Industrial Engineering Basics

Deere & Company
Industrial Engineering Basics
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INCENTIVE SYSTEM DEFINITIONS
AVERAGE OBSERVED MINUTES -The sum of the observed times (by stopwatch) in
decimal minutes, for an element, divided by the number of observations.
BATTERY -Two or more machines or machine tools operated by one or more

operators as a combination work assignment.
CHECK CHART -A method of determining the appropriate Job Classification and

Labor Grade for certain incentive operations. It was developed to provide a
means of differentiating and establishing a consistent relationship between
job classifications for those cases where it is impractical to do so by words
only. NO LONGER USED.
COMMON M.E. -The name given to the Company-wide standardized database for
storing part and operation related information. Gradually being replaced by
SAP.
COMPLAINT -An employee's statement concerning a problem that (s)he feels

exists with respect to her/his employment. This is usually a verbal
statement, however, some units provide written forms for such situations.
CONSTANT CONTROLLED PACE ELEMENTS -Elements where the operator must either
maintain control of an object or must work at a controlled pace during all or
part of the machine or process controlled time. Fifteen percent is added to
these elements to enable the employee to receive a minimum incentive
possibility of 115%.
"D" WORK ELEMENT TIME -Time in Standard Minutes for the elements of work that
must be performed while the machine or process cannot be in operation.
DAILY WORK RECORD -See Time Slip.
DB2 -The name of a Relational Database system, specifically that database

used to store the input data from Generation II Standard Data and WPlanner.
ELEMENT - A division of work that can be measured with a stopwatch and has
readily identifiable beginning and ending points.
FIXTURE -A device or piece of equipment that holds a particular part so that

work can be done on it. It must be fixed or held to the machine on which the
operation is performed. It may be provided with a number of stops and gages,
but not with bushings or other devices for guiding and supporting cutting
tools.
GAGE (GAUGE)-A device for determining the relative capacity, dimensions,

shape, quantity, volume, weight, color, imperfection, or completeness of an
object or of an attribute of an object.
GRIEVANCE -Any written employee complaint concerning the terms and conditions
of his employment formally submitted to Industrial Relations.
HEAT ALLOWANCE -An additional fatigue allowance of 5% applied to certain

elements to compensate for recuperation due to excessive heat.
IMS (INFORMATION MANAGEMENT SYSTEM) -The vehicle (software system) for

accessing the Common M.E. Database. Being gradually replaced by SAP.
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INCENTIVE COVERAGE -The percent of total hours worked that incentive
employees spend working on operations covered by incentive standards. NO
LONGER USED.
INCENTIVE OPPORTUNITY -The percent that the Total Standard Minutes (D + R +

IDA) are of the floor-to floor cycle time (D/l.30 + MT X 1.08). This is a
comparison between the time allowed in the incentive standard and the time
required to perform the work. This figure indicates the earnings potential
of an "individual employee on a particular operation if that employee follows
the prescribed method. Since the Standard Hour Plan is based on an expected
incentive pace of 130%, the maximum calculated incentive opportunity will be
130%. Such a figure, however, indicates only that the earnings potential of
the employee is not controlled by the machine, but rather, is limited
only by the employee himself.
INCENTIVE PERFORMANCE -The percent that Earned Hours on Incentive are to the
Actual Hours on Incentive. NO LONGER USED.
INCENTIVE STANDARD -The measured time established for an operation. It is

expressed in Standard Hours per 100 Pieces or Standard Hours per 100 Units.
In C.I.P.P. & T.C.P., it is referred to as an Output Standard.
INHERENT DELAY -The amount of time, in Standard Minutes, that an operator

must wait for his machine or process to complete its cycle, after he has
completed the manual work that can be performed during the machine or process
cycle of the operation. The figure is calculated, assuming that the operator
will perform his "internal" work at an incentive pace.
INHERENT DELAY ALLOWANCE -Inherent Delay multiplied by 1.10. This guarantees

the operator a minimum incentive premium of 110% for the time his/her machine
or process is kept running when there is no manual work to perform.
JIG - A piece of equipment to help locate a part so that operations or

processes may be performed on the part. Drill jigs, for example, locate the
places for holes in a product and guide the drill in making the hole. An
ordinary template used for lettering is an example of a jig.
JOB CHANGE -The work involved in changing a machine tool or work place from
one operation to another.
JOB CLASSIFICATION -A term used to identify a group of duties described in a

written job description, which has been evaluated under our Job Rating Plan.
JOB DELAY -Unmeasurable, miscellaneous work or interruptions not directly

related to the number of pieces or units produced.
JOB DELAY FACTOR -A percentage factor used to increase total standard minutes
(D + R + IDA) for an incentive operation to accommodate for unmeasurable,
miscellaneous work or interruptions that are not related to the number of
pieces produced. The factor can range from 3% to 6%.
JOB DETAIL AND STANDARD SHEET (J.D.S.S. OR J.D.S.) -The form on which the
specified method of performing an operation covered by an incentive standard
is recorded. Similar to Sequence of Events (SOE).
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JOB EVALUATION -The rating of jobs according to a specifically planned
procedure in order to determine the relative worth of each Job.
LABOR GRADE -A numeric division of the wage scale for hourly and incentive
job classifications. NOW MORE COMMONLY REFERRED TO AS PAY LEVEL.
MACHINE (OTHER THAN MACHINE TOOLS) -A non-portable, power-driven device for

cutting, shearing, punching, straightening, forming, or otherwise working on
and modifying material or parts.
MACHINE TIME -Elapsed running time for a machine or process controlled

element. It should be stated on the Mechanical Detail Sheet.
MACHINE OR PROCESS LIMITED ELEMENTS -Elements where the machine or process

limits the minimum time in which the work can be performed, but the operator
controls the time except for the limitation. The fastest machine or process
time that safely produces a quality product is multiplied by 1.30 to provide
a minimum incentive opportunity of 130%.
MACHINE TOOL -A non-portable, power-driven machine, partly or wholly

automatic in action, for milling, planing, turning, grinding, boring,
drilling, sawing, or otherwise changing the shape of materials by removing
metal in the shape of chips, fragments, spiral shavings, or the like.
MACHINE TOOL BATTERIES -Two or more machine tools operated by one operator as
a combination work assignment.
MECHANICAL DETAIL SHEET (MECHANICAL DATA SHEET. M.D.S.) -

A form used to provide instruction for performing a specified, preplanned
method of an operation and for all mechanical data necessary to setup and run
the operation according to that method. It also is a source document for
information necessary to establish the incentive standard.
METHOD –The prescribed way of performing work as determined through time

study or some other means.
METHOD AUDIT -A control procedure used to assure operator compliance to the

specified method as shown on the Job Detail and Standard Sheet and the
Mechanical Detail Sheet. NO LONGER DONE.
METHOD-TIME-MEASUREMENT (M.T.M.) -A predetermined time system by which it is

possible to analyze any manual operation or method into the basic motions
required to perform it and assign to each motion a predetermined time value.
MOTION AND TIME STUDY -A procedure for developing the most efficient method
of performing a specific amount of work and determining the time necessary to
perform it.
MULTIPLIER –NO LONGER USED.
NORMAL MINUTES -Average Observed Minutes multiplied by a Performance Rating.

It is sometimes called Leveled Time.
NORMAL PERFORMANCE -The performance that is expected from the average

employee, skilled in his assigned task, when following the prescribed method,
and working at a non-incentive pace.
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OBSERVED MINUTES -Elemental times recorded from stopwatch readings and shown
in decimal minutes.
OCCUPATIONAL CODE -An alphanumeric designation that identifies a Job

Classification.
OCCURRENCE -A ratio designating the number of times that an element of work

is performed during one complete cycle of an operation.
OUTPUT STANDARD -The measured time established for an operation. It is

expressed in Standard Hours per 100 Pieces or Standard Hours per 100 Units.
Prior to C.I.P.P. & T.C.P., it was referred to as an Incentive Standard.
PERFORMANCE RATING -A percentage rating that is used to adjust Observed

Minutes to Normal Minutes. Ratings are expressed in five percent increments
(75, 80, 85,..., 100, 105, 110, etc) .
PERSONAL AND FATIGUE FACTOR (P & F) -A percentage factor used to increase the
Normal Time to provide for personal needs and recuperation from fatigue.
Normal elemental time values are multiplied by these factors to arrive at
Standard Minutes.
PIECES PER CYCLE -The quantity of units that are produced or processed during
the span of one complete cycle of an operation.
PLANT DATA -Any predetermined time data currently in existence, or developed

in the future, that does not comply with the rules and regulations (accepted
policies and procedures) of Standard Data development.
PRESET STANDARDS -Incentive standards that are established prior to the

operations being performed in the shop and without observing the operation.
Mechanical Detail Sheets and Standard Data are used in determining methods
and time.
PRIMARY FUNCTION -That part of the written Job Classification which describes
the essential characteristics of a particular work assignment and which must
be fulfilled to clarify work under that Job Classification.
PROCESSING EQUIPMENT -Powered equipment that subjects material or parts to a

process or treatment in the course of manufacture that is not intended to
change the size or shape of the material or part. Examples include heat treat
furnaces, wheelabrators, and flow coat painting.
PRODUCTION STUDY -A detailed time-of-day study taken to gather complete

information as to how an operator's time is occupied over a period of several
hours or a complete shift.
"R" WORK ELEMENT TIME -Time in Standard Minutes for the elements of work that
may be started during the running time of the machine or process.
RANDOM SERVICE BATTERY -A battery of machines or machine tools in which the

order of servicing the machines is at random (has no specific sequence).
SPECIFIC SEQUENCE BATTERY -A battery of machines or machine tools in which

the order of servicing the machines is in a fixed or specific sequence.
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STANDARD DATA -A collection of elemental time values which have been
developed with full consideration of the relationship of such Standard Data
with all other Standard Data currently in existence, and according to
procedures consistent with those used in the development of all other
Standard Data. These procedures make use of a Company-modified version of the
Method-Time-Measurement (M.T.M.) predetermined time system and are designed
to provide consistent incentive standards on both existing and future
operations throughout a prescribed range of methods, equipment, and material.
STANDARD HOURS PER 100 PIECES OR UNITS -The unit of time which compensates
for the work required to produce 100 pieces or units.
STANDARD MINUTES -Normal Minutes multiplied by an appropriate Personal and

Fatigue factor.
TIME SLIP (TIME CARD. DAILY TIME REPORT. DAILY WORK RECORD) -
An employee's record of work performed, which is presented to the Company for
payment.
TIME SLIP AUDIT -A control procedure used to insure that employees properly
charge the Company for work performed and follow practices consistent with
the Standard Hour Plan and existing contract provisions. NO LONGER DONE.
TOOL- The cutting or shaping instrument that is used in a machine or machine

tool.
TOOL LIFE (IN PIECES) -The projected number of pieces that can be expected to
be produced from a particular tool when cutting at the speeds, feeds, and
conditions listed on the Mechanical Detail Sheet.
TOTAL ALLOWED MINUTES PER PIECE -The sum of the total Standard Minutes for
all of the elements plus the Inherent Delay Allowance, divided by pieces per
cycle, and then multiplied by the Job Delay factor.
TOTAL STANDARD MINUTES PER CYCLE -The sum of the Standard Minutes for all of
the elements in one complete cycle of an operation. This includes the "D"
Standard Minutes, the "R" Standard Minutes, and the Inherent Delay Allowance.
TSO (TIME SHARING OPTION) -The slang expression for a CRT terminal used to
access the host computer system.
UTILIZATION FACTOR –NO LONGER USED.
WORK ASSIGNMENT FACTOR –NO LONGER USED.
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WAGE SYSTEMS
CHARACTERISTICS OF A WAGE SYSTEM
Before any wage payment system is evaluated, an understanding of the characteristics of a good wage
system is essential. Just what must a good wage system be?
1. It must be fair and equitable not only to the employee but also to the company. Every means
possible should be used to establish an accurate and consistent standard on an operation. So-
called “loose” standards hurt the company because of the reduction in production and
overpayment for the parts produced. They are a source of dissatisfaction to the employee because
the incentive standards that are accurate and fair now seem “tight” to him. Likewise, “tight”
standards cause a great deal of employee dissatisfaction and a definite lowering of production.
2. It must be controllable, that is, any changes that occur in the results of the system must be readily
detected and the new conditions incorporated, or the former conditions restored. Costs must be
held in line to allow for a reasonable company profit. If uncontrollable, a wage system could
function as a flood out of control, which destroys everything in its path.
3. It must be simple to administer and calculate. The system must be easily understood by the
employee as well as the employer. An operator should be able to calculate his earnings and
understand the “how” and “why”.
4. It must be flexible enough to permit adjustments for fair standards of accomplishment, thereby
reflecting the employee’s contribution to the company, the standard of living for the times, and the
demand for labor at any given period of time.
5. Its job evaluation and compensation plans must be separate. The relative value of the work
performed on a given job must be evaluated first, without any consideration of the amount of
money to be paid for the job. Then a plan of payment for these jobs can be established separately.
TYPES OF WAGE PAYMENT PLANS
There are a multitude of wage payment plans in existence throughout the industrial world today. They can
be categorized into three basic types: daywork, measured daywork, and incentive. Deere & Company
utilizes all three of these basic plans with a particular plan used in a given situation and for a specific
purpose.
Daywork Plan
In this wage payment plan, the employee is paid a straight hourly wage. If he/she works eight hours per
day and is to receive ten dollars per hour, he will be paid $10.00 X 8 hours = $80.00 at the end of the day.
One can readily see that this plan is very simple to administer. The calculation of earnings is simple for
both the operator and the shop clerk. The plan is flexible, since it can readily change with the labor market,
cost of living, and general conditions of the times. Another advantage of this plan is that job evaluation and
compensation can be kept separate.
A noticeable disadvantage of this plan is the variable cost per piece and can best be explained by an
example:
First Worker Second Worker

Makes 800 pieces per day Makes 1200 pieces per day
Cost = $80.00 = $ 0.10 per piece Cost = $80.00 = $ 0.067 per piece
800 pieces 1200 pieces
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Cost estimating is made very difficult because the cost per part or assembly will vary with each individual
worker. Another disadvantage is the inherent lack of recognition of the good worker over the marginal
worker. This plan requires thorough supervision to assure a reasonable amount of production per worker.
Measured Daywork Plan
The term “measured daywork” has acquired a variety of meanings with the passage of time, and today its
usage varies by industry. Many modifications of measured daywork plans are in operation – some truly
incentive plans and others non-incentive in nature. Within Deere, “measured daywork” can be defined as
the measurement of work paid for on a straight hourly or non-incentive basis for the purposes of scheduling
and control. This plan simply enables us to evaluate work being performed on an hourly basis. By its use
we can establish a definite schedule for the worker and thus control his/her activities. A janitor, for
example, might be required, after a measurement program, to sweep ten offices in a building, empty ten
wastebaskets, empty thirty trash barrels, and clean four restrooms. This is the schedule he/she must
accomplish each day. A merit-rating plan is typically used in conjunction with measured daywork so the
operator does have some incentive to do well in his work.
This plan has all the advantages of the daywork plan mentioned previously. It is simple to administer, easy
to calculate, flexible, and job evaluation and compensation can be kept separate. It has the additional
advantage of permitting the establishment of definite schedules. Another advantage is that a set amount of
money can be paid for a definite amount of scheduled work.
Very thorough supervision is required with the use of this plan to assure that the schedules established are
fulfilled. Because of a lack of positive incentive, we would expect the standard of performance of the
worker to be lower under this plan than under the true incentive plan.
Incentive Plan
Since the amount of work accomplished by an operator is partly dependent upon the skill and effort he/she
expends, it has become economically and psychologically sound to provide some type of plan to pay
him/her in proportion to the skill and effort he/she puts forth. Under an incentive plan, the operator
receives an additional return for extra production. The incentive plan, when usable, capitalizes on the
advantages of the other wage payment plans and also offers many new benefits of its own, valuable to both
employee and employer.
There are two main types of incentive plans:
• Direct pay - individuals or groups of individuals receive pay in direct proportion to their
performance against the standards.
• Indirect pay - individuals or groups of individuals receive pay based on their performance against
an output/input ratio or some other performance measure.
What are some of the benefits of a direct pay incentive plan?
1. Production is increased – an individual is willing to work harder and produce more when he/she is
rewarded for his/her efforts by additional compensation.
2. Waste time is reduced – productive time no is worth more to the operator than non-productive
time. The worker will make every effort to stay on the job to produce more.
3. In individual incentive plans, individual opportunity is increased – if an operator works harder and
more skillfully than his fellow worker, he will be rewarded for it. Since no monetary ceiling is
imposed, an operator’s earnings are controlled only by his/her capacity and desire to produce.
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4. In group incentive plans, above average performance by some can help offset lower performance
by others in the group to improve average group performance.
5. Better standardization of labor costs – direct cost will not vary since the cost per piece is
established by work measurement. Indirect cost, however, will still vary based on production
schedules.
6. Reduction of overhead costs – since we are getting more production per given unit of time, the
overhead cost per piece will be reduced.
7. Productivity, the units of work produced per given unit of time, will increase – this increased
productivity will eventually result in a higher standard of living for the worker.
8. Safer working conditions – an all-out effort is expended to keep the operator on the job, since lost
time means lost production and higher costs. Safe working conditions improve operator
effectiveness.
9. More accurate scheduling – with the time known to produce a given part, we can readily predict
the number of pieces that can be produced in a given period of time.
10. Lower selling price – cost savings to the company by the reduction of overhead costs and
increased productivity can, in turn, be passed-on to the customer.
11. Better competitive position – lowering of the selling price and maintaining the same quality
naturally puts the company in a better position to compete with other producers of similar
products.
One type of direct pay incentive plan is the Piece Work Plan. This plan expresses the job standards or rates
in terms of money per piece, for example, in dollars per piece or dollars per hundred pieces.
Dollars per 100 pieces = Minutes per piece X 100 X Dollars per hour
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Some identifying characteristics of the Piece Work Plan are that it provides a fixed amount of time per unit
of work, in most cases provides a minimum, wage are computed easily, individual incentive opportunity is
assured, and direct labor costs are constant. One noticeable disadvantage of this system is that a new piece
rate must be calculated every time the occupational rate changes. This becomes quite laborious in cases
where many thousands of operations are involved.
Another type of direct pay incentive plan (the one used in Deere factories successfully for more than 40
years) is the Standard Hour Plan. In this plan, the incentive standard is expressed in Standard Hours Per
Hundred Pieces, which is the unit of time measuring the quantity of work that must be produced in order to
earn the equivalent of occupational rate. The standard is calculated by using the following formula:
Standard Hours Per 100 Pieces = Minutes per piece X 100

