Annexure - C
Hindustan Unilever Ltd.
Chiplun Factory
New Performance linked Incentive Scheme
A. Salient Features of the scheme
Objective –
The new Productivity Linked Incentive Scheme (PLIS) is designed to motivate and
encourage the shop floor employees to work towards improving the overall plant
performance in terms of Productivity, Delivered Quality, Cost, Output Reliability, Circle
vibrancy & Morale by adopting a TPM approach. The TPM activities directly contribute
to the improvement of above performance measures, while simultaneously improving the
skills and proficiency levels of the shop floor employees. The shop floor employees shall
work together as a cohesive team to bring in a work culture of mutual cooperation and
continuous improvement, and thereby earn commensurate variable pay.
This incentive scheme aims to align the efforts of the workmen with the key business
priorities of the unit.
The incentive scheme shall be based on six broad parameters, namely:
• Productivity
• Quality
• Cost
• OR
• TPM – JH
• Morale
Here, morale (measured as sparkle score) shall serve as the qualifying criteria.
Improvement in productivity is essential in order to deliver to the demands of the
business, by utilizing the existing resources in a more effective manner. In the wake of
increasing raw material prices it becomes imperative to make workmen conscious about
cost control. Also, continuous improvement in quality needs to be a constant guiding
factor.
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A. Eligibility –
This scheme will be applicable only to the permanent and probationary workmen of
Hindustan Unilever Limited, Chiplun, who will agree and abide by the terms and
conditions of the Long Term Settlement signed between the company and the Union, on
19th Aug 2012.
Standard Manpower Deployment –
Keeping the long term viability of the factory in mind, it is agreed to have the following
manning norms in view of the changes in equipment, method and processes in our
manufacturing facilities.
1. The Manning standards have been agreed to be implemented as attached in
Annexure 1.
B. Parameters –
As discussed above the parameters that will be the basis for payment of incentive are –
1. Productivity
2. Quality
3. Cost
4. OR
5. TPM ( JH pillar )
6. Morale ( Sparkle Score)
1) Productivity –
The index that will be used for linking the productivity of the plant with the incentive for
workmen is the monthly OEE (Overall Equipment Efficiency), considering the deduction
of the management losses as mentioned below:
1. Non availability of raw material and/or packing material
2. Non availability of power
3. Non availability of space in the BSR (Bonded Store Room)
4. No plan period
5. Any kind of R&D trials to be conducted in the plants
6. Communications by the management on the shop floor
7. Paid holidays
8. Annual maintenance of the plant
- Apart from the losses mentioned above, no provision would be made for
considering any loss time like – machine breakdown, shift handover, change
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over time, etc. while calculating monthly OEE for the plant for the purpose of
payment of incentive.
- While working out the monthly OEE for the purpose of this incentive scheme,
only such production as is approved by the management for use/despatch to the
market will form the basis and the quantity reprocessed/rejected or frozen shall
be excluded.
OEE calculations:
It is a measure of the operational performance of the production lines. It considers three
performance indicators based on the 13 losses defined in TPM.
OEE = (Availability * Performance Efficiency * Rate of Quality) / 10000
Total Operating Time
Availability = ----------------------------- x 100
Total Available Time
Total Production
Performance Efficiency = ------------------------------------------------ x 100
Total Operating Time x Line Speed
Total Production – Total Rejection
Rate of Quality = --------------------------------------------- x 100
Total Production
The management loss time (as defined above) would be deducted from the total time, i.e.
(480 * number of total shifts in the month).
The OEE for the plant would be the weighted average of the OEE for all the packing
machines and SKUs produced during the incentive month.
For Bulk powder production the OEE will be calculated on the basis of OPE ( over all
process efficiency ) of the process .
Illustration:
– The total production for a particular SKU (say 250 gm Rin Bar in flow wrap) is 20T
in one machine shift .
– Only such production as is approved by the management for use/despatch to the
market will form the basis and the quantity reprocessed/rejected or frozen shall be
excluded.
– Say for example that 0.1 tones of production was rejected.
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– Thus, total production that would be used for calculation of productivity is
= 20-0.1 = 19.9 tones .
– The speed of the machine is 220
– In the shift 10 min management communication took place , therefore total available
time is 480-10= 470 min.
