EMPLOYEE BONUSES

Many companies offer employee bonuses at the end of the fiscal year if they meet certain goals. Employees in some circumstances may mean every plant employee if it is a site goal or it could mean all employees on a process unit if it is a unit goal. If a unit has four crews and you are an operator on A crew and an operator on D crew breaks his leg slipping off a ladder then all operators on the unit have their bonuses penalized by the accident.

Below is an example of a year-end bonus plan, also called a variable payout plan. The payout plan is based on four sections, each having one or more subsections. Each section carries a percentage of the payout depending on its importance. Here is the way your bonus would be calculated. To keep the math easy let us assume you made $70,000 last year as base pay. The bonus has been set at 7% of base pay for last year. If you got the maximum weighted value for each section, which totals 100% then you get 100% of 7% of $70,000 or $4900 as a bonus. Now, lets assume you achieved only 80% of the maximum weighted value of goals, then you would receive 80% of the 7% bonus, which is 5.6%. That means you get 5.6% of $70,000 or $3920.

Variable Payout Plan for SJCD Process Unit

1. Be safety and environmentally conscientious: 20%

This section includes the plant OSHA injury rate, reportable spills, and incidents.

2. Economic value: 52%

Unit gross monetary performance (how much money did we make)

Fixed cash cost (Did we stay in budget or bust the budget)

Energy cost (electricity, steam, cooling water, etc.)

Quality compliance (ISO ratings, etc.)

Site value incentives (Achieving certain milestones)

3. Dependability: 14%

Availability of equipment and supplies to meet maximum production

4. Make our company a good place to work: 14%

You have individual objectives, such as attending certain safety meetings. You also have individual goals that give you points for good health (exercise and diet), conducting a safety talk with co-workers, filling out safety observations, etc.

** If the site experiences a severe incident, resulting in personal injuries, or fatalities, a significant incident or other major incident, the company has the right to reduce or cancel any portion of the incentive payout. Also, the company retains the sole discretion to interpret the provisions of this plan, and reserves the right to amend, cancel, or modify this plan in whole or part, at any time.

Assignment #

Name: __________________________ Date _________

VARIABLE PAY OUT PLAN

You are an operator on the SJCD Unit and the table below shows the companys variable pay out plan for your unit if your unit meets all of its goals. The plan starts January 1^st of this year and ends January 1^st of the following year.

Instructions:

1. Calculate the bonus amount for each category.
2. Read the scenario below and answer the questions related to it.

SJCD Process Unit Variable Pay Out Plan

Category	%	Amount
Safety and Environment	35
Unit profitability	25
Dependability	25
Good place to work	15
		Total $7000

*Based on an operators base wage of $70,000 per year SJCD plant management will give a 10% ($7000) bonus January 1^st of the next year.

Scenario:

Jeff is 54, five feet nine, of average build, and weighs 198 pounds. He has been an operator on this unit for 21 years and is well liked because of his good natured personality. He is teased in a friendly way about being overweight and he takes it with good humor. He is always willing to help anyone having problems in their area. The only exercise he gets is pushing a lawnmower around his yard. Lately, his back has been hurting him and he went to a doctor who, after examination, said that Jeff should lose weight and sign up at a gym and begin working out, especially doing core exercises to help his back and abdomen. Jeff went home, told his wife what the doctor said, and told her that he would think about joining a gym. That was two months ago and he still hasnt begun exercising and he has gained another pound.

It is December 23^rd and Jeff is working the graveyard shift on his unit. He is working the purification section of his unit. This section has two distillation towers that purify the finished product to 97.8% purity and requires climbing each 100-foot tower twice a shift to collect samples and take gauge reading for comparison with the control board readout. Jeff has to collect samples, take gauge readings, tighten flanges and packing nuts, lubricate pumps as needed, make valve lineups, and troubleshoot his unit when it becomes upset.

It is now two in the morning and everyone has just finished a coffee break and is preparing to go outside and make their last round. Jeff puts on his PPE, grabs his sample basket, and goes outside. He collects some samples, takes gauge readings, and then notices a puddle of liquid under a 12-inch diameter pipe. He takes out a flashlight and bends closer to examine the pipe and sees the leak is coming from a flange. The piping and flange are 10 inches off the pad. Jeff removes a box end wrench and adjustable wrench from his tool belt and fits the box end around one nut and the adjustable wrench around its opposite on the other side of the flange. He leans forward and pulls on both wrenches but the nuts dont budge. He takes a deep breath, leans forward again and throws his full strength into the effort. The adjustable wrench slips off the nut and Jeff loses his balance and falls backwards onto the pad. A bolt of pain shoots up his spine. He lays there for a minute, then staggers to his feet. His back is killing him and he cant stand up straight. He radios the console operator that he may need help getting back to the control room. EMTs are called out and escort him in an ambulance to a nearby hospital. Jeff stays in the hospital for two days and then is released and put on bed rest for one week. His accident is recorded in the OSHA 300 log which records all accidents to personnel.

Questions to be answered

1. Fill out the amount column in the Variable Pay Out table.

2. Assuming Jeffs unit met all other unit goals how much of a bonus did they get?

3. How much did Jeffs accident cost each unit employee?

4. What could Jeff have done differently that would have prevented this accident? (If there is not enough room here for your answer continue on the back of this page.)

4. How do you think Jeffs crew members and the operators on the other shifts feel about Jeffs accident? (If there is not enough room here for your answer continue on the back of this page.)