Motivation is a driving force that prompts a person to take purposeful actions. If we are talking about work, of course, a person is motivated not only by financial reward, but it is important, and for many people it is decisive.

What is the remuneration received by specialists on the farm? Do they understand what the reward level depends on? Do they have an impact on the result? Is the set of key performance indicators (KPIs) correctly formed for this or that position?

These and a number of other questions arise in the process of forming financial motivation schemes for specialists on the farm, let’s try to figure it out together with Denis Timchenko, consultant of the AVM/GAF Center for managing dairy farms and Kateryna Dudka, consultant of the AVM Center for managing the efficiency of dairy farms.

In order for the employee to effectively work for the result, it is necessary to implement effective financial motivation schemes at the enterprise, which are tied to this result.

As part of the development and implementation of the “Farm Reference Model”, the AVM together with the IFC created a methodology for managing the effectiveness of the MTF personnel based on key farm indicators and personnel evaluation procedures.

That is, the system of financial motivation will be effective if it encourages employees to increase the performance of the MTF, which ultimately has a positive effect on the financial result, and gives the employee the opportunity not only to receive a higher reward, but also to have the opportunity for professional and career growth.

Based on this approach, we implement various variations of financial motivation schemes, but their basis is:

MTF goals and KPIs,
the organizational structure,
requirements for each position (competencies) and expected results of the employee’s work in the position,
division of the employee’s remuneration into a permanent and variable part, the appointment for each position of the CRI, on which the size of the variable part of the remuneration depends,
monthly monitoring and KPI, determination of actual remuneration,
quality feedback.

For example, for one of the companies, we* used the following approach: for all key positions on the farm, not only the requirements and expected work results were defined, but also four possible levels of competence development for this position:

“Trainee”,
“Beginner”,
“Professional”,
“Expert”.

It’s no secret that it’s almost impossible to find a person for a position whose competencies 100% meet the requirements. Accordingly, with this approach, we* achieved a clear understanding of the requirements for competencies in the position, the current level of competency development and, automatically, areas for both professional and career growth.

For each level of development in the position, we have determined the principles of increasing the remuneration (permanent part).

For the position, KRIs characterizing efficiency (no more than 5), their target values, the algorithm and the procedure for their evaluation were determined. Each KRI was assigned a weight, based on which the so-called “bonus pie” is distributed to the employee. In this way, the amount of the variable part of the salary is determined every month.

Then there is the matter of technology and mathematics. In order to monitor the performance of KPIs and calculate the reward, we* have developed a convenient form of the Employee Performance Card, in which both the employee and his manager can see how the reward is calculated. Also, this card is the basis for personnel evaluation and for providing feedback to the employee.

An employee, with the improvement of his professional skills and on the basis of periodic evaluation, will be able to reach a higher level, for example “Expert”, which will not only affect the level of his permanent part of the remuneration, but also gives him access to receiving additional monetary remuneration for the achievement of Corporate (team) goals .

Please note that specialists with a high level of competence almost in most cases grow within companies. They have a high level of self-motivation, are able to organize not only their own work, but also entire departments and directions. They have high strategic planning skills and are able to bear responsibility for the decisions made. Therefore, systematically working on the development and improvement of staff motivation is an important task of company management.

If you want to develop your staff and “grow” Experts inside your farm, and not wait until they appear on the market, contact the experts of Global Agro Finance, 066 611 7948, global.agrofinance@gmail.com.

For general information and tools of the Dairy Farm Reference Model, follow the link.

Source of information:

Consultation Center of the Association of Milk Producers