– The shift OEE will be = (19.9*10^6)/(470*220*250) = 19.9/25.85 = 76.98%.
– Similarly for other machines running with different SKUs OEE will be calculated .
– Weighted average of the all machine shift OEEs will be calculated for the month .
– This OEE fig will be considered for incentive payment for a particular month ..
The figure of OEE so arrived would have to be approved by the Departmental manager.
For only Bulk bag : OPE = Bulk production / ( 40*Batch Size of the Boone Mixer )
For Bulk bag & Pack production .
Pack production will be as per above calculation
Bulk OEE
= Bulk production / ( 40* Batch size of Boone Mixer – powder required for 100% OEE
of the packing machine )
For calculating the monthly OEE, the following machine speeds shall be applicable:
Machine Speeds
OEE calculations
Machine Speed SKU
HSQ 175 upto 200 gms
165 Above 200 gms
Flow wrap 220 All packs
Mico Bosch 46 all pack sizes
Pakona 12 3.0/4 kgs
Hassia 30 1.5Kg
35 500/700g
65 200g
General Conditions:
- The Factory Manager shall have the final authority to resolve any issues that
arise with regard to machine speeds used for calculation of monthly OEE for the
purpose of payment of incentive.
- All efforts would be taken by the union and the workmen to run machines at
higher speeds.
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- For any other pack sizes other than those covered above, the management will
suitably fix the speed for calculation of monthly OEE for the payment of
incentive.
- In case any additional packing line is added / removed, changes in equipments,
tablets weights, work methods, packaging etc the monthly OEE shall be
calculated accordingly at anytime during the year and will take effect from the
immediate following month.
Quality –
Payout will be linked to the factory annual target as declared by central QA. For the
purpose of incentive calculation, plant wise monthly CRQS data as provided by
Central QA shall be considered. This is applicable for NSD Bar and NSD Powder
plants. For no sample pick up by CQA team for a particular plant in that month the
incentive payout will be at target multiplied by one level.
In case method of defect measurement is changed by central QA, it will be suitably
incorporated in the incentive scheme. In this regard decision of the Factory Manager
will be final.
Cost / Wastage –
The parameters under wastage/cost that will be linked with incentive for NSD Bar &
Powder are different based on the respective plant problems and priorities.
Table D: Parameters for cost/wastage for NSD Powder and NSD Bar plant
Parameters for cost/wastage
NSD BAR - Weight give away
& - PM ( wrapper , powder laminate , bale laminate , CLD , sacks)
POWDER over consumption.
The incentive pay out will be based on the monthly figures for the above parameters,
i.e. Monthly weight give away fig will be published by factory QA & over
consumption figures will be by commercial dept.
The Factory Manager shall have the final authority to resolve any issues that arise
with regard to GA & Over consumption .
4) Output Reliability (OR) -
Output Reliability (OR) measures the reliability of a site to deliver an agreed production
plan. Thus, Output Reliability (OR) measures Actual Production against the Production
Plan given to the factory measured in one UOM (CLD’s/ bale/sack). Payout will be
linked to the factory annual target as declared by center. OR will be calculated for all
three plants together.
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5. TPM - To bring in Manufacturing excellence and move unit from current foundation
to development stage, performance of the JH pillar scores are to be considered for payout
6. Morale (Pinnacle Employee Appraisal Rating)-
Corporate Employee Relations has introduced a uniform and standardized personal
appraisal system for Shop floor employees covering multiple dimensions such as
skill, aptitude, contribution, etc. This appraisal is done annually for each April to
March cycle on a five point scale (5-highest rating, going to 1-lowest rating), and the
appraisal rating for an employee remains constant thereafter for a year until the next
assessment. The objective of the appraisal system is to recognize and reward a better
performing employee, and to coach and develop other employees. A small portion of
the PLIS incentive payout for each employee shall be linked to the specific
performance appraisal of each employee. The appraisal rating of an employee will
not change during the year and the incentive earned under this parameter will remain
same throughout the year.