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The operator determines his/her pay by multiplying the number of pieces produced, divided by 100, times
the standard hours per 100 pieces. This result is the earned hours, which is then multiplied by the
occupational rate of the work being performed to determine actual pay.
The Standard Hour Plan has the same identifying characteristics as the Piece Work Plan, with one
exception – the incentive standard is expressed in time units rather than money. Upon examination of the
formulas for the calculation of the rates or standards for both plans, one will notice that the formulas are the
same, except that, in the Piece Work Plan, the rates or standards are converted from time per 100 pieces
into money per 100 pieces. Excluding this step allows us to express the standard as Standard Hours Per
100 Pieces rather than Dollars Per 100 Pieces. This gives us a standard that will remain fixed, eliminating
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the necessity of recalculating it every time there is an adjustment in the occupational rate. This also makes
it easier to continue the “full” incentive system in which earnings are in direct proportion to the effort
expended.
Another advantage of this plan is that it is easy to determine the performance level of an individual,
department, or factory by comparing earned hours to actual hours. Under the Piece Work Plan it is
necessary to examine the “base” piecework earnings, which becomes difficult because of different base
rates.
The primary type of indirect pay plan is Gainsharing. As the name implies, there is a sharing of gains in
productivity between the company and the employees. A formula is typically used to determine the hours
of pay and the adjustments to the base ratios that are required to keep the system viable. The Continuous
Improvement Pay Plan (C.I.P.P.) is a gainsharing plan that has been in use in most Deere factories since
1994. The Team Compensation Plan (T.C.P.) is an almost identical gainsharing plan that has been in use at
the Horicon factory since 1995. In these plans, the incentive standards (output standards) are expressed in
Standard Hours Per Hundred Pieces, just as in the Standard Hour Plan. All Output Standards should be set
using the same methods development and work measurement procedures as those used to set standards
under the Standard Hour Plan.
Importance of Establishing Good Methods in an Incentive Plan
Establishing good methods is of prime importance in an incentive system, since we are paying the operator
for work performed and not his ability to change methods. Time can only be tied to a specific method. If
the method varies, the time to perform it is going to vary. Any change in method must be reflected by a
change in the incentive standard. Under the Standard Hour Plan, an operator can legitimately increase
his/her earnings by either working faster or more skillfully. He/she should not be allowed to increase
earnings by substituting another method for the one on which the standard was established. Employee
suggestion plans are used in most factories operating under incentive plans, as a means of rewarding
individuals for ingenuity in thinking-up new or better methods, or for suggesting changes to part, tool, or
fixture designs.
The company reserves the right to establish and control methods for several very important reasons:
1. The company feels that an operator should be paid for work performed and not merely the number
of pieces produced. Paying more for manual work time than for wait time, through some type of
formula, provides the most fair and equitable means of paying the operator.
2. Consistent method controls bring about consistent earnings. Proper methods control will prevent
the type of situation whereby two operators working the same number of hours and exerting the
same effort on the same job, but on different shifts, earn $120.00 and $170.00 respectively. This,
of course, can happen if one of the operators s allowed to “short cut” the established method.
3. The company reserves the right to establish and control methods to insure safe practices. Every
precaution must be taken to insure the safety of the operator on the job. The incentive standard is
higher in many cases to allow for the use of some safety measure or device, and the operator is
expected to conform to the established method.
4. Methods must be controlled to maintain proper quality of our products. Method shortcuts tend to
result in lower quality, and must therefore be prevented.
5. The correct method is needed to assure correct use of tools and equipment. A change in feeds or
speeds could easily be very costly in tool breakage or machine maintenance.
6. Proper methods control will assure a consistent wage system that benefits both employer and
employee.
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Deere & Company Attitude Toward an Incentive System
The Deere & Company philosophy in regard to incentives can be expressed as follows:
1. Incentives should clearly reflect the elements of work required to perform a job.
2. Incentives should be established so as to compensate the employee in direct proportion to the skill
and effort expended.
3. Incentives should be subject to revisions and reflect any changes in the work elements required.
4. The determination of the work elements to be performed should rest solely with the Company.
5. A properly operated incentive system epitomizes the philosophy around which our economy is
built and should be maintained.
The John Deere Standard Hour Incentive Plan (1955-1997)
The Deere & Company Standard Hour Incentive Plan (SHP) was used in most Deere factories, foundries,
and parts warehouses from 1955 until 1997. As already explained, the standards are expressed in Standard
Hours per 100 Pieces. They are commonly referred to as Incentive Standards or simply Standards. All
standards were to be established using proper time study and/or predetermined time data application
procedures.
“Minutes per piece” is determined from time study or predetermined time data or a combination of the two.
“Minutes per piece” is multiplied by 100 to get minutes per hundred pieces, then divided by 60 to get hours
per hundred pieces. This is simplified by multiplying “Total Allowed Minutes Per Piece” by 1.667 to
arrive at the “Standard Hours Per 100 Pieces”.
A standard of 1.67 Standard Hours Per 100 Pieces means that an employee, working at 100% effort, should
be able to produce 100 pieces in 1.67 hours, and therefore be entitled to his/her occupational pay rate for
that hour of work. If the employee produces more than 100 pieces in 1.67 hours, then he/ she will earn
more than the occupational pay rate per hour.
Incentive Standards are rounded as follows:
For standard hours between .0000 and .0499, round to 4 places past the decimal.
For standard hours between .050 and .249, round to 3 places.
For standard hours between .25 and 4.99, round to 2 places.
For standard hours between 5.0 and 99.99, round to 1 place.
For standard hours of 100 and higher, round to the closest whole number.
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DEERE & COMPANY JOB RATING PLAN
FOR PRODUCTION AND MAINTENANCE JOBS
The Deere & Company plan of job evaluation is an adaptation of the National
Metal Trades Association plan, which is the most widely used plan in industry
today. It was introduced in 1946 and is the only plan in use in the Company for
evaluating production and maintenance jobs.
This system is a numerical point method of determining the relative worth of all
production and maintenance jobs below the rank of foreman or supervisor. It is
not applied to clerical jobs. This method of evaluation consists of a series of
four major factors that are further refined to a total of eleven factors which
cover all the conditions that influence the worth of a job. Evaluations are
based on the average conditions in all plants and consequently are not
necessarily representative of the conditions of a specific job in anyone plant.
Each factor is assigned a maximum point value developed through experience. Of
particular importance is the preparation of adequate job descriptions in
sufficient detail to provide a factual basis for evaluation of each factor.
The following table lists the rating factors and the point ranges assigned to
each factor:
FACTOR POINT % OF TOTAL

RANGE MAXIMUM POINTS
SKILL 1 Experience 11 - 110 50
2 Education or Intelligence 14 - 70
3 Initiative and Ingenuity 14 - 70
EFFORT 4 Physical Demand 10 - 50 15
5 Mental or Visual Demand 5 - 25
6 Equipment or Process 5 - 25
RESPONSIBILITY 7 Material or Product 5 - 25 20
8 Safety of Others 5 - 25
9 Work of Others 5 - 25
CONDITIONS 10 Working Conditions 10 - 50 15
11 Unavoidable Hazards 5 - 25
Using this method, it is possible to record the degree or extent to which each
of these factors is contained in any job. In order that the same interpretation
and line of reasoning will be used in assigning values, certain "Guide Charts"
have been developed indicating features, or job content, warranting the dif-
ferent values. In order to maintain a relationship between jobs a list of
"Bench Mark Jobs" outlines examples of jobs in the Company within particular
levels of each factor. These guide charts and bench mark jobs are only to
outline a particular level and establish a standard which, by comparison, will
serve for any similar condition or requirement. It is important that these
descriptions of various levels be studied in order to have a clear understanding
of these levels. It must be recognized that the ultimate value and accuracy of
an evaluation depends on the analysis of the jobs being of sufficient detail to
establish these correct levels.
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Each job will be evaluated on the basis of a fair day's work at normal activity
as required by the job without incentive. It will be assumed that all workers'
time is effectively utilized and that any waiting time is, whenever practical,
absorbed by the addition of duties requiring equal or lesser skills.
The relative value of a job compared with any or all other jobs similarly
analyzed is indicated by the total number of points. The point range in which
this total points falls determines the Labor Grade, as shown in the following
table:
LABOR GRADE
POINT RANGE HOURLY INCENTIVE
360 - 381 1 -
338 - 359 2 -
316 - 337 3 3
294 - 315 4 4
271 - 293 5 5
248 - 270 6 6
225 - 247 7 7
201 - 224 8 8
175 - 200 9 9
149 - 174 10 10
250 Classifications
101 Sub-classifications
Prior to 1997
Point Pay
Range Level
360 - 381 1
338 - 359 2
316 - 337 3
294 - 315 4
271 - 293 5
225 - 270 6
149 - 224 7
61 Classifications
Since 1997
Job Classes in Labor Grades 8, 9, 10 became Pay Level 7

Job Classes in Labor Grades 6 and 7 became Pay Level 6
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(For Employees Hired 1 October 1997 and After)
EXHIBIT "A"
RATE SCHEDULE
BASIC RATES
PAY AFTER AFTER AFTER AFTER AFTER

LEVEL MINIMUM 12 MOS. 24 MOS. 36 MOS. 48 MOS. 60 MOS.
1 (Non-CIPP) 19.515 19.710 19.905 20.100 20.295 20.490
2 (Non-CIPP) 18.085 18.270 18.445 18.625 18.805 18.990
3 (Non-CIPP) 17.435 17.610 17.780 17.960 18.130 18.310
4 (Non-CIPP) 15.745 15.900 16.060 16.215 16.370 16.525
4 (CIPP) 13.690 13.825 13.965 14.100 14.235 14.370
5 (Non-CIPP) 15.150 15.305 15.455 15.610 15.760 15.910
5 (CIPP) 13.175 13.310 13.440 13.575 13.705 13.835
6 (Non-CIPP) 14.655 14.805 14.950 15.100 15.245 15.395
6 (CIPP) 12.745 12.875 13.000 13.130 13.255 13.385
7 (CIPP or Non-CIPP) 12.010 12.135 12.255 12.375 12.495 12.615
NOTE: Employees in pay levels 1, 2, or 3 will have their CIPP rate determined by dividing the applicable
rate in Exhibit "A" by 115%.
14
(For Employees Hired Prior to 1 October 1997)
EXHIBIT "F"
JOB CLASSIFICATION RED CIRCLE RATES
REGULAR WORK ASSIGNMENT

OCC. If assigned to CIPP If not assigned to CIPP
CODE CLASSIFICATION (CIPP) (Non-CIPP)
C5 SHEET AND PLATE FABRICATOR $17.795 $19.985

C6 CNC SHEET AND PLATE FABRICATOR $17.795 $19.985
D1 MACHINIST GRIND, LAP AND HONE $18.400 $20.745
D2 MACHINIST TURN, DRILL, BORE AND MILL $18.400 $20.745
D3 MACHINIST GEAR CUTTING $18.400 $20.745
D4 MACHINIST JOB SHOP $19.120 $21.685
D5 CNC MACHINIST GRIND, LAP AND HONE $18.400 $20.745
D6 CNC MACHINIST TURN, DRILL, BORE AND MILL $18.400 $20.745
D7 CNC MACHINIST GEAR CUTTING $18.400 $20.745
D8 CNC MACHINIST JOB SHOP $19.120 $21.685
F1 MANUAL ARC WELDER $18.400 $20.745
F2 CNC/ROBOTIC WELDER $18.400 $20.745
F 16 SPOTWELDER $17.795 $19.985
H1 HEAT TREAT OPERATOR $17.795 $19.985
K8 ASSEMBLER $17.795 $19.985
K 17 ENGINE TEST OPERATOR $17.795 $19.985
L5 PAINTER $17.795 $19.985
M 14 ELECTROPLATER $17.795 $19.985
M 26 MISCELLANEOUS PROCESSOR $16.765 $18.570
15
EXHIBIT "F"

M 46 REACTION INJECTION MOLD OPERATOR $18.400 $20.745

N 51 WELDER/FABRICATOR JOB SHOP $19.120 $21.685
Q1 POWER HOUSE OPERATOR AND/OR MAINTENANCE $19.815 $22.785
Q2 BOILER ROOM OPERATOR $17.795 $19.985
Q 10 POWER HOUSE HELPER $16.765 $18.570
R5 MACHINE MAINTENANCE $20.620 $23.705
R7 MACHINE MOVER $18.400 $20.745
R9 BUILDING REPAIR & MAINTENANCE $19.120 $21.685
R 15 REPAIR MECHANIC (INDUSTRIAL TRUCKS) $19.815 $22.785
R 17 TRUCK, TRACTOR, TRANSPORTER OR BATTER SERVICE $17.190 $19.095
R 18 COMMUNICATIONS & ELECTRONICS SERVICE $20.620 $23.705
R 19 MAINTENANCE OILER $17.190 $19.095
R 20 ELECTRICIAN $20.620 $23.705
R 22 ELECTRONIC RECORDER & CONTROLLER SERVICE $19.815 $22.785
R 25 COMBINATION WELDER $19.815 $22.785
R 31 SHEET METAL AND/OR PLASTICS MAINTENANCE $19.120 $21.685
R 37 PIPE FITTING, HEATING & VENTILATING MAINTENANCE $19.815 $22.785
R 41 MAINTENANCE PAINTER $18.400 $20.745
R 46 FURNACE REPAIR $18.400 $20.745
R 60 MAINTENANCE WORKER - WAREHOUSE $19.120 $21.685
16
EXHIBIT "F"

