Original Date: 11/12/2001
Revision Date: 01/18/2007
Information : Incentive Pay Program
In 1996, Frontier Electronic Systems initiated the Incentive Pay Program which tied company profitability and employee contribution to company performance. This successful program is increasing revenue/employee ratio, business growth, on-time delivery, quality, and customer satisfaction. Business performance is equal to or better than key industry standards.
Prior to 1996, employees at Frontier Electronic Systems (FES) could see no visible link between company performance and their contribution to that performance. FES soon recognized that an employee incentive plan could provide many benefits: be an impetus for employees to work efficiently, be innovative in finding ways to improve processes, reduce cost throughout the company, and optimize customer service and profitability. In 1996, the company established the Incentive Pay Program which tied together profitability, employee contribution, quality plan goals, company vision, and company performance.
The Incentive Pay Program is providing a link for employees between their performance and the success of FES. Employees are kept informed of company performance and forecasts throughout the fiscal year. At the end of each year, 25% of FES’ net profits form the employees incentive pool. A portion of this money is distributed evenly to employees as recognition of their contribution to overall FES success. The remaining moneys are allocated proportionally among individual business units, manufacturing, contracts, purchasing, human resources, accounting, and information systems based on their contribution to profitability and the attainment of other company goals.
The Incentive Pay Program continues to improve profitability and increase revenue/employee ratio at FES. Business performance is steadily improving the company’s Dunn & Bradstreet financial rating since FY97, with a current overall rating of 4A1 (strong). FES has had no credit line use since July 1998. In addition, improved on-time delivery and quality of products/services provided by FES employees are contributing to higher customer satisfaction.
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