There are both casual and structured incentive pay programs. Casual incentives are a way to say “we noticed your good work.” These are much easier to manage but do not have the motivating power of a regular, structured incentive pay program. There are seven essential steps to designing and troubleshooting a structured incentive pay system: 1) Analyze the challenge you are facing at the dairy, and determine if incentives are appropriate. No amount of incentives can help improve the performance of a motivated herd manager who simply does not have a feel for artificial insemination. 2) Link pay with performance that the employee controls. It is a mistake to give an end-of-year bonus because the dairy made money a particular year as the employee may work quite hard next year but the price of milk may go down. Instead, employees should be rewarded for effort that it takes to achieve goals under their control). 3) Anticipate loopholes where employees obtain a reward but the dairy gets punished (permitting employees to go home when the milking shift is done rewards them for not "seeing" cows that need extra help. 4) Establish standards and determine pay. In a calf death loss incentive, make it clear how this will be measured. In a milk quality incentive, set exact goals to be met. 5) Protect workers from negative consequences. Make sure that wages are not reduced when dairy employees begin to make good bonuses. 6) Improve communications. Involving your veterinarian, nutritionist, or Cooperative Extension agent so your incentive is technically correct from a dairy science aspect is a must, but so is making sure that employees are involved also and give feedback ahead of time of design flaws. 7) Periodically review the program. Good record keeping and statistical analysis may be quite telling. For more information. you can download these resources: • "Dairy Incentive Pay" (4th Edition, Gregorio Billikopf, editor) http://www.cnr.berkeley.edu/ucce50/ag-labor/7dairy/7dairy.htm • "Labor Management in Agriculture" http://www.cnr.berkeley.edu/ucce50/ag-labor/7labor/001.htm • "Helping Others Resolve Differences" http://www.cnr.berkeley.edu/ucce50/ag-labor/7conflict/ Additional materials of interest include MP3 files to help employees learn English or managers learn Spanish, audio programs on effective listening skills and on interpersonal negotiation skills, all of which are available at: http://www.cnr.berkeley.edu/ucce50/ag-labor/. Gregorio Billikopf, University of California

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