Although many in warehouse labor pay workers a flat hourly rate, at Costa we’ve found that incentivized pay can be the most productive way to compensate workers.
One of the biggest issues that DC’s find in warehouse contracting is that they choose labor outsourcing based on price, rather than on service quality. While it isn’t always simple, incentivized pay encourages workers to perform their jobs more efficiently based of production-based models, which can include hourly goals, daily volume, weekly volume, team pay or piece-per-rate. This model leads to better quality of work and better outcomes and cost efficiency for the DC.
Josh Wean, Chief Operations Officer at Costa Solutions
Josh Wean, Chief Operations Officer at Costa Solutions, had the following insights about how companies like Costa Solutions handle worker pay:
Other than incentivized pay, what are other common models among outsourced warehouse support/lumpers?
- Straight hourly pay
- Hourly base plus some incentive
- Team pay
- Pay for performance
What makes incentivized pricing the best option for your customers?
Josh: “It maximizes output and productivity. Studies have proved that efficiency and productivity are much better when incentivisation is in play. Several ways to do this include pricing based on piece rate, weekly volume, daily volume, output without error, productivity per hour goals, and team pay models.”
What makes incentivized pay difficult to implement?
“You have to have a competent management team, clearly defined goals, and a system set up to handle/track time vs. output. You also need a labor force with low turnover or you risk lower output. You also have to be able to motivate workers.”
How does Costa’s incentivized model compare with the competition?
“Some competitors follow the same model, some don’t. Some do incentive pay based on how many trucks a person can do in a day. All are different. But not many of them can do an incentivized model with team pay – that makes Costa unique. Another thing that gives Costa Solutions an edge is the work culture, with VIP recognition programs and higher than normal safety protocols.”
Costa Solutions has found that this compensation model results in higher pay for workers and a higher level of service for our customers. Just like in every business, it starts with people. Prioritizing our team members is the best way we know to deliver outstanding results.