Oxford Holt & Company

Production bonus scheme

The method of production was highly labour intensive and this company relied upon a bonus scheme to motivate and remunerate their staff.  Initially, the bonus scheme was successful, however, as time passed, things deteriorated - along with morale. 

Moreover, production staff had developed ways of "manipulating" earnings, resulting in very high wages being paid for a low level of productivity. 

To make matters worse, a number of restrictive rules and regulations meant that any remedial action would prove difficult.  Our solution was based upon slowly changing the whole bonus scheme culture.  This entailed devising more effective ways to produce job times, drawing up a new pay structure that removed the restrictions and creating a climate of openness and fairness.

Management and staff, from the Chairman downwards, were involved in the company's objectives, culminating in a high profile launch of the way forwards - including the new pay scheme.  The assignment changed the face of industrial relations at the company and resulted in productivity improvements of around 20% plus a major reduction in administration costs.  Monetary savings were approximately £450,000 per annum.

Job evaluation

This client is an engineering company, part of a major PLC and had experienced rapid growth in a niche market.  Consequently, systems and operations had been largely overlooked whilst the company struggled to satisfy production requirements. 

Although a form of payment system was in place, the situation had been allowed to deteriorate up to the point where IR problems were evident and morale was beginning to suffer.  With regard to the pay scheme:

  • Skilled staff were being paid less than their unskilled counterparts
  • Of around 100 hourly paid staff, there were 28 different basic rates
  • A multitude of ad hoc payments were being made for various eventualities

We were asked to devise and implement a pay scheme that would be fair to all participants and would remove the anomalies.  To achieve this, we customised some generic job evaluation tables to suit the industry and graded all jobs on a "points rating" basis, with the aid of some simple job specifications.  A high level of communication with the staff ensured that the system was seen to be rational and equitable.

The project was concluded and the system installed without any industrial relations difficulties.  Due to uncertainties about time scales, fees were based on daily rates, but the total estimated fee was within the client's budget.

Incentive scheme

Management introduced a production incentive scheme at this medium-sized engineering company as a result of pressure from the staff for higher wages in return for increases in productivity.  The scheme succeeded in raising wage levels - unfortunately, productivity remained static.

As a consequence, profits began to fall and as we became involved, the company was barely breaking-even.  The main problem was that the incentive scheme had been badly conceived.  Evidence was plentiful:

  • Job times on which the scheme was based were highly inaccurate
  • Some were so "loose" that staff could reach maximum bonus by lunchtime.  Others were so "tight" that staff had no incentive to try to achieve them
  • High levels of overtime were required, including weekends, nights and holidays

We were asked to correct the standard times and to install a incentive scheme, including the necessary management controls and wages payment routines.  In addition, to devise a standard costing system that would enhance planning and costing within the company.

The results of the project were difficult to believe:


  • Productivity increased by around 70% 
  • There were no industrial relations problems 
  • The company was returned to profit
  • Actual savings were c£900,000 per annum.