R 62 HOIST AND PORTABLE TOOL REPAIR $18.400 $20.745

T1 TOOL AND DIE MAKER $21.675 $24.930
T4 INSTRUMENT REPAIR $19.815 $22.785
T5 TOOL LAYOUT INSPECTOR $21.675 $24.930
T 10 MACHINE HAND $19.965 $22.935
T 20 TOOL GRINDER $19.120 $21.685
T 50 HEAT TREATER (TOOL ROOM) $19.120 $21.685
U1 INSPECTOR $19.120 $21.685
U 10 PRODUCTION LAYOUT INSPECTOR $19.120 $21.685
V2 MATERIAL STORAGE AND RETRIEVAL $16.765 $18.570
V 20 PRODUCTION SUPPORT $16.765 $18.570
X1 MACHINIST $20.620 $23.705
X7 MECHANIC $19.815 $22.785
X 13 INSTRUMENTATION AND TEST MECHANIC $20.620 $23.705
X 20 PARTS LAYOUT $20.620 $23.705
X 26 FIELD TEST EQUIPMENT OPERATOR $17.190 $19.095
X 45 WELDER $19.815 $22.785
X 60 PRODUCT DEVELOPMENT SPECIALIST $21.675 $24.930
Z1 FACILITIES SUPPORT $16.325 $18.115
Z 32 MACHINING SETUP $19.815 $22.785
17
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19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
THE AGE OF TIME STUDY
In the earliest civilization, time was of little consequence. The movements of man were limited to a narrow
area surrounding his shelter, which he had to protect against animals and other men, while collecting his
food within a space restricted by the necessity of defense. There was little variety in his foods, and he
subsisted on what was immediately available. Time was measured by light and dark, and in those days
before the era of cooked foods, it is likely that meals at an appointed moment were not a subject likely to
upset domestic bliss. The seasons were not particularly marked in that cradle of mankind beyond perhaps a
wet and dry season, which was probably noted in due course. There was perhaps no sharp differentiation
between periods of scarcity and plenty.
As wandering nomads or geologic changes forced these early men from their lands of ease and plenty, and
seasons became more pronounced for these people who were then more or less unwilling wanderers, the
notion of time and season was forced upon them by the necessity of storing up subsistence for the future -
those periods when food could not be had for the picking. Husbandry was an idea brought about by
necessity, and oddly enough, seemed to be developed by the wife (or wives) of the family, who first
collected seeds and preserved them for the next crop. Then the men undoubtedly began an earnest
consideration of time and motion by choosing the shortest route to the places where the meat was most
plentiful.
The condition that we call civilization is slow of advancement. The simplest needs of early peoples were
easily satisfied, but these needs did increase in number, and in due time, certain people, due to a desire for
ease, or for power, or through dislike of doing certain things, or because of mental superiority or quality of
leadership, began to use the work of others who were perhaps simple slaves, or feudal or family
appendages. Some of these workers were bound by chains and driven by the lash; some were bound by a
token sewn on the clothing, and some were bound by their own fears of moving on to a better land. As the
needs of man further increased, and the ability of the family head to control his own time and labor became
inadequate for the subsistence of the group surrounding him, the delegation of selected jobs to others
began. Certain people became hewers of wood, and others drawers of water; certain ones hunted the meat,
others cultivated the fiber, and others tended the herds, or wove the fabric, or fashioned the clothing, or
cooked the food. Ideas of regularity of life were well established, regularity of eating, seasons of growing
and preparation for the barren months. Time had become an important factor of life.
With the establishment of time as an element of life, its use became similarly important. The early head-
man knew how long it should take him to walk to the hunting ground or to chop down a tree and
recognized the difference between the time required to fell a little tree as compared to a big one; he knew
fairly well the difference in time required to carry in a few wild turkeys or a great moose, and he
particularly knew how long it should take his good wife to plow and cultivate the garden and milk the goat.
Similarly, the wife had well-defined ideas as to how long it should take to pluck those turkeys or to weave
so much cloth, or to card so much wool.
During all these thousands of years, the idea of measure and measurement had already become well
established, the measurement of time, of distance, and of pieces.
Lord Kelvin once said, “If you can measure that of which you speak, and can express it by a number, you
know something of your subject; but if you cannot measure it, your knowledge is meager and
unsatisfactory.”
Quite naturally, the members of the body provided the earliest standards and instruments of measure. The
“hand”, that most obvious scale, still continues in describing the height of a horse, and for the writer, it is
lengthwise, still the legal size of a croppie. From the end of the nose to the end of the outstretched arm still
approximates what we know now as a yard. Many systems developed to provide standards of
measurement, some logical and decimal, some arbitrary and English, nonetheless are recognized and
accepted today.
37
The idea of numbers was more difficult and slower to take hold. Ultimately, even the most primitive man
knew how many goats should be traded for an additional wife, a superior weapon, or an article of comfort
or convenience.
The measurement of time was also more difficult. Day and night sufficed at first. The daily appearance of
the sun was observed, and the monthly appearance of the moon was put to work, as we all know from our
boyhood interest in the American Indian. The annual cycle became apparent as people were forced away
from the equatorial lands, and in due time, subdivision of years, months, days, and even minutes became
necessary, measurable, and numbered. The measurement of time and the instruments to do it progressed
through the observation of seasons, through sundials, water clocks, hourglasses, crude power mechanisms,
until today the hundredth of a second presents no problem of timing.
In due course, man found himself able to recognize and measure time and distance and to count, and at just
about this period, more or less, he discovered what was referred to previously as the necessity or desire to
sluff-off or delegate work. This required a new type of effort – that of planning. If three trees were to be
felled, or three acres to be plowed, or three yards to be woven, the group leader had well-defined ideas as to
how much time it should take, and what constituted a fair contribution to the common economy.
As time passed, industry of a sort developed, and certain persons became specialists who concentrated on
certain lines of labor producing more of one thing than they would themselves use, and bartering the
surplus for the surplus of some other specialty producer. Trade was established, which necessitated the
invention of money. In due time, the shackles of men were broken so that they were free to move about
and sell their labor. Today, labor is man’s principal value to himself and to civilization, and therefore, its
measurement is a matter of principal importance. After all, labor was all that the previously mentioned
specialist had to sell.
With the rise in consumption of goods, the special producers were called upon to expand their output and to
hire others to help. What would constitute a fair day’s work? Surely the employer of those times had some
notion, for he was himself an expert and knew how much and how quickly the delegated work should be
done. It was not called time study, for probably the time required for the work was never the subject of a
true study. But a result, of a sort, was based on experience. Throughout the ages, the time required to do
certain things had been recognized and was in the background of daily life – probably not much discussed
outside the field of sports – but nonetheless present. When the wage era began, the expectancy of so much
work for so much pay was a natural sequence.
But what was to be expected as a day’s work might fluctuate enormously due to lack of true time study or
the presence of harsh or easy going instincts in the employer or the presence of great vitality or laziness of
the employee. With the delegation of tasks, how was a fair standard to be determined? Measurement
became inevitable – a measurement of work that would throw out guesswork, prejudice, and superstition.
At one period, standards of work were set by the master or the factory clock and strongly spiced by the
opinion and prejudice of the foreman. With the expansion of industry and the introduction of many
complex things, and the increasing delegation of tasks into smaller and smaller special parts, the leaders of
the industry became less acquainted with all the intricacies and depended more and more on supervisors to
set the standard of a fair day’s work. And in our time, the expansion of industry has been so great that even
the setting of a fair day’s work has to be undertaken by specialists – people who endeavor to be scientific in
their use of TIME and MEASUREMENT and the devices used for recording these things.
We’ve always had engineers. Dr. Frank Gilbreth has said, “An engineer is a person who believes in
measurement, who knows how to measure, does measure, and is willing to abide by the results of this
measurement, whether they suit his preconceived notions or not.” Some of our veterans of the European
forces have undoubtedly seen the work of early engineers applied to daily life, other than in ancient bridges
and architecture. They have seen very ancient stone posts along the road stating “Zwei STUNDE nach”
somewhere. The STUNDE is a measurement of the distance an average person will be able to walk in an
hour’s time. These engineering results and these standards go back into the centuries when walking was
the sole means of transportation. Likewise, our Navy veterans are familiar with the KNOT, a term dating
back far into the earliest days of sailing vessels. Each KNOT in a log line bears the same proportion to a
38
mile that 28 seconds do to an hour. The number of knots that run off the reel in 28 seconds shows the
number of miles a vessel is sailing in an hour. These standards were set generations ago by time study
engineers, even though they had never heard the term, nor even called themselves engineers. The only new
aspect of time study is in its recognition, its acceptance as the field of specialists, and the use of modern,
accurate tools and methods. There is no difference in fundamental concept between the STUNDE or the
knot and the pieces per hour as determined by a modern time study engineer.
Time study has been in use since the earliest days of man.
39
HISTORY OF MOTION AND TIME STUDY
Actual time studies were first recorded in France back in the middle of the eighteenth century. Overall
cycle times were clocked on a watch and recorded, and an “allowed” standard was given to the foreman to
use as he saw fit. No effort was made to break the operation down into elements or to performance rate the
cycle time. These two improvements in time study procedure did not come about until the end of the
nineteenth century.
Frederick W. Taylor, the recognized “Father of Time Study”, began to use time studies at the Midvale Steel
Company in Pennsylvania. He was one of the first time study men to break time studies into parts or
elements. Frederick Taylor was a very active man. He realized that method and time were interrelated.
When he was studying the shoveling of iron and ashes in a large steel mill, he noted that the size of the
shovel was a very important factor to consider when determining the worker’s accomplishment for a given
period of time. A few of his other accomplishments are the invention of high-speed steel and the discovery
and evaluation of some of the variables affecting the cutting of metals.
Frank B. Gilbreth is credited with being the “Father of Motion Studies”. His first well-known work was in
the construction business where he studied the motions of bricklayers. He almost tripled the number of
bricks that could be laid in an hour by simply reducing the basic motions required from eighteen to four.
He did not speed up the motions; he simply eliminated the unnecessary ones. In 1912 he developed the
system of examining operations on film and breaking the work down into micromotions called Therbligs.
He is also well known for promoting the idea that there is a better way to do anything and everything, and
that it is just a matter of taking another good look at the job.
In the late nineteenth century, Deere and Company had a very crude way of measuring what could be done
in a certain amount of time. The practice of setting a piece price by comparing jobs “almost” the same or
by bargaining it, as well as other poor practices, led to mistrust and suspicion. Inequities were always
anticipated and it was difficult to maintain any control over costs. Setting the production schedule was
done by the “seat of the pants” and was very often met by hiring extra operators and then laying them off,
in mass, after the schedule was met.
In 1904 Deere & Company started to get its system on a better basis by adopting some of the ideas from
Taylor’s “Scientific Management” theories. Although these improvements were weak because of a self-
imposed ceiling on earnings and lack of attention to methods, it was still a step in the right direction.
In 1925 the Company issued a Piece Rate Manual as a guide for all factories. It explained the policies and
procedures to follow for specific situations and helped to bring about consistency in incentive standards as
well as fair treatment. It was not too long before all the factories had accepted and adopted this manual.
By 1946 a better plan than the piece price plan had been developed. It was called the “Standard Hour Plan”
and was first introduced at the John Deere Dubuque Tractor Works. By 1955 all but two Deere factories
were operating on the Standard Hour Plan. The remaining two adopted the SHP by 1961.
There was practically no comparison between the methods used prior to 1955 and the detailed procedures
used under the Standard Hour Plan to set accurate and consistent work standards. Deere had come a long
way in trying to establish a fair and equitable wage payment system.
40
WHAT IS MOTION AND TIME STUDY?
To the average man on the street, Motion and Time Study can mean almost anything, but to the industrial
engineer it is the backbone of a fair and equitable wage payment system. The industrial engineer would
define it something like this:
Motion and Time Study is a procedure for developing the most efficient method of performing a
specific amount of work and determining the time necessary to perform it.
The industrial engineer has many tools from which to choose in order to help him/her with all the different
problems related to his/her work, but the basic tool that will be used almost every day is Motion and Time
Study.
Motion and Time Study can be broken into two interrelated parts:
1. Development of the most efficient method.

2. Determination of the time necessary to perform it.
Development of an Efficient Method
The method you use to perform work is very important. It affects the time for performing a job more than
any other factor. Developing a good method can be easy if you guide yourself by a definite plan of attack.
A successful guide has been the Four Step Pattern.
Four Step Pattern
1. Analyze the job to be performed.

2. Think of several ways of doing the job.
3. Pick out the best way.
4. Install and use the best way.
The first step of analyzing the job to be performed is the fact-finding step. What is our basic problem? Is
there really a problem? How much time should we take to solve the problem? What do we have to work
with? What are the desired results? Who could help to solve the problem? In other words, gather all the
facts pertinent to the job to be performed. It makes no difference if the job to be performed is polishing
shoes, digging ditches, punching stock, assembling a plow, or traveling from Springfield, Illinois to
Wabash, Indiana. It must be analyzed and understood before any method can be established.
The second step in the Four Step Pattern is where you really get the opportunity to use your imagination.
Most operations can be performed in more than one way. For example, you can fly, take a train, ride a bus,
drive a car, ride horseback, or travel any number of ways from one location to another. To say that an
operation can be performed in only one way is folly. No operation has ever been set up that cannot be
improved. For example, man has run foot races for years and no one thought it was possible for human
beings to run a four-minute mile. Today there are several runners who have surpassed this barrier by
training and running in a little different way than they did before. Man has been punching holes in steel
with hammers and massive punch presses for years. One of the inflexible rules for punching steel was that
you could not punch a hole any smaller in diameter than the thickness of the stock. Today we punch holes
of almost any size, regardless of stock thickness by using tools in a different way than we did before. The
progress of the mechanical world depends on the ability of people to think creatively and to associate
workable ideas with varying situations. Thinking of different ways to do something is largely a matter of
individual imagination and using the ideas of other people familiar with the subject. The more ideas we
have, the faster we will grow.
41
The third step is picking the best way to perform an operation. This may seem difficult to some people
with an untrained eye, but it can be one of the easiest parts of the industrial engineer’s job. He/she must
work with all the possibilities at his/her disposal. He/she must get all the answers to every question asked.
He/she must be sure to:
1. Work with facts, not opinions. Opinions lead to arguments and misunderstandings. Facts
lead to conclusions and results. A fact does not vanish when you ask “why?”
2. Work with causes, not effects. Which is better – to fix the hole in a leaky tire or to pump
it up each day? To wipe up the oil around a machine or fix the leak in the oil hose? Get
to the cause of the problem.
3. Work with reasons, not excuses. An excuse dodges the question and often covers up
facts. Find out why every detail is handled as it is. Develop the questioning attitude.
Don’t be satisfied until you know why. But remember that questioning is effective only
if we respect the position of others and use our best and most searching judgment to
evaluate properly the information obtained.
The industrial engineer must realize that a good method for performing a job is an easy method. That is, it
is simple, requiring as few complex motions as possible and is as free from mental and physical fatigue as
possible.
He/she must also realize that the method must meet all the requirements of the evaluation factors common
to those used for making most industrial decisions.
Evaluation Factors
1. Quality – Certain quality standards must be maintained in order to be satisfied with what
your work is to accomplish. Certainly, if we are to sell a product we must meet all the
requirements of our customer, or else we will have no consumer.
2. Quantity – In order to sell or use a product or service, it is necessary to have the product
made or be able to serve at a specified time. Therefore, we must be able to produce
rapidly and in the desired quantity at the specified time.
3. Safety – No person should be asked to unnecessarily risk his/her life or limb to meet a
production requirement. Whatever we ask a person to do should be as safe as humanly
possible.
4. Economy – Labor, material, and overhead costs must always be considered in