This appraisal rating in PLIS incentive payout is being introduced with bonafide
intent to help develop capability and effectiveness of all shop floor employees over a
period of time. Since this is being introduced in August 2012 all employees shall earn
the PLIS incentive payout of this parameter assuming a uniform appraisal rating of 3
for all employees for first year, even though the real individual appraisal rating will
vary from employee to employee. From 2nd year onwards employees having rating 4
& 5 will paid differential amount and 3rd year onwards all employees shall earn
incentive payouts commensurate with their actual individual appraisal ratings over the
full one to five point scale. Following will be the payment.
Morale
Sparkle Rating 5 4 3 2 1
First year Per month 470 470 470 470 470
Second Year Onwards Per
month 620 620 470 470 470
Third Year Onwards Per
month 680 620 470 345 250
Current Daily attendance Incentive (DA1) scheme will continued to be paid as per
last Long Term Settlement dated 11th September 2008.
Total Incentive
The total incentive shall be sum of payout of each parameter:
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a) Total incentive = [OEE payout + Quality payout + Cost/wastage payout+ OR
payout + TPM payout + Morale payout]
b) The PLIS linked incentive for each eligible employee will be computed and paid
monthly based on the Physically Present Days (PPD) of each particular employee
within the calendar month. The incentive for any given calendar month shall be
payable along with the wages for the following month. The incentive shall be
payable only for days when the eligible employee had been physically present
from beginning to the end of the shift, and had put in full 8 hours of work at the
allocated workstations.
Total Monthly Incentive
= (Total Incentive Day Rate ) x (PPD)
c) Furthermore, each employee’s own individual attendance performance will also
influence gross monthly incentive earnings of the particular employee. An
attendance performance multiplication factor for the number of days of his/her
unauthorized absenteeism (in other words, absenting from work without prior
permission) during the calendar month will be applied to the Monthly Incentive
for each individual employee. The purpose of this multiplication factor is to
reward employees with no unauthorized absenteeism & also to penalize any
practice of unauthorized leave/absenteeism. The Attendance Performance
Multiplier shall be as tabulated below:
d) A new leave card will be introduced for effective leave management.
Days Unauthorized Attendance
Leave/Absenteeism/Post Facto leave Performance Multiplier
sanction within Calendar Month
0 1.1
1 1
2 0.95
3 0.9
4 0.8
>=5 and <7 0.7
>=7 0.5
a) Thus, including the Attendance Performance Multiplier, the gross PLIS incentive
earnings for any employee shall be computed as shown below:
Gross Monthly Incentive Earning
= (Total Monthly Incentive) x (Attendance Performance Multiplier)
= (Total Incentive Day Rate) x (PPD) x (Attendance Performance Multiplier)
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For Eg.
No. of Available Days = 26
Incentive Earning = Rs. 100/day
Pre- Postfacto Leave
Sanctioned Sanction
Earning basis
Scenario PPD PL CL Absent/UL/LWP PL CL Attendance
Multiplier
1 26 0 0 0 0 0 2860
2 25 0 0 1 0 0 2500
3 20 4 2 0 0 0 2000
4 15 9 0 3 0 0 1350
5 24 0 0 0 0 2 2280
6 22 0 0 4 0 0 1760
7 22 0 0 0 4 0 1760
C. General Requirements
- Employees who do not participate in the various safety initiatives and adhere to
the standard Safety Operating Procedures in the factory shall not be eligible for
earning incentive
- All indices as mentioned above will be worked out as mentioned against each
parameter and the payments will be made along with the wages of the
corresponding months.
- For any particular day, a workman will get the incentive of the plant he works
for..
- Surplus workmen apart from those deployed on productive jobs decided by the
Departmental Manager shall also be eligible to minimum monthly incentive
payout of Rs 600/-.
- Fitters associated with a particular plant will get the incentive for the plant they
are associated with.
- One electrician each will be deputed in powder & bar for electrical asset care . the
incentive for these two electricians will be for the plant they are associated with.
- Workmen who are not associated with any plant will get incentive based on
average of the monthly incentive payout of the three plants pro-rated as per their
attendance as mentioned in attendance
- All figures calculated for the purpose of payment of incentive shall be rounded off
as:
- Figure of less than 0.5 will be rounded off to nearest lower whole number. For
example : If OEE achieved is less than or equal to 84.49 % then it will be rounded
off as 84 %
- Figure of more than or equal to 0.5 will be rounded off to nearest higher whole
number. For example, if OEE achieved is 84.5% or higher, then it will be rounded
off as 85 %.
