Piloting a New Compensation Model

We worked with Dara O’Rourke and Niklas Lollo from the University of California, Berkeley from FY15-18 to explore new methods to increase the value created in factories and share that with workers. The resulting Compensation and Benefits research pilot focused on changing compensation structures and tracking increases in both factory productivity levels and take-home pay. Our academic partners have published the results of the pilot in a working paper.

 

The research pilot took a different approach to compensation, and included improved pay transparency for employees, as well as incentive systems for hitting productivity goals. The results were encouraging, and the factory we worked with has independently chosen to further adopt versions of the approach to all lines within the pilot factory as well as to other factories in their network.

 

We are continuing to look into what elements of the pilot were important to its success, such as information systems that connect business and operator data, lean processes that focus on enabling workers through standard processes and skilling, problem-solving and engagement activities, worker-management communication channels, and strong employee input throughout the process of implementing a new compensation system.

 

This pilot is not the whole answer to the complex challenge of wages, but it is an important step forward. Our unique academic relationship has created a multi-stakeholder approach that presents a strong alternative to the current model of compensation used in most factories.

 

We know that compensation systems that reward performance and attract talent will benefit all stakeholders. We are now collaborating internally, with our leading suppliers, and with external experts to explore next steps on scaling the learnings from this research pilot.