Back in 1999, Daman Products Co. implemented a bonus plan. The 65 manufacturing employees at the Mishawaka, Ind., maker of parts for hydraulic systems would be evaluated on these criteria: meeting production schedules; maintaining their machines; and reducing overtime, scrap, and shipping errors. Productivity surged, and some employees added as much as 15% to their paychecks.
Then the economy took an unexpected U-turn, and so did Daman’s sales, plunging some 20%. Forget about bonuses. The company went into survival mode, cutting about 20 jobs. And after just one year, Daman Products put its bonus program on indefinite hold.
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