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- Every daily rated workmen will qualify for incentive in respect of any day of
weekly holiday worked by him in substitution of a holiday taken/to be taken as
specified under the Factories Act.
- The Incentive Scheme shall be automatically suspended for the time of any work
retardation (such as go – slow, work to rule, or the like, etc.) in breach of contract.
No incentive earnings would accrue to any workmen for and in respect of such
durations.
- No incentive shall be paid to any workmen for the shifts he indulges in any kind
of misconduct under Model Standing Orders applicable in the factory.
- There will be changes in the plant including equipment, machines, layouts,
speeds, feeds of machine, tablet weights, work methods, SOP , packaging
Unilever audit requirement etc. In such cases the Management will revise the
rated capacities and OEE determinants accordingly. Such revisions will be made
and decided by the management considering relevant factors and after informing
the concerned workmen and Union.
- The incentive payment shall be made along with the monthly wages as a separate
head, and will not attract any indirect / incidentals like PF, Bonus, Gratuity etc.
D. New Products and Manufacturing system
In the future, the management at its own discretion may introduce new products to be
produced from its existing manufacturing facilities, or set up new manufacturing
facilities to produce new products. For this incentive scheme, a new product shall
mean a product whose nature of usage is different from the existing products being
manufactured in the factory. This means, a detergent bar, be it for dishwashing or
cloth washing, of a new colour, shape, weight, perfume shall not be called a new
product.
A new product will be excluded from the OEE compilation during its settling down
period. During this settling down period, all workmen (including those engaged on
the production of the new product) will qualify for Productivity Incentive based on
the OEE computed without the new product or as decided by Factory manager .
The duration of the settling down period for a new product will be maximum three
month. The Factory Manager, at his discretion, if he deems necessary, taking into
account the nature and complexities involved in the production of the new product
may prolong this duration.
Thereafter, the OEE of the new plant will be worked out on the basis of the total
actual accepted production vis-à-vis the rated capacity of the manufacturing system.
The workmen will co-operate with the Company in every manner in implementation
of progressive measures pertaining to installation of new machinery or method of
working, modification of existing machine, up gradation , Kaizens , introduction of
new line of packing or jobs or changes in packing materials as found necessary in the
exigencies of business. In particular, it is agreed that the Company has the right to
change, from time to time, the pack sizes, the material used for packing etc. in the
interest or exigency of business or for economy or marketing reasons.
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It is recognised and agreed that for better layout or to accommodate additional
machines or for other reasons, it may become necessary to shift and/or reshuffle the
existing machines in the factory or any other areas in the premises. In the interest of
this unit and the business, the workmen will fully co-operate with the changes
incident upon the issues mentioned above.
The Company reserve the right to alter the size and pattern of CLD’s, wrappers,
laminates etc. and change the packing material or mode of doing any job from time to
time at it’s entire discretion and allot required number of men of such
revised/modified/improved operation and the workmen shall co-operate with it.
It is recognised and agreed that the Company may have to change the weights of
soaps/bars/pouches in different lines either for business exigencies or for complying
with statutory requirements. The workmen shall extend their co-operation and shall
pack without any objections whatsoever different weights of soap/bars/pouches
giving the full production of the machine from which the weight of the
soap/bar/pouch has been varied/ changed. In particular, no question of workload
increases or otherwise will be taken up or pressed as an excuse for not packing such
different SKU’s.
It shall be the priority of the Management to fix up the number of men per machine
and suitable incentive scheme for any new line based on Industrial engineering
studies or otherwise.
In the event of any improvement in the method of work or elimination of any process
or installation of new machines or improvement to the existing machine or process or
increase in machine speed the number of workmen will be suitably be adjusted and/or
rates may be revised based on Industrial Engineering studies or otherwise.
There will be changes in the plant including equipment, machines, layouts, speeds,
feeds of machines, tablet weights, work methods, packaging etc. In that case
Management will revise the Parameter score determinants accordingly. This revision
would be done at anytime of the year and will take effect from the immediate
following month.
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