|Activity Based Compensation is a method of paying
the workforce for their value added activities and to focus everyone
to talk, think, and act, based on dollars.
Hours, percentages of standard, delay time, units per hour, cost per
mile, and cost per stop all have their place, but are not easily
converted to a dollar equivalent. All measurements with ABC are in
dollars. Work elements, delays, breaks, and productivity are all
represented by actual dollar values.
Our reason for speaking only
in dollar references is that dollars are the one common language
that is clearly understood from the warehouse employee and truck
driver to the CEO and Board of Directors.
Employees are focused on completing value added activities,
become aware of lost time (extended breaks, talking about last
night’s game, etc.), and are rewarded for above average performance.