determining an economical way of performing a service or making a product.
Unnecessary use of tools and equipment makes a product or service more costly.
Likewise, the use of expensive materials when cheaper ones will work just as well. The
more time it takes to perform a service or make a product, the more it will cost. The less
time it takes to produce a service or product, the less it will cost. Producing at a loss is
like digging your own grave.
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The fourth step in the development of an efficient method is the step that gives meaning to the other three.
It consists of installing and using the best way. Unless this step is completed and followed up on, all the
efforts already completed will have served no purpose.
Determination of Time
What does time mean to you? The element of time is, without a doubt, one of the most important factors in
our everyday life, domestic and industrial.
Take this morning, for example. You probably heard the alarm clock ringing out, telling you it was time to
get up. You looked at the offender, shut off the noise, and quickly decided that you had only a certain
amount of time to wash, dress, and eat breakfast before leaving for work. At a certain time you rushed out
to the car and started to work. You probably even tried to drive your car fast or slow so that you could get
to the green traffic lights at the right time and you would not have to stop and wait for the red lights to
change.
At a certain time you arrived at work and you may have clocked-in on your time card, indicating that you
expected to spend a certain amount of time on your job. When it was time for coffee break this morning,
I’ll bet you didn’t waste any time taking advantage of it.
Man, you know more about time than Father Time, himself!
But what really is time?
1. Time is a commodity to buy and sell, just like steel in the warehouse, electricity for the lights, gas
for the furnace, tires for the car, and lead for your pencil. You and I have the commodity of time
to sell to whatever company will buy it. We all consider our time as having a certain real value.
For example, would you be working for this Company today for one dollar per hour instead of the
salary you are getting? We had time to sell at a price and time is what the Company bought.
2. Time affects productivity. Productivity, as defined by John W. Kendrick, is the net output per
weighted unit of labor and per unit of tangible capital combined. The weighted unit of labor in
this case is normally expressed in manhours. So that if the net output per unit of tangible capital
remains fixed, productivity varies according to the length of time spent performing each operation.
If you decrease the time to do something, productivity goes up. If you increase the time to do
something, productivity goes down.
3. Time, in terms of economics in industry, represents monetary values and costs. The more time it
takes to perform a job, the higher the cost. The less time it takes, the lower the cost. Time must
be accounted for in business in the same manner as we account for inventories and raw materials.
Work has a real monetary value when something is accomplished that can be described and timed.
Foe example, what do we usually consider when we set out to earn money to go to school or make
a living? We tell ourselves, ”If I do this particular work, I’ll make so much money in a certain
amount of time. This will enable me to buy enough food for my family, pay the rent, pay school
tuition, etc.” So, you see, work can be described and timed, and it has real monetary value
according to the time involved.
What then is Time Study? Time Study is a procedure to use to determine the time required to do a
specified task, performed by a qualified and well-trained person. While the development of a method is
largely analysis of the work, Time Study involves measurement of the work.
Since time is so important and work can be measured in terms of time, what factors affect the length of
time it takes to perform an operation?
43
Factors That Affect Time
1. The METHOD of performing the operation.
We have already seen that there are several different means of travel in going from one location to
another, such as by plane, train, car horseback, etc. each means of transportation performed under
normal circumstances would take a different amount of time in order to accomplish the same
distance. Just as there are differences in the means of travel, there are also differences in the ways
of performing shop operations. It take considerably more time to join two boards together with
screws and a screwdriver than it does with nails and a hammer, yet the same basic purpose is
accomplished.
The condition of the parts and tools utilized will also affect the method and consequently, the time
to perform the operation. For example, if your car is an old Model “T” or any other car, for that
matter, it will only go so fast and no matter what you do about stepping on the accelerator, it will
only go that top speed. You cannot go any faster. Another example is carrying a full cup of hot
coffee. Unless you are a juggler, you will tend to slow down and be more careful. Or, if you try
to read the fuzzy print on a newspaper, it is difficult and time consuming. Bent or deformed stock
will often slow an operator down on his/her job. If you are operating a bulldozer with a hot
furnace, the furnace will heat the stock only so fast, and then you must wait. So there are many
things that will affect the method and the time for performing an operation.
Conditions of the surrounding area tend to change the method of performance, and consequently
the amount of time. For example, a heavy downpour of rain will definitely slow you down on the
road, if you cannot see very well. The same is true in the warehouse or on the shop floor. If it is
oily, you tend to pick your places to walk and, therefore, walk more slowly. Icy, slick, or rough
floors, or dangerous projections will also slow you down. So certainly, method does make a
difference in the time for performing an operation.
2. The EFFORT put forth by the operator.
There are different speeds for turning pages of a book. One person may turn the pages slowly,
while another might turn them more quickly. Both are using the same method and yet they do not
consume the same amount of time. The speed at which the operation is performed will depend on
how much effort is put forth.
Some factors over which an operator does not have complete control will affect the amount of
time taken. Stuffy air conditions, hostile co-workers, or personal problems at home all tend to
slow the operator’s performance.
The effort that a person puts forth in order to perform the operation is motivated in one way or
another. Additional compensation may be the reward needed for increased output. Security is
another motivation. The fear of losing a job may make an operator perform faster because of the
realization that he/she must not only produce for his/her own personal benefit, but also that of his
co-workers so they can keep the Company competitive. A sense of pride in his/her work, as well
as being part of a productive group, can also be a motivating factor.
3. The SKILL exercised by an operator.
Training and experience develop skill to a great degree in performing work. The more skillful an
operator, the less time it takes for that person to perform the operation. Magicians practice many
hours to accomplish their tricks and yet, nine times out of ten, their tricks are simply sleight-of-
hand. “The hand is quicker than the eye” is an old saying that holds true only with practice and
developed skill. The same is true of an operator. The relaxed operator, or skilled operator, can
perform much easier and faster than the fumbler.
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45
GUIDELINE FOR NUMBER OF CYCLES TO
OBSERVE DURING A TIMESTUDY
The following table is a suggested guideline for the number of cycles to observe when taking a timestudy of an operation. The
number of readings shown are the number to observe after the proper method has been developed and an elemental
description has been made for the operation.
Deere Guidelines
Approximate Overall Cycle No. of Readings (Cycles)
Time (Stopwatch Minutes)
5 or less 10
8 8
13 6
25 5
50 4
150 3
150 or more 2
Note: Additional cycles to those shown above should be observed and timed when one of the following conditions exist:
1. When substantial variation or difficulty is encountered in the performance of the operation. When this variation or
difficulty is for only a few elements, it may be practical to time additional cycles on only those elements rather than the
entire operation.
2. When the operation involves an exceptionally high annual volume or production hours.
3. When the cycle time of the operation is very short.
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PURPOSES OF MOTION AND TIME STUDY
Incentive Standards work is one of the most important and interesting areas of work in industry. If a
Motion and Time Study Program is set up and used with a clear understanding of what it is to accomplish
by all parties concerned, then there are many benefits to be gained. Set purposes for making Motion and
Time Studies must be established and understood not only by management, but also by the shop floor
worker, and all levels in between. It should be the purpose of any sound Motion and Time Study Program:
1. To find the easiest and most economical way to perform work, considering all the evaluation
factors of methods, tools, equipment, materials, and safety.
2. To provide an Incentive Standard for a specific amount of work to be performed that is fair and
equitable to the employee as well as the Company.
3. To establish and maintain the standard practices of performing the work according to written
descriptions, in order to insure quality parts, safe practices, desired quantity of parts, and economy
of production.
4. To standardize the time required for the performance of work in order to determine schedules and
plan work, to determine machine effectiveness, and to determine the number of human resources
and machines that can be most economically utilized.
5. To standardize direct costs to prepare budgets and estimate costs for bids in determining the
selling price of the product.
These are some of the purposes of a Motion and Time Study Program that are the responsibility of an
Industrial Engineering Department. The success or failure of the department depends on how well these
purposes are fulfilled and maintained.
47
RESPONSIBILITIES OF THE INDUSTRIAL ENGINEERING DEPARTMENT
We have mentioned before that one of the responsibilities of the Industrial Engineering Department is to
establish fair and equitable labor standards for manufacturing operations. This can only be done by
standardizing the method and then determining the time for the job, using established policies and
procedures.
The work of the Industrial Engineering Department is certainly important when we realize that the cost of
labor is constantly increasing. The accurate determination of labor costs is the direct responsibility of the
Industrial Engineering Department. It is estimated that the additional cost per hour for performing
productive work that is not on incentive is variable, but approximately 50% higher than if it were
performed on incentive. It is therefore necessary that proper communications be established so that all new
jobs as well as those affected by method changes can be performed as incentive work as soon as possible
after the job is in production. In order to maintain or reach a high percent of time on incentive, it is also
necessary to have appropriate charts and records that emphasize and compare incentive earnings,
downtime, and non-incentive productive work. Performance records help to determine the areas that need
additional incentive coverage as well as those where better methods should be employed, or where
machines and manpower are not properly utilized.
The Industrial Engineering Department has another basic responsibility to management. It covers four
different areas:
1. It is to provide management with an adequate means for analyzing and controlling excessive costs.
2. Management also needs a sound wage payment plan so they will have a fair and equitable means
of paying for work performed.
3. Management needs information dealing with cost advantages and disadvantages when purchasing
equipment. They must know how much machine time and manual time are required when
performing an operation on certain types of machines, since both of theses times are costly.
4. Management must also know and have the tools necessary to maintain a sound wage payment
system. It would be naïve to assume that a job and its environment will remain fixed after an
incentive standard has been established. The methods used in an industrial shop must, by their
very nature, be dynamic. An incentive standard becomes obsolete just as a piece of equipment
does. In fact, an incentive standard is considerably more vulnerable to obsolescence than a piece
of machinery. If management is to prevent inconsistencies from creeping into the incentive
standard structure, they must keep abreast of changes in methods and conditions in the shop. If we
are to prevent the development of serious inequities in the incentive standard structure, we must
keep our incentive standards representative of current methods and conditions. We must keep
abreast of change!
RESPONSIBILITIES OF THE INDUSTRIAL ENGINEER
Now that we know what has to be done in order to get our end result in motion and time study, just what
part do we play as an industrial engineer?
The Industrial Engineer is a member of the staff organization. He/she may report to a Manager of
Industrial Engineering (or a designate) or a Business Unit Manager or some other staff manager. The
Industrial Engineer typically has no authority over the employees on which he/she performs work
measurement activities.
48
The IE’s main function is to help create and maintain the documentation required to run the shop operations
from a work measurement and pay standpoint. A close relationship with the shop floor supervisor must be
maintained. Mutual respect between the IE and the shop floor employees will make the job considerably
easier. In most cases the supervisor is the customer. He/she calls the IE to do methods and standards work,
much like a plumber would be called to install and maintain pipes. In a house, the plumbing must be
installed according to local codes. Likewise, when the IE does methods and standards work, it must be
done according to accepted rules and regulations specified by the Company. The IE is responsible for
setting a fair and accurate standard in the factory.
CONDUCT OF THE INDUSTRIAL ENGINEER
A good Industrial Engineer must be able to get the “job done” with the least amount of friction and discord.
This involves getting along with others and, as in any other job; his/her success will depend on it. He/she
will be dealing with the most sensitive part of the worker – the paycheck. He/she will have to learn to
remain calm and patient while talking to some pretty excited and angry people. He/she must be able to let
criticism roll off his/her back and stand firm in following rules and regulations. An Industrial Engineer
who does not gain the confidence of the supervisor and the worker will find success hard to attain, even
though he/she might know “everything else in the book”.
The success of the incentive system is dependent upon the ability of the Industrial Engineer. The following
basic statements are presented as a guide to proper conduct for the IE.
1. Contacts the supervisor when entering the department. Does not assume the operation is ready to
time. Something may have come up that can be explained by the supervisor.
2. Becomes familiar with the job to be timed. Allows enough time for the operator to feel at ease.
Does not start timing immediately. Haste breeds error and confusion. Mistakes often have to be
lived with for a long time.
3. Explains what he/she is doing to both the supervisor and operator when asked. Does not hesitate
to ask them for suggestions. They may have ideas that haven’t occurred to him/her.
4. Listens with humility. Tries to eliminate “I” from his/her vocabulary. Controls the ego. Does not
superior. This would only cause the operator to resent and resist any good suggestions he/she may
have.
5. Tries to put him/herself in the “operator’s shoes”.
6. Is courteous, understanding, and treats others with dignity. Does not hesitate to be honest and
sincere.
7. Improves his/her technical knowledge. This will establish and maintain his/her prestige. Does not
try to answer something of which he/she knows nothing. The operators soon find out and pass the
word.
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68
JOB DETAIL AND STANDARD SHEET (PAGE 1 OF ) OPERATOR 1 ENGINEER 2
PART No. OPER. No. DEPT. MACHINE No. MACHINE CODE DATE PART NAME 3
1 2 3 4 5 6
OPERATION DESCRIPTION: D.P.T. NEW REV. R.P. RCK. WITHDRAWN STD.
8
REMARKS:
OCC. CODE L.G. STD. HRS./100 PCS. S. U. HOURS T. O. HOURS W.A.F.
10 11
REASON FOR CHANGE
15
MATERIAL: SIZE WEIGHT JDM PART SIZE WEIGHT
=_________ Pcs. 17
EQUIPMENT 18
ELE. DATA R Std.Min./ OCC/ OBSERVED TIME IN STD. BND

No. CODE ELEMENTAL DESCRIPTION MT CYCLE CYCLE DECIMAL MINUTES AVG. PERF. NORM. P&F MIN. BY
1 2 3 4 5 6 1 2 3 4 5 6
SKETCHES, LAYOUTS, ETC. Number of Pcs./Cycle 7

STANDARD "D" WORK MINUTES 8
8 STANDARD "R" WORK MINUTES 9
INHERENT DELAY ALLOWANCE 10
TOTAL STANDARD MINUTES 11

TOTAL JOB
STD. MIN. DELAY STD. HRS./100 Pcs.
69
M-4834-12-65-Stock Note: The approved method is as shown on this form and no change in method may be made by the 12 X 13 = 15 x 1.667 = 16
Printed in U.S.A. employee without securing approval of the company as indicated by the issuance of a revision Pcs./Cycle 14
JOB DETAIL AND STANDARD SHEET (PAGE 1 OF )
PART No. OPER. No. DEPT. MACHINE No. MACHINE CODE DATE
1 2 3 4 5 6
OPERATION DESCRIPTION:
8

10 11
REASON FOR CHANGE
15
=_________ Pcs. 17
EQUIPMENT 18
ELE. DATA R Std.Min./ OCC/

No. CODE ELEMENTAL DESCRIPTION MT CYCLE CYCLE
1 2 3 4 5 6
SKETCHES, LAYOUTS, ETC. Number of Pcs./Cycle 7
M-4834-12-65-Stock Note: The approved method is as shown on this form and no change in method may be made by the
Printed in U.S.A. employee without securing approval of the company as indicated by the issuance of a revision
70
Instructions for Preparing the Job Detail and Standard Sheet
A. Upper Left Section
1. Part Number
2. Operation Number
3. Department Number
4. Machine Number (if different from Machine Code)
5. Machine Code (from Routing)
6. Date of study
8. Brief Description of the Operation
10. Labor Grade of Operation
11. Standard Hours Per 100 Pieces
15. Reason for Change
17. Size and Weight of Finished Part
18. Type of Equipment
B. Lower Left Section
1. Element Number
2. Standard Data Code (blank indicates time study)
3. Element Description
4. Type of Element. Blank = “D”.
“R” = Run Time Element.
“MT” = Machine Time Element
“C” = Constant Controlled Pace
“P” = Process Controlled Element
5. Standard Minutes Per Cycle. The time that should be shown in all cases is
the time that is used to calculate the total standard minutes for the
operation. That is, the standard minutes per occurrence multiplied by the
occurrence per cycle. Round the number to three decimal places.
6. Occurrence Per Cycle. This is the fractional occurrence value for
elements that don’t occur every cycle. Blank = the element occurs every
cycle.
7. Number of Pieces Per Cycle
8. Sketches, Layouts, Etc. If a sketch will enhance understanding, place it
here. This isn’t usually necessary if OMS’s are being created for the
operation.
71
OPERATOR 1 ENGINEER 2
PART NAME 3
D.P.T. NEW REV. R.P. RCK. WITHDRAWN STD.
REMARKS:
OBSERVED TIME IN STD. BND

DECIMAL MINUTES AVG. PERF. NORM. P&F MIN. BY
1 2 3 4 5 6
STANDARD "D" WORK MINUTES 8
STANDARD "R" WORK MINUTES 9
INHERENT DELAY ALLOWANCE 10
TOTAL STANDARD MINUTES 11

TOTAL JOB
12 X 13 = 15 x 1.667 = 16
Pcs./Cycle 14
72
C. Upper Right Section
1. Name of Observed Operator

2. Name of Engineer
In Remarks area:
Take at least one Overall cycle time reading and attach a Performance
Rating to it.
D. Lower Right Section
1. Observed Time in Decimal Minutes. Refer to the Reference Table for the
number of observations to make. Disallowed times should be circled and
explained on the study – e.g. fumble, wrong movement, improper method,
etc. Two or three digits should be recorded, depending upon the precision
of the stopwatch being used.
2. Average. This column is no longer used.
3. Performance Rating. Enter as a percent, in 5% increments, while on the
shop floor.
4. Normal Minutes. This column is no longer used.
5. P&F. Personal & Fatigue Factor. Enter as a percent. If two values have
been prorated, show the calculation.
6. Standard Minutes Per Occurrence. This is the time allowed every time the
element occurs. If the element occurs every cycle, leave this column
blank and post the value in the Standard Minutes Per Cycle column. Run
a chain calculation to average the Observed Times, multiply by the
Performance Rating and the P&F Factor. Round the number to three
decimal places.
8. Standard “D” Work Minutes. The total Standard “D” Work Minutes Per
Cycle from the Standard Minutes Per Cycle column. If there are no “R”
or “MT” elements, leave blank and post the value as indicated in #12
below. Post the value to three decimal places.
9. Standard “R” Work Minutes. The total Standard “R” Work Minutes Per
Cycle from the Standard Minutes Per Cycle column. Post the value to
three decimal places.
10. Inherent Delay Allowance. Show calculations elsewhere on the form.
Post the value to three decimal places.
11. Total Standard Minutes Per Cycle. The sum of #8, #9, and #10.
12. The same value as #11.
13. Job Delay Factor. From the Reference Tables.
14. Number of Pieces Per Cycle.
15. Total Allowed Minutes Per Piece. This entry is no longer posted.
16. Standard Hours Per 100 Pieces. This is the result of a chain calculation
using #12 times #13 divided by #14 times 1.667. This converts Minutes
Per Piece to Standard Hours Per 100 Pieces. The value shown should be
the calculator-displayed value, truncated to one digit past the number
required by the rounding schedule. The value is then posted according to
the rounding schedule in #11 of the upper left section.
73
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JOB DETAIL AND STANDARD SHEET (PAGE 1 OF ) OPERATOR ENGINEER
PART No. OPER. No. DEPT. MACHINE No. MACHINE CODE DATE PART NAME
REMARKS:
REASON FOR CHANGE

=_________ Pcs.
EQUIPMENT

SKETCHES, LAYOUTS, ETC. Number of Pcs./Cycle _____
STANDARD "D" WORK MINUTES
STANDARD "R" WORK MINUTES
INHERENT DELAY ALLOWANCE
TOTAL STANDARD MINUTES

TOTAL JOB
75
M-4834-12-65-Stock Note: The approved method is as shown on this form and no change in method may be made by the X 1.0 = x 1.667 =
Printed in U.S.A. employee without securing approval of the company as indicated by the issuance of a revision Pcs./Cycle _____
JOB DETAIL AND STANDARD SHEET (PAGE OF )
PART No. OPER. No. DEPT. DATE

