Quality Based Incentive Systems

Executive Summary:
At the request of the members of the Quality Modular Building Task Force, researchers explored options for incorporating quality-based metrics into employee incentive programs. To develop an industry baseline, the team performed a series of telephone interviews with nine modular manufacturers – all Task Force members - and three large, progressive HUD Code manufacturers. Only one modular and one HUD Code manufacturer used a quality metric to determine incentive awards. Monetary awards are the most common form of incentive, taking many forms including “kickers” to base rate of pay, annual bonuses, and contributions to retirement accounts. While incentive programs were popular in the modular industry, no modular manufacturer was satisfied with their current program. A broader review of the issue revealed widely varying views on the overall effectiveness of incentive programs. If modular manufacturers choose to use incentives, researchers recommended some basic principles for their use. An overall incentive program structure was developed based on these principles, including suggested metrics, awards, evaluation levels, and frequency of awards. [download incentive program presentation (16MB)]

Technical Reports & Papers:
Elshennawy, A., M. Mullens, I. Nahmens, “Quality-Based Compensation Schemes for Modular Homebuilding,” Industrial Engineering Research ‘04 Conference Proceedings, Houston, May, 2004.

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