Rs 2000/- person         SIP ( Opns .& Maint.)
   5    House keeping rating as per TPM - not less than 90%      Rs 500/- person         SIP ( Opns .& Maint.)

Note
        Name of employees as approved by VP ( SIP)
        This scheme will be subject to contribution factor.

Questions:

    1. Evaluate the incentive schemes individually and collectively for their effectiveness in partial
       productivities of individual plants/ departments/ teams as well as total factor and total
       productivity of the entire production set up of Ispat International.

    2. What process time measures, flexibility measures and quality measures you can apply to
       compute and evaluate operational productivity?

    3. Attempt to evaluate the labour productivity through cost, input, output and outcome measures.

    4. Apply the financial ratios pertaining to computation of HR ROI and interpret the findings.

    5. Identify and state the technology, employee, product, task, material based and any other
       techniques employed by Ispat International for enhancement of productivity.

    6. Show evidence to highlight the process, technology and people perspectives and their
       interrelation in enhancing human productivity.

    7. Analyse the data and schemes individually and collectively for the manufacturing set up as a
       whole to assess how effectively it adds and improves shareholders value in Ispat International
       using the chart provided for reference.

    8. Which are the areas where you think the improvement is possible in the existing reward system
       and what are your suggestions for the same?


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