76
M-4835 -19-65 Stock Printed in U.S.A.

PERFORMANCE RATING
It is an accepted fact that it is impractical to select an operator to be time studied who will be the “average
skilled operator”. It is also not practical to select several operators to perform the same job to be studied.
Even the same operator will possess varying degrees of skill on various work elements and also may work
with varying degrees of performance during the time study.
The accepted practice within Deere is to adjust observed time to normal time. The time study engineer
through special training and experience adjusts the observed time by means of factors (as illustrated below)
applied from observation of the work elements performed by the employee.
These factors will be shown on the time study according to a scale in which 100% indicates normal
performance, 105%, 110%, 115%, etc. would indicate progressively higher performance while 95%, 90%,
85%, etc. would indicate lower performance. If the actual time in decimal minutes of an element is given a
performance rating of 110%, it means that in computing his study the time study engineer will increase the
actual minutes 10% to arrive at the normal time for the operation. Actual times with a 90% performance
rating will be reduced to 90% of the actual time to arrive at the normal time.
Where time values are established by time study, the performance rating will be made during the
observation and the time study engineer will, upon request, indicate the performance rating to the
employee.
Policy Concerning Informing the Worker of his Performance rating
It is suggested that the time study engineer should hand the time study board to the operator for observation
of the performance rating if the operator requests to know the rating.
Elements covered by Standard Data do not have to be performance rated.
Items Covered by Performance Rating
There are two main items that affect the relationship of observed performance to normal performance.
These two items constitute effective effort and are covered by one performance rating factor. They are:
1. Pace or Tempo (also referred to as Effort)

2. Skill of Performing the Task
Pace or tempo is the rate of physical activity of the operator. Skill of performing the task is the proficiency
with which the operator is performing the operation using the prescribed method. Generally there is a close
relationship between the skill of performing the task and the pace or tempo.
Items Not Covered by Performance Rating
There is no way of accurately compensating for differences in method as a part of performance rating. The
only satisfactory way to handle this factor is to standardize the method prior to taking the time study and to
establish a standard time for this specified method. Thus the incentive standard should not apply if a
method other than that specified in the standard is used.
Performance rating should not be affected by the delays encountered in performing the operation. An
allowance for miscellaneous job delay time is applied as a separate item in the standards setting procedures.
Performance rating should also not be affected by the time that may be required for rest, recuperation, or
personal needs. A separate personal and fatigue factor is applied to each element to cover the time for
these items.
77
Items to be Considered When Rating Performance
In rating performance the time study engineer must judge the normal pace or tempo and the normal skill of
performing the task and must relate the observed performance to that normal performance. This process of
judging normal performance for the task and relating the observed performance to that normal performance
is the process of performance rating used for most elements. It is probably one of the most challenging
aspects of the time study engineer’s job.
There are some special cases in which the maximum pace or tempo is limited by the machine or process.
In these cases it may be necessary to determine the performance rating by judging how fast the element is
being performed in relation to how fast it could be performed.
It is impossible to list all of the items that need to be considered, to some extent at least, in performance
rating all of the work elements encountered. However, consideration of the following characteristics will
aid in judging the normal pace or tempo and the normal skill of performing the task and in relating
observed performance to that normal performance.
1. The degree of care or control required.
2. The effect of characteristics such as compactness or bulkiness on the ease or difficulty of handling
an object.
3. The effect of weight or force in gaining control of an object and in overcoming inertia.
4. The degree to which the operator employs simultaneous motions.
5. The degree to which hand and body motions are coordinated.
6. The degree to which unnecessary motions are employed or normal motions are eliminated.
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PERFORMANCE RATING & NORMAL WORK PACE SUPPLEMENTAL INFORMATION
The John Deere incentive system allows the operator a certain amount of time per day for rest, delays, and personal
needs. What performance should be expected of our operators the rest of the day? Our incentive employees usually
work faster than our hourly employees because they can make more money by working faster.
As mentioned earlier, there are three factors that affect the time required to do a specific task.
• Method of performing the operation

We have already learned the Five Step Method for analyzing jobs. The method is the single most important
part of measuring the labor on an operation.
• Effort put forth by the operator

The effort that an operator puts forth in order to perform his operation is motivated in one way or another.
Additional compensation may be the reward needed for increased output. Security is another motivation
factor. The fear of losing his job will make an operator perform faster because of the realization that he must
not only produce for his own personal benefit, but must produce with his co-workers so that he can place the
company on a competitive basis. Pride of work is also a motivation for being able to put out good quality
work and at the same time compete with his co-workers. The feeling of belonging to a good group certainly is
another motivation for producing.
• Skill exercised by the operator.

Training and experience develop skill to a great degree in performing work. The more skillful an operator is,
the less time it takes him to perform the operation. A skilled operator can make a difficult operation look easy.
A performance rating should not be used to evaluate the method of performing the work. A performance rating
addresses only the effort and skill of the operator. It normalizes or levels the Average Observed time to the 100%
level.
This is how it works. If you had an observed (actual) time on your stopwatch of .10 minutes and rated the operator at a
100% performance, you would multiply the .10 minutes by 100% to get .l00 Normal Minutes.
If the operator were working slower than 100% you would see a slower time on your watch, such as .11 minutes. Let's
rate this performance at 90%. Now multiply the .11 minutes by 90% to get a Normal Time of. 099 Minutes.
If the operator were working faster than 100% you would see a faster time than .10 minutes on your stopwatch. Say we
recorded a .09 minutes on our watch and rated the performance at 110%. Multiply the .09 minutes by 110% and get a
Normal Time of .099 Minutes.
Each of the above stopwatch observations were multiplied by a performance rating to get a normalized time. Normal
time represents the time it would take to perform a given amount of work at 100% performance rating.
So, if we do a good job of performance rating, it doesn't matter if our operator goes fast, slow, or just turns in a normal
performance. We will properly normalize his time by a performance rating and the resulting times will be almost
identical.
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-21-
ADVANTAGES OF USING P & F FACTORS
1. The industrial engineer is able to performance rate work elements without regard
to the weight of the object(s) handled.
2. The factors increase as the nature of the work becomes more fatiguing
3. The factors are applied to the normal minutes for each element, rather than to the
total normal minutes. This provides for the most equitable balancing of work
among individuals performing as a group. THE CURRENT TREND IS TO
SIMPLIFY APPLICATION BY USING ONE SINGLE AVERAGE P&F
FACTOR FOR THE ENTIRE STANDARD.
NOTE: Heat Allowance (an additive to P & F Allowance) will be covered in the next
tape along with Job Delay. The Heat Allowance information is on Page 3 of this P & F
section.
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-21-
ADVANTAGES OF USING P & F FACTORS
1. The industrial engineer is able to performance rate work elements without regard
to the weight of the object(s) handled.
2. The factors increase as the nature of the work becomes more fatiguing
3. The factors are applied to the normal minutes for each element, rather than to the
total normal minutes. This provides for the most equitable balancing of work
among individuals performing as a group. THE CURRENT TREND IS TO
SIMPLIFY APPLICATION BY USING ONE SINGLE AVERAGE P&F
FACTOR FOR THE ENTIRE STANDARD.
NOTE: Heat Allowance (an additive to P & F Allowance) will be covered in the next
tape along with Job Delay. The Heat Allowance information is on Page 3 of this P & F
section.
111
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114
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Rules for Rounding Output Standards
(Hours Per 100 Pieces)
.000 to .0499 4 Places

.050 to .249 3 Places
.25 to 4.99 2 Places
5.0 to 99.9 1 Place
100.0 and over 0 Places
117
154
118
REMARKS:
REASON FOR CHANGE

=_________ Pcs.
EQUIPMENT


TOTAL JOB
119

120

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John Deere Time Data History
1918 Some form of time data has existed in the Company before World War I
1950 Deere purchases the rights to use the MTM Predetermined Time System
1952 MTM Micromotions combined into larger basic patterns termed “Basics”.
1953 Factory Managers determine the need for Company-wide consistent data
1955 John Deere Standard Hour Incentive Plan installed
1958 Union questions Plant Data inconsistencies among factories

Standard Data “Universals” developed
1960 First manually applied Standard Data (Drill Press) completed using the Deere
Universals
1961 First computerized Standard Data application program completed
1964 Standard Data for all major production processes completed
1980 First Computerized Standard Data for Assembly released (ASB1)
1986 Generation II (GEN2) released – Computerized Data Application for most

processes
1988 Deere purchases rights to use LCW as a time data system (modified & renamed
MTS)
1994 Continuous Improvement Pay Plan (C.I.P.P.) installed
1999 WPlanner released
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Standard Data Development
Once we have determined the actual work to be done, we can begin to develop the two
numerical codes required to create a Standard Data table. These two numbers are
referred to as the Description Code and the Conditions Code.
Let’s start with the Description Code.

The first digit deals with the type of work to be done. In this case we are handling a part
from the raw stock container to the fixture, so it is Material Handling.
First Digit > Basic Groups
0. Miscellaneous
1. Material Handling (Transporting motions – moving, sliding, carrying, etc.)
2. Machine Manipulation (Motions requiring partial control by the operator –
Levers, cranks, buttons, etc.)
3. Transport Material with Hand Tools
4. Transport Material on Wheels, Rollers, Pivot Arms, etc.
5. Process Functions – Manually Controlled
6. Gaging
7. Walking
8. Handle Container
9. Position and Disengage
The second digit deals with the type of material being handled and how it is handled.
Second Digit (Since first digit is a 1)
0. Miscellaneous
1. Casting Type (Forgings, Cores, Tools, etc.) <<
2. Stock Up Multiple Rounds, Pipes, Angles, Channels, and U-Bars only
3. Stock Up Multiple Flat & Square Stock, Plate Stock and Sheet Metal only.
Stock Aside all Multiple Bar Stock, Plate Stock and Sheet Metal. All Single Bar
Stock, Plate Stock and Sheet Metal Handling
4. Hardware Type (Small Screws, Washers, etc.)
5. Wires, Nails, etc.
6. Granular or Powder Type (Sand, etc.)
7. Unrestricted Grasping Points through entire range of size and weight of any
material (G1A, RL1)
8. Contact Gain Control and Contact Relinquish Control (G5 and RL2)
9. Dissimilar Types
139
The third digit answers the question: Once I have obtained the material, where am I
going to go with it?
Third Digit
1. To Exact Location
2. To An Approximate Location
3. To Other Hand
4. Against a Stop
9. Simultaneous Handling
The fourth digit answers the question: Once I get the material to location, what am I
going to do with it?
Fourth Digit
1. Toss or Drop
2. Place
3. Part Remains in Hand
The fifth digit answers the question: Where will I get the material?
Fifth Digit
1. From Other Than Container

2. From Fixture-Type Location
3. From Container
4. When Part is Already in Hand(s)
5. From Other Hand
The sixth digit answers the question: How many parts will I handle at a time?
Sixth Digit
1. Single Part
2. Multiple Parts
3. Multiple & Single Parts
We’ve now completed the Description Code: 111.231
1 – Material Handling
1 - Casting Type
1 – To Exact Location
2 – Place
3 – From Container
1 – Single Part
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Now we can develop the Conditions Code.
The first digit describes the Work Level at the end of the previous element. In our case,
the operator had just placed aside the part from the previous cycle into a 25% Waist
finished stock container.
First Digit
1. 100% Waist
2. 75% Waist
3. 50% Waist
4. 25% Waist
5. 0% Waist
The second digit describes the Work Level at gain control of the material. In our case,
the operator is getting the part from to a 25% Waist raw stock container.
Second Digit
1. 100% Waist
2. 75% Waist
3. 50% Waist
4. 25% Waist
5. 0% Waist
The third digit describes the Work Level at the end of the element. In our case, the
operator will have placed the part into the fixture, which we assume to be on the machine
at a 100% Waist condition.
Third Digit
1. 100% Waist
2. 75% Waist
3. 50% Waist
4. 25% Waist
5. 0% Waist
141
The fourth digit answers the question: How am I going to get to the material? We can
Reach up to 30” to it or Body Travel to it. In our case, the distance between containers is
3’, so it’s too far to reach. We need to Body Travel to the material.
Fourth Digit
1. Reach
2. Body Travel
The fifth and sixth digits specify the Reach or Body Travel distance involved.
For Reach:
Fifth Digit = 0
Sixth Digit:
1. 0”
2. 2”
3. 4”
4. 9”
5. 12”
6. 18”
7. 22”
8. 26”
9. 30”
For Body Travel
Enter the Actual Feet of Body Travel
Fifth Digit = 0 if less than 10’

Sixth Digit = Actual Feet of travel
In our case, we will Body Travel 3’, so the fifth digit is 0 and the sixth digit is a 3.
142
The seventh digit answers the question: How am I going to transport the material? We
can Move With it up to 30” or Body Travel With it. In our case, the distance between the
raw stock container and the machine is 4’, so it’s too far to move with it. We need to
Body Travel With the material.
Seventh Digit
1. Move
2. Body Travel
The eighth and ninth digits specify the Move or Body Travel distance involved.
For Move:
Eighth Digit = 0
Ninth Digit:
1. 0”
2. 2”
3. 4”
4. 9”
5. 12”
6. 18”
7. 22”
8. 26”
9. 30”
For Body Travel
Enter the Actual Feet of Body Travel
Eighth Digit = 0 if less than 10’

Ninth Digit = Actual Feet of travel
In our case, we will Body Travel 4’, so the eighth digit is 0 and the ninth digit is a 4.
143
The tenth digit answers the question: What additional moves and/or motions are required
to accomplish the work? This applies only if the moves required to get or release the
material exceed those allowed in the basics, or when other motions are introduced into
the regular pattern. For example, moving parts to or from a spindle rack or shelf rack.
1. No additional moves or motions

2. Additional move at gain control
3. Additional move at relinquish control
4. Additional moves at gain control and relinquish control
In our case, everything is straight forward, so nothing additional is required.
We’ve now completed the Conditions Code: 441.2 03 2 04 1
4 – 25% Waist at end of previous element

4 – 25% waist at gain control of the material
1 – 100% Waist at relinquish control of the material
2 - Body Travel To the material
03 – Body Travel distance to the material
2 – Body Travel With the material
04 – Body travel distance with the material
1 – No additional moves or motions required
Once we have the Description and Conditions Codes, we consult the Bar Stock or
Casting Code Reference books to determine which Universal Table to use for our
material handling element. In our case, we use Book #2 which includes Description
Codes 111.231 – 111.341. Under the 111.231 Tab, we find a page that includes the first
3 digits of the Conditions Code – 441. The table is AA11.
We will also use the Universal Table for Position Casting in Fixture.
144
AA11 Single Part to Exact Location From Container. Body Travel to the Part. Body Travel With the Part.
Body Travel With Part in Feet

Body 1 1 2 3 4 5 6 7 8 9 10
Travel 2 1 2 3 4 5 6 7 8 9 10
To Part 3 1 2 3 4 5 6 7 8 9 10
in Feet 4 1 2 3 4 5 6 7 8 9 10
5 1 2 3 4 5 6 7 8 9 10
6 1 2 3 4 5 6 7 8 9 10
7 1 2 3 4 5 6 7 8 9 10 Std
8 1 2 3 4 5 6 7 8 9 10 Min
9 1 2 3 4 5 6 7 8 9 10 Per
10 1 2 3 4 5 6 7 8 9 10 Occ
2.0 0.066
7.0 0.069
Code: 10.0 5.0 0.072
111.231D 12.5 9.0 4.0 Maximum Weight 0.076
441. 14.5 12.0 8.5 of Part in Lbs. 0.079
17.0 14.0 11.0 6.0 0.083
18.5 16.0 14.5 10.0 6.5 0.087
20.5 18.0 16.0 13.0 10.0 5.0 0.091
22.0 20.0 18.0 16.5 13.0 10.0 5.0 0.096
24.0 22.5 20.0 18.5 15.5 13.0 9.5 4.5 0.100
26.0 24.0 22.5 20.5 18.0 16.0 12.5 10.0 5.5 0.105
28.0 26.0 24.0 22.5 20.0 18.0 16.0 13.5 10.0 6.0 0.110
30.0 28.0 26.0 24.0 22.0 20.5 18.5 16.0 13.5 10.0 7.5 0.115
32.5 30.0 28.0 26.0 24.0 22.0 20.0 18.0 16.0 13.5 11.0 7.0 2.0 0.120
35.0 32.5 30.5 28.0 26.0 24.0 22.5 21.0 19.0 16.0 14.5 11.0 7.0 3.0 0.126
36.0 35.0 33.0 31.5 29.0 26.5 24.5 23.0 21.5 19.0 18.0 15.0 12.5 9.5 5.0 0.132
38.0 36.5 35.0 34.5 32.5 29.0 27.0 25.0 24.0 21.5 20.5 18.0 15.5 13.0 10.0 6.0 0.138
40.0 38.0 37.0 36.0 35.5 31.5 30.0 28.0 26.5 24.5 23.0 21.0 19.0 17.0 15.0 12.0 9.0 5.0 0.145
41.5 39.5 38.5 37.0 36.5 33.5 34.0 30.0 29.0 27.0 25.5 23.0 21.0 19.5 17.5 15.0 12.5 9.0 5.0 0.151
45.5 42.5 40.5 38.5 37.5 36.0 36.0 33.0 32.0 30.0 28.0 26.0 24.0 22.5 21.0 19.0 17.0 14.0 11.5 0.159
51.0 46.0 43.0 40.0 39.0 38.5 37.0 35.5 34.0 32.0 30.0 28.5 27.0 25.0 23.0 21.5 20.0 17.5 15.0 0.166
57.5 53.0 49.0 44.5 41.0 41.0 38.5 38.0 36.5 35.0 33.0 31.5 29.5 27.5 26.0 24.5 23.0 21.0 19.0 0.174
63.0 59.0 55.0 50.5 47.5 44.5 40.0 40.0 39.0 37.0 35.5 34.0 32.5 30.5 29.0 27.5 25.5 24.0 22.0 0.182
70.0 66.0 61.0 57.0 54.5 50.0 46.0 44.5 42.0 40.0 38.5 37.0 35.5 34.0 32.5 31.0 29.0 27.0 25.0 0.191
75.0 75.0 68.0 64.0 60.0 56.0 52.5 48.5 45.0 43.0 41.0 39.5 38.0 37.0 35.5 34.0 32.0 30.0 28.5 0.200
75.0 69.5 65.5 62.0 58.5 55.0 51.0 48.0 44.5 42.5 40.5 39.0 38.0 37.0 35.0 33.5 32.0 0.209
75.0 75.0 69.0 65.0 61.5 57.5 54.5 50.5 47.0 44.0 42.0 40.5 39.0 38.0 37.0 35.0 0.219
75.0 75.0 68.0 64.5 61.0 57.0 54.0 50.0 47.0 44.0 42.0 41.0 39.0 38.0 0.229
75.0 71.0 67.5 64.0 60.0 57.0 53.5 50.0 47.0 44.5 42.5 40.5 0.240
75.0 75.0 70.5 67.5 64.0 60.0 57.0 53.5 50.5 48.0 44.5 0.251
75.0 75.0 71.5 67.5 64.0 61.0 58.0 55.0 51.0 0.263
75.0 75.0 71.0 67.5 65.0 61.0 58.0 0.275
75.0 75.0 75.0 68.0 65.0 0.288
75.0 75.0 0.302
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
INHERENT DELAY ALLOWANCE PROBLEMS
1. Given: Standard “D” Work Minutes = .097

