Industryweek 1557 19156paulharder

Juiced With Employee Incentives

May 17, 2009
CEO of private-label beverage maker Cliffstar challenges employees to take charge of their own destinies with a program that rewards continuous-improvement behaviors.

In an odd turn of events, the recession may be increasing sales for privately owned beverage maker Cliffstar Corp., says company CEO Paul Harder. The Dunkirk, N.Y.-based manufacturer with sales estimated at $1 billion annually appears to be benefiting from more cost-conscious consumers turning toward its private-label juice, teas and sports drinks rather than brand-name products, says Harder. Sales are "slightly ahead of last year," according to Harder, who has served as CEO for two years. He says the company is positioned for long-term growth because of a shift in consumer behaviors and the companys own continuous-improvement plan.

"The private-label brand has a modestly lower cost than national brands. If you look at what the national sentiment is and how people are viewing their purchases these days, youre seeing a shift away from conspicuous consumption -- people who are not willing to accept lower value but dont want to be conspicuous about what theyre buying," Harder says. Wal-Mart, for instance, plans to increase its stock of private-label brands from 20% to 40%, says Harder.

In addition to changing buying habits, the company is taking proactive steps to reduce costs and increase productivity. One of its more recent continuous-improvement efforts features an employee incentive program.

IndustryWeek spoke with Harder about the companys Cliffstar Way rewards program, which provides 1,200 employees with opportunities to offer suggestions and participate in the improvement process. The employees can earn points for their ideas and use those credits to select gifts such as jewelry, childrens toys and travel packages from a catalogue.

IW: Why did the company decide to implement an employee incentive program?

Cliffstar CEO Paul Harder believes his company's employee incentive program has produced results but cautions that "we need to be realistic. We also have some who have seen programs come and go in the past, and those folks are watching and waiting to see what will become of C-Way."

Harder: The Cliffstar Way, otherwise known as C-Way, was rolled out to employees at the end of 2008 with the actual launch at the start of January 2009. It is a new way of doing business for Cliffstar, and it is becoming the Cliffstar way of operating -- how we solve problems, make improvements and conduct business. It is a culture change for us, one which will help us to grow and strengthen our company in uncertain times while making our work lives and personal lives more rewarding. C-Way is focused on expanding the abilities of Cliffstar associates and rewarding them for learning and getting involved in the process of making the company better. We are working hard to not participate in the current recession. We want to sustain and improve our associates wage rates and job security. We also want to involve as many associates as possible in directly improving all aspects of Cliffstar.

IW: How does the program work?

Harder: Employees can participate in various ways. They can offer individual input in the form of a suggestion, which can pertain to just about any aspect of the company. They can also participate as a member of a C-Way team. The teams are generally cross-functional, multilevel groups of seven to 10 people assembled to define, analyze and make recommendations, which they present to a steering team. Each team has a leader and facilitator who support the team members throughout the process. The team leader has overall accountability for results, while the facilitator focuses on the problem-solving process and is accountable for skill sets of the team members. We teach team skills and problem-solving tools to help them in this process. The teams come together, learn, produce, report findings and then disband. C-Way is headed by a corporate steering team, including me and our corporate facilitator, as well as other cross-functional members each serving a term. Each plant site has its own steering team with the plant manager and site facilitator as permanent members and other term cross-functional members. These teams sponsor the C-Way teams. They gather opportunities based on associate input as well as other needs determined by management. From this list, they determine which teams to assemble to attack the available opportunities or problems. The corporate facilitator acts as the coach and mentor to the CST, plant steering teams and individual C-Way teams.

IW: Have you noticed more employee involvement in the continuous improvement process on the plant floor since its implementation?

Harder: Absolutely, we have more employees volunteering for teams than we have room for right now. Many employees are very eager to be part of this new way of life. Of course, we need to be realistic. We also have some who have seen programs come and go in the past, and those folks are watching and waiting to see what will become of C-Way. The challenge for us is to walk the talk, show them we mean business, and we do value them and their participation in this process.

IW: What types of improvements have employees suggested?

Harder: One quick, simple example has to do with damaged pallets at our Dunkirk plant. The employees originally came in with the idea of buying a more expensive pallet that would hold up better and last longer. After completing a root-cause analysis and gathering data on the actual problem, they made some recommendations that did not cost us a cent, and will save the site over $125,000 annually.

IW: Tell me a little more about how C-Way can improve employees wage rates and job security.

Harder: When you go for a real process-improvement program, you can take 20% to 35% of the cost out of production as you keep refining your process. So theres a significant cost savings that happens which translates into more competitiveness, a better ability to invest and more value-added per labor hour, which in turn translates into more job security and an ability to pay better wages to employees who are more productive.

IW: How do you make that connection with employees that overall plant performance will impact their long-term stability and wage increases?

Harder: A lot of that falls back to communication. I was doing town-hall meetings twice a year, and now Im doing them on a quarterly basis, and part of those town meetings are going to include the impact of the C-Way teams. We also have a gain-sharing program in the plants, and as we become more productive theyll see it directly in their monthly gain-sharing checks.

IW: Do these types of programs become more difficult to sustain during economic downturns?

Harder: On the contrary, they become easier. People want to be on the winning team. They want to make their jobs better. People want to be empowered to make a difference and this is a great opportunity for them to create a win, win situation where they increase their job security while making the company stronger and saving money.

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