Get creative with compensation

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Chances are, wage or benefit hikes have been a little scarce around your dairy lately. And it’s tempting to adopt the attitude that “you are lucky to even have a job, so don’t even think about anything extra.”

But that doesn’t do anything positive for you or your dairy. In fact, quite the opposite is true.

“Don’t think that if ‘I can’t give them money, I can’t do anything,’ when it comes to compensation,” says Bob Milligan, senior consultant at Dairy Strategies and professor emeritus at Cornell University. There are plenty of things you can and should do to keep your dairy an employer of choice. And, these things entail little, if any, financial investment.   

Here are four things to consider when it comes to compensation on your dairy.

Set the stage

Inform employees how the farm is doing. This can be during formal meetings or informal conversations.

Everyone knows that this is a challenging time, says Milligan, but give employees a sense of your farm’s position. “It’s a matter of fairness and it’s a matter of trust,” he says. “Unless you tell them otherwise, they may question the future of your farm and, thus, their job security.” Remind your staff (and yourself) that although things are tough, most dairy farms will survive and return to profitability. If this is not the case for you, your employees need to know that, too.

Take time to communicate to your staff that you are all in this together. Share the sacrifices that the farm has had to make to adjust to the economy. Let employees and family members know that it would have been worse without their hard work and commitment. Show sincere appreciation for their dedication.

“We flat out talk about this at the monthly meetings I have with clients and their employees,” says dairy consultant Tom Wall, owner of Language Links, LLC in Green Bay, Wis. “We work hard to have an open-door policy that establishes and retains trust and rapport. This gives employees a chance to talk about what they’ve heard in the community or on neighboring farms so we can address any concerns right away.”

Incentivize performance

This may be a good time to roll out a performance-based pay plan or dust off a current plan that you haven’t been using, suggests Wall. “These really are success-sharing programs in that the dairy and the employees both win.” Plus, they only require some time, training — or retraining — and commitment.

A well-designed incentive program can be of great benefit to dairy farms and their employees, especially in times of economic stress, agrees Gregorio Billikopf, University of California dairy labor specialist. If milker pay is tied to lowered somatic cell counts, for instance, then employees only get an incentive if they have helped raise the profitability of the dairy.

According to the University of California’s Dairy USA Wage Survey 2009, 47 percent of farms surveyed offered some type of incentive program, compared to 36.5 percent in 2006. Last May, respondents said that roughly four out of five employees eligible for an incentive earned one. These earnings averaged about $142 per month.

Enhance job satisfaction

Look for ways to help people do their jobs better. Anything that enhances job satisfaction is a form of non-financial compensation, says Milligan. “The vast majority of employees come to work to succeed.”

Be clear. Make sure that people know what is expected of them, when it is expected and how things are expected to be done.

If you have not already done so, establish clear performance expectations on your operation. Begin with milk production, somatic cell counts, calf mortality, feed intake — and work your way throughout the dairy. If you have these standards in place, revisit now them with your personnel.

“Engage everyone in meeting and exceeding these expectations,” recommends Milligan. “That means working with employees to set performance expectations.”

One big caution: If a farm’s pay scale is not in line with industry standards, then employees will pick up on it and any effort to satisfy them through non-monetary means will have less effect. 

Show interest

Spend time training. And offer support, encouragement and feedback on the expectations that you and your employees have just outlined.

“If you can’t give your employees more money, then give them more of your time,” says Milligan. Work to prevent problems or handle them promptly when they do arise.

To do this, hone your listening skills. Pay attention to body language and tone of voice. Ask questions so that you fully understand what was said, which will allow you to give an appropriate response.

Ask questions to find out more about your employees and what they think. Ask how their families are doing. Ask how they would handle a problem on the dairy or ways to improve processes or methods. Follow through on this input. Share a meal.

Find out where employees are at in their lives without getting overly involved or meddlesome. “It’s often the little things that mean the most,” Milligan says.


Compensation caveats

According to researchers at Kansas State University and Texas A&M University, good compensation packages cover three areas:

  • Non-monetary compensation: Any benefit from an employer or job that does not involve tangible value. It includes career and social rewards like job security, flexible hours, growth opportunities, praise and recognition, task enjoyment and friendships.
  • Direct compensation: This is an employee’s base wage and any performance-based pay.
  • Indirect compensation: This is far more varied, and includes everything from legally required programs like Social Security to health insurance, retirement programs, paid leave, child care or moving expenses.

Just remember, intrinsic motivation — the motivation that comes from inside an individual — differs among workers. People react to incentives in different ways.


Act, not react

The key to compensation, says dairy consultant Tom Wall, owner of Language Links LLC in Green Bay, Wis., is to have a pay scale and benefits package in place that deal with good times and bad times. “In an up market and a down market, people still want to get paid. You need to have the systems in place so that you can lay out your plan and stick to it,” he says.

Be up-front with your employees. For instance, tell them “this is what we’re going to do and this is how we’re going to handle this situation.” It’s always better if you handle this pre-emptively — before they ask.



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