Standard “R” Work Minutes = .028
Machine Time (Actual Minutes) = .096
a. Draw a Man-Machine Chart

b. From the chart, derive the Inherent delay Allowance
c. From the chart, derive the Incentive Opportunity on the controlled
portion of the operation
2. Given: Standard “D” Work Minutes = .863

Standard “R” Work Minutes = .670
Machine Time (Actual Minutes) = .470
Pieces Per Cycle = 4
Job Delay = 3%
Calculate the Output Standard
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
CALCULATION OF ACTUAL CYCLE TIME STANDARDS (A.C.T.S.)
Actual Cycle Time Standards are required for all Incentive Standards to assist
in determining machine loads and scheduling operations. Actual Cycle Time is
defined as the elapsed time required to perform an operation when working at an
incentive pace, following the prescribed method, and using the specified feeds
and speeds.
Actual Cycle Time Standard (A.C.T.S.) is the actual cycle time multiplied by a
job delay factor and converted to hours per 100 pieces.
It is the responsibility of the engineer or data applicator who establishes or

revises an output standard, to insure that the A.C.T.S. is adjusted accordingly.
For computer-generated standards, the A.C.T.S. is calculated automatically and
printed on the JDSS or SOE. For all other types of studies, the A.C.T.S. must
be manually calculated and posted on the JDSS or SOE.
The formulas to be used to calculate the A.C.T.S. are as follows:
D + R + IDA Job
For Single Machines and 1.30 1.10 X Delay X 1.667
Specific Sequence batteries: Pieces Per Cycle
(For batteries, this assumes the D, R, and IDA are for all the work in the
battery).
For Random Service {(D/1.30) + (MT X 1.08)} X Job Delay X 1.667

IDA batteries: Pieces Per Cycle
(This assumes the D and MT are for one of the machines in the battery).
Remember: In random service IDA situations, the assumption is made that IDA
always exists on each combination of parts. So (MT x 1.404) – R must be > 0 or
this is a full work operation and should not be running in a random service
battery.
A.C.T.S.’s are required for all output standards being entered into the Common
M.E. database or SAP.
The same rounding rules that apply to output standards also apply to A.C.T.S.’s.
One exception to the above is the handling of A.C.T.S.’s for furnaces in the
Heat Treat areas. Contact your Division Engineer for the proper handling of
A.C.T.S.’s in these areas.
211
212
REMARKS:
REASON FOR CHANGE

=_________ Pcs.
EQUIPMENT


TOTAL JOB
213

214

Continuous Improvement
Pay System
215
“CIPP”
Continuous Improvement Pay
Plans are Developed by Teams of
Employees within the Framework
of the Continuous Improvement
Pay System.
216
CIPP AGENDA
The CIPP Culture
Basic Elements
How it works
Base Development
Weekly
Semester End
Plan Maintenance
217
MANUFACTURING TRANSFORMATION
AT JOHN DEERE
Manufacturing Management
Environment Systems Culture
1950’s Batch Operations Taylorism “Scientific Management” EFFICIENCY

Process Focused Unspecified Manual Labor MANAGEMENT
Operation Efficiency Rigid Work Rules
Functional Management
Tight Controls
1980’s JIT Manufacturing Downsizing COST REDUCTION

Pull Through Scheduling More Information Sharing MANAGEMENT
Product Focused Quality Circles
Automated Systems Disbanding of Functional
Organization
1990’s Cellular Manufacturing Continuous Improvement JOHN DEERE

Synchronous Flow Self-directed Work Teams TOTAL QUALITY
Business Focused Employee “Empowerment”
Multi-skilled Work Assignments
Business Focused “Leaders”
218
Development of the Continuous
Improvement Pay System
• 1955 - Standard Hour Incentive Plan Implemented in
All UAW and IAM Facilities.
• 1988 - 1994 “Pilot” Pay Plans Implemented in UAW
and IAM Facilities.
• 19 Plans Covering 800 UAW Wage Employees
• 2 Plans Covering 42 IAM Wage Employees
• 1995 - New UAW and IAM Agreements Authorizing

the Continuous Improvement Pay System (CIPP) and
the Team Compensation Plan (TCP).
• 1997 - Termination of Standard Hour Plan.
• 2003 – New CIPP Rules
219
Industrial Engineering Resources
Number of Engineers
1979 1981 1983 1986 1992 1993
598 655 610 516 226 190
NUMBER OF ENGINEERS
800
655
610
598
600 516
400
226
190
200
0
1979 1981 1983 1986 1992 1993
220
Standard Hour Incentive Plan
History of Incentive Performance
AR % INC. P ER F.
66 133.6
67
148 134.7
68 135.1
69 135.2
70 133.5
145
71 134.4
72 133.9
73 133.5
PERCENT PERFORMANCE
74142 134.2
75 135.2
76 136.9
77 136.4
78139 136.7
79 134.8
80 135.2
81 136.4
82136 135
83 132.8
84 135.5
85 136.5
86133 136.2
87 135.4
88 138.1
89 139.5
90130 143.3
91 66
143.2 68 70 72 74 76 78 80 82 84 86 88 90 92
92 144.6
93 146 YEAR
94 146.6
221
Standard Hour Incentive Plan
History of Incentive Performance
155
Paid Perf.
Eff. Perf.
Percent Performance
145
Productivity
135
Gap
125
115
105
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94
Year
222
The Old Culture
“The approved method is as shown on this

form and no change may be made by the
employee without securing the approval of
the Company as indicated by the issuance
of a revision.”
223
Company Pay Plan Objectives
• Promote Employee Involvement, Teamwork,

and Participation.
• Promote Continuous Improvement.
• Assure Labor Rates are in Line with

Comparable Industry Norms.
224
The CIPP Culture
“The approved method is as shown on this
form and no change may be made by the
employee without securing the approval of
the Company as indicated by the issuance
of a revision.”
BUT . . .
The only way to guarantee the best method is

being used that produces a quality part in a safe
manner is to properly document that best method.
This is also the only way to protect the changes
(improvements) from being “lost” in the event of a
Base Adjustment following a Company investment.
225
CIPP BASIC ELEMENTS
• CIPP Rates Exhibits “A” and ”F” Wage rates.
• Base Performance Metric Engineered or historical performance of the work

team for Productivity, Quality or Other.
• Weekly Pay Level 115% of CIPP Rate(s)
• Reserve Fund Weekly earnings in excess of 115% held in
reserve.
• Plan Semester 26 consecutive weeks.
• Base Adjustment When Average Semester Plan Performance exceeds

the 115% Weekly Pay Level.
• Base Adjustment Allowance Additional hours paid to employees in return for the
Company’s right to adjust the Base.
• Company Build-up Hours provided by the Company to match the

Reserve Fund Hours withdrawn to raise Weekly Plan
Performance to 115%.
• SHP Conversion Factor Factor for eligible employees to multiply by hours
earned in CIPP plans to determine total pay.
226
Elements of New System
• New Rate Structure that Eliminates Dual

“Hourly” - “Incentive” Rate Structure.
• A Model Outlining the Basic Mechanics of

Determining Employee Earnings Based on
Continuous Improvement.
• A “Buy-Out” of the Earnings Opportunity

Achieved During the Standard Hour Incentive
Plan.
227
New CIPP Rate Structure
Current SHP &

Hourly Pay System New CIPP System
Current (145%) SHP Conversion Factor

Incentive Earnings
Planned(115%)
Hourly Rates
CIPP Earnings
Incentive Rates CIPP Rates
228
NATIONAL JOINT COMMITTEE
ON COMPETITIVENESS
• International UAW
• Deere & Co Production Engineering
• Deere & Co Industrial Relations
229
FACTORY JOINT CI
STEERING COMMITTEE
• Shop Chairman
• Manager of Industrial Relations
• Factory Operations Management
• Additional Support Personnel as Required
230
CIPP IMPLEMENTATION TEAM
• Factory Facilitator
• UAW Shop Committee Designee(s)
• Two Plan Employees (minimum)
• Factory Production Engineer
• Department/Plan Supervisor
Other Attendees/Contributors/Resource Contacts
• Payroll • Human Resources

• Accounting • Union Committee Person
• Quality Engineering • Department Union Steward
231
CIPP MAINTENANCE TEAM
• Factory Facilitator
• UAW Shop Committee Designee(s)
• Two Plan Employees (minimum)
• Factory Production Engineer
• Department/Plan Supervisor
Other Attendees/Contributors/Resource Contacts
• Payroll • Human Resources

• Accounting • Union Committee Person
• Quality Engineering • Department Union Steward
232
C I P P Model
3 Basic Elements
• Establish a BASE Performance for each Metric.

Productivity, Quality, Other
• Calculate Weekly Performance and the
Employees’ Share of Improvements.
• Determine Weighted Average Performance at
End of Semester (26 Weeks), Adjust the Metric
BASE and Pay Bonus if Performance Exceeds
the Weekly Pay Level.
233
Establish the Performance
BASE for each Metric
• Determine Make Up of the Team.
• Use Minimum of Six Months Performance

History for the BASE.
• For New Operations - Use Engineered Data

and Comparable Operations.
234
Implementation Phase
1. Obtain appropriate management and Union
approval to proceed
2. Select the Implementation Team
3. Establish regular meeting dates
4. Orient and educate the Team about the

Continuous Improvement process (CIPP)
and how it works
5. Set the Plan objectives
6. Define roadblocks (issues and concerns) to a

successful Plan
235
Implementation Phase
7. Remove roadblocks
8. Determine the Plan participants
9. Gather the historical data
10. Set/verify the direct labor output standards
11. Establish the Base
12. Select other performance measures and establish Bases
13. Weight all performance measures
236
BASE Performance Metric(s)
• Labor Productivity Ratio

direct labor hours
output (pieces x standard)
=
input total hours worked
• Quality Ratio
$ scrap
$ direct labor
• Other Measures....
237
Continuous Improvement
Sharing
e nt Company
ro vem Share (33%)
p
u s Im
o
nt inu Employee
C o Share (67%)
BASE
Historical
Performance
238
Weekly Earnings Calculation
and Distribution
• 115% Weekly Pay Level for Performance
equal to the Metric BASE.
• Employees Increase Overall Earnings by 67%
of the Improvement Above the Metric BASE.
• Earnings in Excess of 115% are Placed in a
Reserve Fund.
• Employees Draw from the Reserve Fund
When Performance Drops Below 115%.
239
BASE DEVELOPMENT (from Payroll/Accounting records)
1. Select the history period.

a. Six months minimum recommended.
b. Use a stable period representative of "normal" conditions.
2. Determine the total OUTPUT hours produced for the history period.
a. Use only Direct Labor earned hours.
b. Subtract any D.L. earned hours received for scrap during the history
period.
c. Review the content of the historical OUTPUT hours to determine
their validity and make adjustments if necessary.
3. Determine the total INPUT (hours worked) for the history period.
a. All attendance hours for all employees who produced the OUTPUT
hours.
b. Subtract any hours that were a part of the history but will not be
counted as INPUT for the Plan.
240
BASE DEVELOPMENT (from Payroll/Accounting records)
4. Determine any additional hours required.

a. Total the appropriate hours for "new culture" activities.
b. Total the hours required for "new" work which was not part of the
previous history.
5. Adjust the historical INPUT for the additional hours required and
calculate the BASE.
Historical OUTPUT
= BASE
Historical INPUT + Additional Hours
241
Worksheet One “Example”
Pla n Pa ra me te rs:
1. Add (30) minutes / employee / week for the new culture activity meetings .
2. Cus tomer/ Dealer Fly-ins next winter, employees will be as s igned as

tour guides (4hours /Emp./week)
3. Include 286 hours for New Work ( Material Handling & Ins pection) in the P lan.
Histo ry fo r De pt. 400 fo r (18) Dire ct La bo r Emplo ye e s.
Week Attendance P art No. of Output D.L. Output

No. Hours No. Units s hipped S tandards Hours
(1-4) 2,960 AA-40000 530 500 2,650
(5-8) 2,850 BB-20000 427 600 2,562
(9-12) 2,990 BB-20000 449 600 2,694
(13-16) 2,900 CC-30000 327 800 2,616
(17-20) 3,100 AA-40000 558 500 2,790
(21-26) 3,200 CC-30000 361 800 2,888
TOTALS 18,000 16,200
Adjus tment
Employee # Des cription of Employee Activity Input Output
1 (80) hours Union Bus ines s -80
2 Week 2 - (40) hours s pecial project -40
3 Week 3 - Vis ited machine tool company for one day -8
4 Week 5 - (40) hours vacation
5 Week 6 - (8) hour s afety clas s off-s ite -8
6 Week 6 - (8) hours machine downtime
7 Week 6 - (8) hours United Way activities -8
8 Week 5 - (4) hours job change
9 (42) previous ly claimed AA-40000 units were returned -200
for not being to print. (2) were reworked, but (40) had
to be s crapped.
All Employees were on s pecial projects during the s emes ter -736
TOTALS -880 -200
242
Worksheet Two “Example” P lan Name Date: From/To
1. S elect the his tory - (from P ayroll/accounting records ). De pt. 400 31-De c-90
(S ix months minimum recommended) 29-Jun-91
No. of Direct labor Employee 18 No. of Indirect Labor Emp. 0
2. Determine the total OUTP UT Hours produced for the his tory period. OUTP UT Hours
A. Add all Direct Labor Earned Hours (500 S eries Account Nos .) 16,200
B. S ubtract any Direct Labor Earned Hours that were paid for s crap
produced during the his tory period. (200)
C. Randomly audit the content of the his torical output hours to
determine their validity and make adjus tments if neces s ary. 0
To ta l OUTPUT Ho urs 16,000
3. Determine the Total INP UT (Hours Worked) for the his tory period. INP UT Hours
A. Add all attendance hours for all employees who produced the output. 18,000
B. S ubract any hours that were part of of the his tory, but will not be
counted as input in the plan. (880)
C. Add input hours for any Indirect Labor employees that will be
included in the plan. 0
D. Add the Total hours for the "New Culture" activities .
( 0.5 Hrs . x 18 No. of Emp. x 26 Weeks ) 234
E. Include the hours for any "New Work" which was not part of the
his tory. 286
To ta l INPUT Ho urs 17,640
4. Calculate the BAS E.
To ta l OUTPUT Ho urs = BAS E

To ta l INPUT Ho urs
16,000 = 0.907
17,640
243
Calculating Weekly
Performance
1. Calculate Weekly Results (WR)

Output
= WR
Input
Example:
350
= .875 (round to 3 places)
400
244
Calculating Weekly
Performance
2. Calculate Weekly Plan Performance (WPP)

⎡⎛ ⎞ ⎤
⎢⎜ WR - BASE ⎟ x .67 +1⎥ x 115% = WPP
⎢⎣⎜⎝ BASE ⎟
⎠ ⎥⎦
Example:
⎡⎛ ⎞ ⎤
⎢⎜ .875 - .813⎟ x .67 +1⎥ x 115% = 120.88%
⎢⎣⎜⎝ .813 ⎟
⎠ ⎥⎦
(round to 2 places)
245
Calculating Weekly
Performance
3. Calculate Reserve Fund Hours (RFH)

