The main plant of the General Pajama Company is located in a small town in Virginia and produces pajamas.

The policies of the company in regard to labor relations are considered fair and progressive. The company has enjoyed good labor relations since the day it commenced operations.

Staff work on an individual incentive system. Rates are expresses in terms of units. One unit is equal to one minute of standard work: 60 units per hour equal the standard efficiency rating. The skill required to reach 60 units per hour is high. On some jobs, an average trainee may take 34 weeks to reach the skill level necessary to perform at 60 units per hour.

The amount of pay received is directly proportional to the weekly average efficiency rating achieved. Thus, an operator with an average rating of 75 units per hour (25% more than standard) would receive more than base pay.

The rating of every staff member is computes every day, and the results are posted in a daily record. Many operators do not claim credit for all the work done in a given day. Instead, they save a few piece rate tickets as a "cushion" against a rainy day when they may not feel well or may have a great amount of machine trouble.

When it is necessary to change an operator from one type of work to another, a transfer bonus is provided. This "bonus" is designed so that the changed operator who relearns at an average rate will suffer no loss in earnings after the change. Despite this allowance, the general attitudes toward the job changes in the factory are markedly negative. Many operators refuse to change, preferring to quit.

Based upon careful analysis, it is known that only 32% of the operators who change tasks recover to the standard time of 60 units per hour. The other 62% either become chronically substandard or quit during the retraining period. It is known that the problem in changing operators is not the result of the training program.

Questions:

What is causing operators to perform substandard work or quit?
What would you recommend to maintain production rates as well as retain staff?

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