How to Reduce Labor-to-Sales Ratios and Remakes and Increase Productivity

The cost of labor can constitute as much as 50% of production costs in some laboratories, making it a key factor in determining the success of the business. One of the fairest and most effective ways management can reduce labor-to-sales ratios and remakes, as well as increase productivity is to implement a productivity incentive plan that financially rewards employees for their efforts to achieve these goals.

In many laboratories, profit sharing is either nonexistent or handled in an inconsistent manner. But when you have an established bonus plan that incorporates quality control measures into each production step and involves both technical and administrative personnel, it motivates employees, breaks down animosity between departments and promotes teamwork, and instills a sense of employee accountability and responsibility.

Productivity incentive plans should be predicated on two figures only:
- Cost of Labor
- Total Sales/Cases
Produced...