⎛ WPP - 115%⎞
⎜ ⎟ x Input Hours = RFH
⎜ 100 ⎟
⎝ ⎠
Example:
⎛ ⎞
⎜ 120.88 - 115.0 ⎟ x 400 = 23.52 Hours
⎜ 100 ⎟
⎝ ⎠ (round to 2 places)
246
CIPP Reserve Fund
Weekly Plan
Performance
Reserve
Fund
115% WPL
(Base)
100%
26 Weeks
247
CIPP HOW IT WORKS - WEEKLY
Weekly pay calculation
Std. Hr. Plan
Hours * Weekly Hours
x x Conversion =
Worked Performance Paid
Factor
40 x 115% x 1.000 = 46.00

40 x 115% x 1.261 = 58.01
* Weekly Plan Performance including any build-up
248
Weekly Pay Calculations
Weekly Weekly
Weekly Plan Plan Reserve Employee
Plan Earned Paid Fund Hours Company Paid
Perf Hours Hours Weekly Accum. Build-up Hours
115% 46.00 46.00 0.00 0.00 0.00 46.00
119% 47.60 46.00 1.60 1.60 0.00 46.00
113% 45.20 46.00 -0.40 1.20 -0.40 46.00
107% 42.80 45.20 -1.20 0.00 -1.20 45.20
Weekly Hours Worked = 40 Employee

SHPCF
40 x 115% x 1.000 = 46.00
249
Weekly Pay Calculations
Weekly Weekly
Weekly Plan Plan Reserve Employee
Plan Earned Paid Fund Hours Company Paid
Perf Hours Hours Weekly Accum. Build-up Hours
115% 46.00 46.00 0.00 0.00 0.00 58.01
119% 47.60 46.00 1.60 1.60 0.00 58.01
113% 45.20 46.00 -0.40 1.20 -0.40 58.01
107% 42.80 45.20 -1.20 0.00 -1.20 57.00
Weekly Hours Worked = 40 Employee

SHPCF
40 x 115% x 1.261 = 58.01
250
End of Semester Distribution
and BASE Adjustment
• Reserve Fund is Distributed to the Plan Employees.
• BASE is Adjusted when the Average Semester Plan

Performance Exceeds 115%
• Employees Receive a Base Adjustment Allowance
of Additional Paid Hours in Return for the
Company’s Right to Adjust the BASE.
251
RESERVE FUND DISTRIBUTION
RESERVE FUND DISTRIBUTION
Individual Total Reserve SHP

Employee ÷ Plan x Fund x Conversion
Hours Hours Hours Factor
Example
244 ÷ 2436 x 173.56 x 1.000 = 17.38 Hours
244 ÷ 2436 x 173.56 x 1.261 = 21.92 Hours
252
Semester End Analysis
Average Semester
Weekly Plan Plan Performance
Performance
115% WPL
(Base)
100%
26 Weeks
253
AVERAGE SEMESTER PLAN PERFORMANCE
Total OUTPUT
- BASE
Total INPUT x .67 + 1 x 115%
BASE
Total OUTPUT ÷ Total INPUT - BASE ÷ BASE x .67 + 1 x 115%
Example
9100 ÷ 10400 - .813 ÷ .813 x .67 + 1 x 115% = 120.88%
254
TRUE AVERAGE SEMESTER PERFORMANCE WITH MIDTERM BASE CHANGE
Average Semester Plan Performance (Original Base) Average Semester Plan Performance (Multi Base)
Output % Weekly % Weekly
Input Weekly Input Weekly
Week Base Earned Performance Week Performance Formula
Hours Results Hours Hrs
Hours
1 0.813 255.00 274.00 0.931 126.15% 1 274.00 126.15% IP * WP 345.6527
2 0.813 285.00 334.00 0.853 118.82% 2 334.00 118.82% IP * WP 396.8545
3 0.813 289.00 333.00 0.868 120.20% 3 333.00 120.20% IP * WP 400.2659
4 0.813 246.00 270.00 0.911 124.30% 4 270.00 124.30% IP * WP 335.6052
5 0.813 380.00 441.00 0.862 119.61% 5 441.00 119.61% IP * WP 527.4948
6 0.813 377.00 435.00 0.867 120.09% 6 435.00 120.09% IP * WP 522.3746
7 0.813 320.00 452.00 0.708 105.05% 7 452.00 105.05% IP * WP 474.8058
8 0.813 360.00 433.00 0.831 116.74% 8 433.00 116.74% IP * WP 505.5043
9 0.813 380.00 365.00 1.041 136.62% 9 365.00 136.62% IP * WP 498.6528
10 0.813 360.60 334.00 1.080 140.27% 10 334.00 140.27% IP * WP 468.5024
11 0.813 329.00 364.00 0.904 123.61% 11 364.00 123.61% IP * WP 449.9394
12 0.820 341.00 397.00 0.859 118.66% 12 397.00 118.66% IP * WP 471.0767
13 0.820 270.00 330.00 0.818 114.83% 13 330.00 114.83% IP * WP 378.9362
14 0.820 275.00 332.00 0.828 115.78% 14 332.00 115.78% IP * WP 384.3934
15 0.820 204.00 245.00 0.833 116.19% 15 245.00 116.19% IP * WP 284.6629
16 0.820 312.00 370.00 0.843 117.18% 16 370.00 117.18% IP * WP 433.5809
17 0.820 291.00 342.00 0.851 117.90% 17 342.00 117.90% IP * WP 403.2225
18 18
19 19
20 0.820 315.00 422.00 0.746 108.09% 20 422.00 108.09% IP * WP 456.1338
21 0.820 285.00 328.00 0.869 119.60% 21 328.00 119.60% IP * WP 392.2717
22 0.820 328.00 374.00 0.877 120.36% 22 374.00 120.36% IP * WP 450.1330
23 0.820 281.00 308.00 0.912 123.68% 23 308.00 123.68% IP * WP 380.9232
24 0.820 235.00 265.00 0.887 121.28% 24 265.00 121.28% IP * WP 321.3815
25 0.820 333.00 389.00 0.856 118.39% 25 389.00 118.39% IP * WP 460.5237
26 0.820 345.00 407.00 0.848 117.60% 26 407.00 117.60% IP * WP 478.6303
Totals 7396.60 8544.00 0.866 Totals 8544.00 10221.5223
Output Hrs 7396.60 = 0.866

Input Hrs 8544.00 Semester Results
.866 - ..813 x .67 +1 x 115% = 120.02% Weekly Hrs 10221.5223 x 100 = 119.63%
0.813 Average Semester Plan Performance Input Hrs 8544.00 Average Semester Plan Performance
255
CIPP BASE ADJUSTMENT
The Base will be adjusted by 33% of the

team improvement in the output/input
ratio when compared to the Base (not
to exceed 2%).
256
(118% Average Semester Plan Performance)
Total OUTPUT
- BASE
Total INPUT x 100 x .33
BASE
Total OUTPUT ÷ Total INPUT - BASE ÷ BASE x 100 x .33
Example
8784 ÷ 10400 - .813 ÷ .813 x 100 x .33 = 1.28% *

* Up to a maximum of 2%
(1997 Rule Plan – No adjustment)
257
Base Adjustment
Weekly Plan
118% Performance
Average Semester
Plan Performance
115% WPL
(new Base.823)
115% WPL
(.813 Base)
next
26 Weeks semester
258
(119.67% Average Semester Plan Performance)
Total OUTPUT
- BASE
BASE
Example
8968 ÷ 10400 - .813 ÷ .813 x 100 x .33 = 2.00% *

(1997 Rule Plan – No adjustment)
259
Base Adjustment
Weekly Plan
119.67% Performance
Average Semester
Plan Performance
115% WPL
(new Base.829)
115% WPL
(.813 Base)
next
26 Weeks semester
260
(125% Average Semester Plan Performance)
Total OUTPUT
- BASE
BASE
Example
9553 ÷ 10400 - .813 ÷ .813 x 100 x .33 = 4.28% *

(1997 Rule Plan – 6.49% adjustment)
261
Base Adjustment (2003 Rules)
125%
Average Semester
Plan Performance
115% WPL
Weekly Plan
(new Base.829)
Performance
115% WPL
(.813 Base)
next
26 Weeks semester
262
BASE ADJUSTMENT ALLOWANCE
< 2% Base Adjustment
BAA = % Base Adjustment X 1.5 X Input Hours
2% Base Adjustment
BAA = 2% Base Adjustment X 2.0 X Input Hours
263
BASE ADJUSTMENT ALLOWANCE
Average
Semester Individual
Plan Base x Multiplier x Employee = BAA
Performance Adjustment % Plan Hours
115% 0% x 1.5 x 1000 = 0.00 Hours

118% 1.28% x 1.5 x 1000 = 19.20 Hours
119.67% 2.00% x 2.0 x 1000 = 40.00 Hours
125% 2.00% x 2.0 x 1000 = 40.00 Hours
264
265
SHORTENED SEMESTERS
“In the event the number of plan workweeks within a
semester is less than (24) workweeks, the base and
performance metric(s) will be adjusted on the basis of .33
of the total team improvement in the output/input ratio
when compared to the base (not to exceed 2%) times the
number of plan workweeks divided by twenty four (24).”
EXAMPLE
A CIPP plan had sixteen plan workweeks for the semester and .33 of the Total
Team Improvement in output/input as compared to the base was 1.10%.
Base Adjustment = 1.10% x 16/24 = .73%

New Base = 1.0073 x Old Base
266
CIPP 100
Report
267
CIPP 110
Report
268
CIPP 115
Report
269
CIPP 120
Report
270
CIPP 150
Report
271
CIPP 160
Report
272
CIPP 170
Report
273
1 October 2003
ARTICLE XVIII
(UAW 2003-2009 Agreement)
Section 6. CONTINUOUS IMPROVEMENT PAY SYSTEM
Continuous Improvement Pay Plans (CIPP) reward teams of employees for

helping achieve continuous improvement of the operations to which they
are assigned. Continuous improvement requires a cooperative effort from
all employees, and provides employees the opportunity to both increase
their earnings by sharing in these improvements and maintain a consistent
weekly pay level.
274
A. Outline of the Continuous Improvement Pay System
(1) A Continuous Improvement Pay Plan provides incentive compensation to a

team of employees for achieving continuous improvement on a weekly basis
above the Base performance metric(s).
(2) Weekly Plan Performance is a team’s calculated weekly earnings level

expressed as a percent. It is determined by increasing (or decreasing) the 115%
weekly pay level for the team for the week by 67% of the percentage change in
weekly results achieved, compared to each Base performance metric(s). When
multiple metrics (e.g., quality, productivity, schedule performance, etc.) are used,
each metric will be assigned a percentage weighting factor with the sum of the
weighting factors equaling 100%. A Weekly Plan Performance is calculated for
each metric as described above and then multiplied by its respective metric
weighting factor. These individual metric calculations are then added together to
arrive at the total Weekly Plan Performance.
275
(3) Pay for an employee’s attendance hours while participating in a CIPP
application (input hours) within a given week is computed by multiplying
the employee’s CIPP base rate(s) times the Weekly Pay Level for the week.
Weekly Pay Level for each CIPP application will be determined as follows:
a) The maximum Weekly Pay Level for a CIPP application is 115%. Weekly
hours earned in excess of 115% will be allocated to the CIPP application’s
Reserve Fund.
b) When Weekly Plan Performance for a CIPP application is between 100%
and 115%, the hours required to build-up earnings to the maximum
Weekly Pay Level for the plan’s participants will be provided equally
from the CIPP application’s Reserve Fund Hours and the Company, if
hours are available in the Reserve Fund.
c) When a CIPP application’s Weekly Plan Performance provides an
earnings level that is less than 100% of an employee’s input hours times
their CIPP base rate(s), the Company will provide build-up hours to a
weekly pay level of 100% of their CIPP base rate(s) for a plan
participant’s input hours in the plan. Weekly earnings will be built-up
further to the maximum Weekly Pay Level according to Section 6.A.3.(b).
276
(4) An Average Semester Plan Performance for each CIPP application, weighted
by the plan participants’ weekly input hours, will be calculated for each Base
metric at the end of 26 consecutive calendar weeks (Plan Semester) from the start
of the plan and each 26 consecutive calendar week period, thereafter.
a) When the Average Semester Plan Performance for a metric is less than
115%, its Base performance metric will not be changed for the next semester.
b) When the Average Semester Plan Performance for a metric exceeds the
Maximum Weekly Pay Level of 115%, its Base performance metric will be
adjusted by .33 of the percent of total team improvement in the output divided
by input ratio as compared to the base for the next semester; however, in no
case will the base adjustment exceed 2% in any plan semester.
277
(4) b) Continued: For example:
Output Hours in a semester: 9300

Input Hours in a semester: 10000
Current Base: .900
Output/Input = 9300/10000 = .93
Base Adjustment = Output/Input – Base X .33
Base
Base Adjustment = .93 – .900 X .33
.900
Base Adjustment = .011
New Base = [Base Adjustment + 1 ] X Old Base
New Base = 1.011 X .90
New Base = .910
In return for this adjustment, the Company will distribute a Base Adjustment
Allowance of additional paid hours to the plan participants. Overtime
premiums required by statute will be paid with the Base Adjustment
Allowance.
278
c) If a Base Adjustment Allowance is earned for a metric as provided in 4(b) above

during a current semester and there was a Base Adjustment, as provided in 4(b)
above, for that metric each employee’s Base Adjustment Allowance will be
determined by multiplying the employee’s input hours for the semester times the
percentage the Base was adjusted for the next semester (factored by the Base metric’s
weighted hours) times a multiplier based upon the following criteria: For those
teams with a Base Adjustment less than 2%, the employee input hours for the
semester will be multiplied by the Base Adjustment (less than 2%) times 1.5. For
those teams with a Base Adjustment equal to 2%, the employee input hours for the
semester will be multiplied by the Base Adjustment (2%) times 2. (For example, if an
employee had 1000 input hours for the semester and there was a 2% adjustment of
the Base, and the Base is weighted by 100% because there is only one metric, the
Base Adjustment Allowance would be calculated as follows: 1000 (the input hours)
x 2% (the same percentage the Base was adjusted) x 2 (the additional premium for
continuous improvement) = 40 hours.
279
d) Remaining Reserve Funds Hours (accumulated weekly Reserve Fund Hours

less hours used for build-up) will be distributed to the plan's participants at the end
of the Plan Semester. The Reserve Fund Hours and the Base Adjustment Allowance,
if earned, will be distributed to the plan’s participants based on a ratio of each
participant’s plan input hours to the total plan input hours during the semester.
e) In the event the number of plan workweeks within a semester is less than (24)
workweeks, the Base and performance metric(s) will be adjusted on the basis of .33
of the total team improvement in the output/input ratio when compared to the Base
(not to exceed 2%) times the number of plan workweeks divided by twenty-four
(24).
Example:
A CIPP plan has sixteen plan workweeks for the semester and .33 of the total team
improvement in output/input as compared to the Base was 1.10%
Base Adjustment = 1.10% X 16/24 = .73%
280
(5) Each Base performance metric will be established using historical data, when
available, or through comparative data and/or appropriate engineering techniques,
such that weekly results equal to the Base performance metric will yield a Weekly
Plan Performance of 115%.
(6) Employees’ time for the following situations should be excluded when establishing
the Base performance metric and not be included as plan input hours when they
occur.
a. Paid Lunch Hours
b. Authorized Union Business
c. Classroom Training
d. Catastrophic downtime
e. Special projects/assignments outside of plan operation
f. Medical surveillance physicals and tests directed by the Company (not
individual First-Aid Treatment)
g. Scheduled Company meetings (not to include daily or routine
Production/Safety meetings)
h. Activities related to Emergency Response Teams and Evacuation
(7) All attendance hours not included as plan input hours will be paid for at the
employee’s appropriate Wage Rate unless otherwise provided for in the agreement.
281
B. Maintenance of CIPP Applications
(1) In addition to Base adjustments described in Section 6.A.4(b), adjustments to Base
performance metric(s) and/or output standards will be made for the following
conditions:
a) The Company invests greater than $50,000, or $5000 per plan participant,
whichever is less, in a CIPP application area.
i. When an investment results in improved performance the adjustments

will account for only 80% of the calculated improvement to allow
employees time to adjust to the change.
ii. When an investment results in deteriorating performance the adjustments

will account for the full effect of the deterioration.
b) Both parties agree that a change is necessary to assure the on-going

competitiveness of the operation.
282
(1) Continued
c) Work is moved into the plan from another area or out of the plan to another
area.
d) Direct Labor is added to or deleted from the operations.
e) Introduction of new or revised products.
When new or revised products are introduced into a plan, output standards for
the new and revised products will be established based on the design and
methods of manufacture for the new or revised product. At this time, the
Company may update the output standards of all products produced by the
plan participants. In this case, the ratio of output hours produced to the plan
participants’ input hours (Base performance metric) will be adjusted to
produce the same Weekly Plan Performance for this metric that was achieved
prior to the change in the output standards.
283
(2) Output Standards in CIPP applications will be established using procedures
such as time study, standard data, plant data, video analysis, laboratory
analysis, predetermined data systems, part family analysis or any combination
thereof.
a. No output standard shall be changed during the life of this Agreement
except under the provisions of Section B.1 of this Article. The Company
will notify the Union of such changes, as requested.
b. Information on all output standards now established or set during the life
of this Agreement shall be kept in an accessible place for reference and
investigation by appropriate Union officials.
c. Any data or procedural analysis identified in Section B.2 of this Article
will be made available for inspection by appropriate Union officials.
d. In the event that an individual or group of output standards is questioned,
the Company will make every attempt to resolve the question. If
Company investigations do not resolve the questions, the Union Time
Study Representative(s) or the appropriate Union Representative will be
asked to review the operation(s) in question. If these subsequent
investigations do not resolve the question, the issue will be handled
according to the National Joint Committee on Competitiveness Letter.
284
(3) In the event that a CIPP application is not producing the desired results,
the parties agree to meet, determine the extent of the problem, and
develop solutions within the framework of the Continuous
Improvement Pay System.
(4) To support the effective administration of CIPP plans each CIPP plan
will establish a CIPP maintenance team. Duties of these teams include
assisting in maintaining the CIPP application as defined above.
285
Section 7. SPECIAL PAY PROVISIONS
“In the following special conditions, an employee assigned to a

CIPP plan shall be paid his Wage Rate x 115% for attendance
hours that are not included as plan input hours.”
A. Classroom Training (other than employee break-in)
B. Assignment to Non-CIPP work while his regular CIPP plan is in operation
C. Medical Surveillance Physicals and Tests directed by the Company

(not individual First-Aid Treatment) -
D. Scheduled Company Meetings (not to include daily or routine Production/Safety meetings)
E. Activities related to Emergency Response Teams and Evacuation
286
CIPP SUMMARY
• Consistent Weekly Pay Level established for all

Plans.
• Multiple performance measures may be included.
• Teamwork will be the key to performance.
• Employee involvement is the process for change.
• All employees’ skill, knowledge, and talent
acquired through years of experience must be
applied and recognized every day.
287
13 December 1999
(Revised)
CIPP Myths
1. No more Continuous Improvement is possible (productivity) – we are “up
against the wall”.
Reality
Tremendous opportunity for Continuous Improvement still exists. The
“improvements” that have been realized thus far reflect (on average) less
than one half of the productivity gap that existed in 1994 and minimal new
improvements beyond those present during the original Base time line.
The C.I. Process will provide the environment to encourage and allow the
real Continuous Improvement to take place.
2. Direct (incentive) employees have to work more/produce more if indirect

(hourly) employees are included/added.
Reality
Bases reflect the total Input required to produce the Output. If indirect
labor employees are included the Base is adjusted to reflect the impact.
The same number of pieces will yield the same level of earnings for the
team.
3. Direct employees have to make more pieces to cover the input hours of
indirect employees in the Reserve Fund.
Reality
Reserve Fund Hours are added (or subtracted) equally (assuming the
same number of Input Hours) for all employees in a plan. No distinction is
made between direct labor and indirect labor employees in making the
calculations.
4. Every employee within a plan should work/perform at the Base productivity

ratio. Example: if the Base is .800 every employee should produce 6.40
Output Hours (8 Input Hours x .800 Base = 6.40 Output Hours).
Reality
A Base represents the average productivity of all the employees who
comprise the plan. Very possibly, no two employees within a plan have
exactly the same the historical productivity. Individual employees may be
process or capability constrained and therefore not able to produce at the
plan’s Base productivity ratio. Other employees, without constraints,
should be able to produce well above the Base productivity level. New
employees to a plan will be expected to produce at least to the productivity
ratio of the employees they are replacing.
V:\Ie\WHITEHEAD\Newbmts\51CIPP Myths & Reality Revised.Doc 288

5. Any employee who produces at less than the Base productivity ratio is not
carrying his weight and is therefore pulling down the performance of the team.
Reality
An employee producing at his historical productivity ratio has no impact on
plan performance. An employee producing above his historical ratio is
actually contributing to improved performance of the team. A team with a
Base of .800 needs to produce an average of 6.40 Output Hours for every
8.00 Input Hours. An employee producing 11.00 Output Hours with an
historical ratio of 12.00 Output Hours is the “low performer”. Employees
producing below their historical productivity ratio (at any level) are the
employees who are pulling down the performance of the team.
6. Support (hourly) employees do not have to be more productive after a Base

adjustment.
Reality
Unless specific events have been identified that yielded all of the
improvements, the raising of the Base to reflect the buyout should apply
equally across the board with all employees expected to perform to the
higher level.
7. The accuracy of Output Standards is not important – set any standard you
want.
Reality
The overall accuracy of Output Standards is as important in CIPP as it was
in the Standard Hour Plan. Loose standards will result in the “same”
productivity gap that evolved in the Standard Hour Plan. We should not
assume that Base Adjustments will buyout the looseness. We cannot be
paying Base Adjustment Allowances to teams to buyout looseness in
Output Standards that should not have been there in the first place.
8. CIPP is a big “give away” program.
Reality
Employees need to understand that Reserve Fund pay outs are the result
of the negotiated sharing percentage that is applied to all changes (+/-) in
weekly results achieved compared to each Base performance metric. The
“huge” checks that caught everyone’s attention were primarily the result of
Reserve Fund Hour distributions, which are in reality, deferred earnings.
9. As a result of achieving Base Adjustment(s) teams will eventually be unable to

make Base (Weekly Pay Level).
Reality
Base Adjustments (all other things being equal) should never drive plan
performance (on average) below Base (Weekly Pay Level).
10. The only way CIPP teams can make more money/achieve buyouts is to work
harder.
Reality
Working harder will improve plan performance. There are also many other
ways to improve plan performance without working harder:
- reduce setups
- improve material handling/flow
- reduce rework/reclaim
- C. I. Process
- etc.
11. We don’t have to do anything to support that team. They are on CIPP, let
them solve their own problems.
Reality
Everyone (wage and salary) who had a responsibility to support the
employees in the SHP has the same responsibility to support the teams in
CIPP. Changes in performance are shared between the employees and
the Company. The Company must continue to support and implement
improvements as part of its contribution to achieving continuous
improvement.
12. The documentation of the original Base should include data that identifies all
indirect labor that was included in the plan. Off plan hours can then be
determined by referring to this documentation.
Reality
This level of documentation is frequently not available. Input hours were
determined by identifying all of the attendance hours worked by all of the
employees who created the Output and subtracting from that hours for
Paid Lunch, Authorized Union Business, Training of 8 Hours or more,
Catastrophic Downtime and Special Projects/Assignments (Article XVIII,
Section 6.A.(6)). All indirect labor, unless covered by the provisions of
Article XVIII, Section 6.A.(6) is considered to be in the plan.
13. The Company gets to use the earnings held in the Reserve Fund for free.
Reality
All Reserve Fund Hours are paid out at the CIPP rates in effect at the end
of the semester. This includes any COLA increases accumulated
throughout the semester without consideration for the CIPP rates in effect
at the time the hours were placed in the Reserve Fund.

14. Even though we “peg” our daily earnings at a level below the maximum level
achieved during the Base development period (usually 6-12 months) we
should still always earn at least at Base (Weekly Pay Level) level productivity.
Reality
Bases were established as the average productivity achieved by the team
during the historical period. Failure to perform at the “maximum” level
when possible will likely inhibit the team’s ability to achieve average or
Base level productivity. If the “maximum” performances are avoided, the
overall average will be lowered and the ability to achieve Base level
performance will be restricted.
15. When a team’s performance for a week falls below the Weekly Pay Level
something out of the average must have happened and the team should be
“accommodated”.
Reality
The Weekly Pay Level (115%) represents the average productivity. Since
the Base would include many weeks below this average it would be
reasonable to expect that there would also be many weeks below this
average while the plan is operational. Teams that “peg” earnings on a
daily basis are more likely to experience weekly performance <115% than
teams that do not “peg”.

292
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294
295
296
297
298
299
300
301
302
303
DEERE & COMPANY
INCENTIVE SYSTEM POLICY STATEMENT
It has been over 15 years since a Policy Statement covering the

administration of the Standard Hour Incentive Plan has been
issued. There have been many changes in personnel in the
intervening years. In fact, very few people are left who
participated in the conversion from the Piecework System to the
Standard Hour Plan in 1955. Because the Incentive System
contributes materially to Deere & Company's ability to be a low-
cost producer, it is appropriate to restate the basic policies
at this time.
Underlying the policies is the philosophy that a sound incentive

system is fair and equitable for both the employees and Deere &
Company. It provides additional compensation for employees who
perform above normal, and at the same time reduces manufacturing
costs. It treats employees in a consistent manner, because it
pays equitably for all work performed, and contributes to the
optimum utilization of employees, equipment, and material.
As a prelude to stating the policies, it is necessary to define

incentive work. For work to be placed on incentive, it must be
measurable and repetitive, and the time to perform it must be
predictable and consistent. This means that manufacturing
methods must be efficient and well defined. Finally, it is
necessary that the employee's claim for payment is an accurate
account of the work he performed, and the claim can be verified.
The Standard Hour Incentive Plan will be administered according

to the following basic principles:
1. All Incentive Standards will be established in a consistent

and accurate manner, based on the best possible mechanical
and manual method of performing the operation. This is the
primary means to insure the continuation of an equitable
Incentive System.
2. Any change made in design, equipment, material

specifications, or manufacturing methods affecting an
operation will be reflected either in a revision or
withdrawal of the Incentive Standard. The goal is to
insure that Incentive Standards accurately reflect work
performed.
304
Incentive System Policy Statement - 2 -
3. A Job Detail Sheet, containing all pertinent data on which

the Incentive Standard was established, will be kept at the
machine or work location while the operation is being
performed. Employees will be required to follow the
prescribed method.
4. A determined effort will be made to obtain the highest

practical level of incentive coverage. High incentive
coverage results in increased production, lower costs,
higher take-home pay for incentive employees, and a
lesser supervisory work load.
5.The highest practical level of standard and mechanical data

coverage will be maintained. Standard data is the
predetermined time for the manual elements of an operation,
as opposed to stopwatch timestudy time. Mechanical data is
the predetermined mechanical method of performing an
operation. The two major advantages of data are the
establishment of consistent Incentive Standards, and the
ability to preset Incentive Standards prior to the time
operations are performed by the employees.
6. Employee complaints relative to the Incentive System will

be promptly and thoroughly investigated, and corrective
action taken if necessary. It should not be necessary for
an employee to use the formal grievance procedure to voice
this type of complaint. It is understood that many
complaints alleging inadequate Incentive Standards actually
involve other reasons such as lack of service. Emphasis
on a thorough investigation and resolution of complaints
and grievances, regardless of the reason, will help to
maintain a high level of employee confidence in the
Incentive System.
7. Proper administration of the Incentive System involves the

establishment of effective controls to insure adherence to
correct Policies and Procedures. Examples of controls are
audits in such areas as Method, Daily Time Report, End-Of-
Shift Rule, Time Studies, and Data Application. Sound
business practice involves auditing of all facets of the
enterprise, including the Incentive System.
305
Incentive System Policy Statement - 3 -
8. The Incentive System is based on the principle that

incentive employees will be compensated for performance
above normal in direct proportion to their increased
productivity. Every effort should be made to insure that
the earnings paid to incentive employees are commensurate
with their performance. The loss of productivity caused
by paying employees more than their rated performance while
working, as well as allowing idle time in excess of that
provided for in the Incentive Standard, is costly and will
lead to unnecessary investments.
The high level of employee effort resulting from a well-managed

Incentive System is one of the essentials for the continued
success of our Company. In addition to keeping all factory
management personnel familiar with the proper administration of
the Incentive System and the impact of their function on the
Incentive System, each General Manager is responsible for
insuring that proper Incentive System Policies and Procedures are
being followed in his factory. The Industrial Engineering
Department will provide specific administrative details.
There will be considerable pressure on these policies from many

sides. However, strict adherence is necessary not only to insure
that the benefits of the Incentive System are achieved, but also
to guard against its deterioration and potential loss.
306
LIFE SPAN OF THE AVERAGE WAGE INCENTIVE PLAN
The life span of the average wage incentive plan is about 15 years. As you can see on the following
page, good control of a wage incentive plan is generally maintained for the first five years. During
the next five years the standards start to become loose and, without significant intervention, the
system becomes out of control. There is pressure from the Union to ease up on the accuracy of the
standards, and inequitable earnings opportunities exist. A part of the last five years of the average
incentive plan is usually spent in trying, unsuccessfully, to get the plan back under control. Finally,
the old plan is abandoned and a new plan is formulated and installed.
At John Deere, the Standard Hour Plan was in use for forty years. Most of the credit for the success
of the Standard Hour Plan goes to the Industrial Engineers who determined the methods, applied the
data, time studied the operations, and followed up with maintenance and controls to insure the
accuracy and integrity of the system.
In the end, the Standard Hour Plan suffered the same sad demise as the Piece Work Plan before it.
During the 1980’s, the engineering resources required to maintain the Standard Hour Plan were
diverted to other responsibilities. In a few short years, earnings were out of control and alternate
pay plans were piloted in an effort to find a replacement pay system. In 1994, CIPP became the
primary wage payment system and, by 1997, the Standard Hour Plan was gone.
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Deere & Company

BATTERY -Two or more machines or machine tools operated by one or more

CHECK CHART -A method of determining the appropriate Job Classification and

COMPLAINT -An employee's statement concerning a problem that (s)he feels

DAILY WORK RECORD -See Time Slip.

DB2 -The name of a Relational Database system, specifically that database

FIXTURE -A device or piece of equipment that holds a particular part so that

GAGE (GAUGE)-A device for determining the relative capacity, dimensions,

HEAT ALLOWANCE -An additional fatigue allowance of 5% applied to certain

IMS (INFORMATION MANAGEMENT SYSTEM) -The vehicle (software system) for

INCENTIVE OPPORTUNITY -The percent that the Total Standard Minutes (D + R +

INCENTIVE STANDARD -The measured time established for an operation. It is

INHERENT DELAY -The amount of time, in Standard Minutes, that an operator

INHERENT DELAY ALLOWANCE -Inherent Delay multiplied by 1.10. This guarantees

JIG - A piece of equipment to help locate a part so that operations or

JOB CLASSIFICATION -A term used to identify a group of duties described in a

JOB DELAY -Unmeasurable, miscellaneous work or interruptions not directly

MACHINE (OTHER THAN MACHINE TOOLS) -A non-portable, power-driven device for

MACHINE TIME -Elapsed running time for a machine or process controlled

MACHINE OR PROCESS LIMITED ELEMENTS -Elements where the machine or process

MACHINE TOOL -A non-portable, power-driven machine, partly or wholly

MECHANICAL DETAIL SHEET (MECHANICAL DATA SHEET. M.D.S.) -

METHOD –The prescribed way of performing work as determined through time

METHOD AUDIT -A control procedure used to assure operator compliance to the

METHOD-TIME-MEASUREMENT (M.T.M.) -A predetermined time system by which it is

MULTIPLIER –NO LONGER USED.

NORMAL MINUTES -Average Observed Minutes multiplied by a Performance Rating.

NORMAL PERFORMANCE -The performance that is expected from the average

OCCUPATIONAL CODE -An alphanumeric designation that identifies a Job

OCCURRENCE -A ratio designating the number of times that an element of work

OUTPUT STANDARD -The measured time established for an operation. It is

PERFORMANCE RATING -A percentage rating that is used to adjust Observed

PLANT DATA -Any predetermined time data currently in existence, or developed

PRESET STANDARDS -Incentive standards that are established prior to the

PROCESSING EQUIPMENT -Powered equipment that subjects material or parts to a

PRODUCTION STUDY -A detailed time-of-day study taken to gather complete

RANDOM SERVICE BATTERY -A battery of machines or machine tools in which the

SPECIFIC SEQUENCE BATTERY -A battery of machines or machine tools in which

STANDARD MINUTES -Normal Minutes multiplied by an appropriate Personal and

TOOL- The cutting or shaping instrument that is used in a machine or machine

UTILIZATION FACTOR –NO LONGER USED.

WORK ASSIGNMENT FACTOR –NO LONGER USED.

TYPES OF WAGE PAYMENT PLANS

First Worker Second Worker

Measured Daywork Plan

There are two main types of incentive plans:

What are some of the benefits of a direct pay incentive plan?

Standard Hours Per 100 Pieces = Minutes per piece X 100

Importance of Establishing Good Methods in an Incentive Plan

The John Deere Standard Hour Incentive Plan (1955-1997)

Incentive Standards are rounded as follows:

For standard hours between .050 and .249, round to 3 places.

For standard hours between .25 and 4.99, round to 2 places.

For standard hours between 5.0 and 99.99, round to 1 place.

FACTOR POINT % OF TOTAL

Job Classes in Labor Grades 8, 9, 10 became Pay Level 7

PAY AFTER AFTER AFTER AFTER AFTER

REGULAR WORK ASSIGNMENT

C5 SHEET AND PLATE FABRICATOR $17.795 $19.985

JOB CLASSIFICATION RED CIRCLE RATES

REGULAR WORK ASSIGNMENT

M 46 REACTION INJECTION MOLD OPERATOR $18.400 $20.745

JOB CLASSIFICATION RED CIRCLE RATES