Many of my dairy meetings, employee training and work-site audits involve some type of discussion about dairy workers’ wages, salaries or incentives. Often this question comes from dairy workers. In my opinion, it is because at a majority of dairy farms the rules about this topic are not clear, creating confusion and frustration for employees.
A majority of the dairies I visit do not have an employee handbook that explains the regulations about wages. Most dairy managers hire a worker and close the deal (talk about wages) in a very informal way.
In some cases, owners or managers may delegate another person to tell the new hire how much they are going to make. By doing this, managers miss an opportunity to find out more about the new employee’s situation and share with that new employee what the dairy expects. In my experience, many workers easily forget the initial wage conversation.
The first step to alleviate confusion about wages is for owners and managers to create a clear, concise wage plan and communicate it to new hires. When hiring, most dairies start the new employee with a verbal commitment about their starting wage but do not include goals for the employee or a timetable for future review.
New workers, in a short period of time, will inevitably ask their colleagues how much they make and compare wages. Dairy employees are often very competitive when it comes to income, so this will create a situation where many of them will come to ask for more money.
Dairy workers frequently ask me: “If milking cows is the same task for a new or experienced employee, why does one person make more than another?”
This question can be answered with a “wage increase plan” that is based on performance, hierarchy or experience. When you are putting your wage plan together and communicating it, consider the following:
• Make it attractive and fair. Sometimes it is difficult to find good labor, and the few that are still looking for jobs in the dairy industry are seeking decent wages that will maintain their needs and support their families back in their home countries.
Talk to your neighbors and other dairies about their worker wages and incentives so your dairy can be attractive to potential new hires. By talking to different dairies, you will also have more information about how much others pay.
Therefore, when an employee comes to you saying that the neighbor pays more and he would like to make the same or more, you will be informed and prepared to address this. If you know what really is on the other side of the fence, you will know whether or not the grass there is truly greener.
• Set increments based on performance. Most dairies verbally offer a potential wage increase for new employees based on time, but without specifications of how long and why. The rate of wage increases will depend on your goals.
My recommendation is to have an increase in wage for a new employee in the first three months after they were hired, then after six months from the date of hire and then at their one-year anniversary. This increase should be accompanied by a review and be based on performance and goals.
Performance metrics could include detecting cows with mastitis, communication with owners, relationship with co-workers, showing up on time, reporting sick cows, heat detection, etc.
The metrics you will use to evaluate performance should be clearly explained at the beginning of the hiring process. This way you will keep employees motivated, informed and on the same page as other employees, resulting in lower turnover.
• Have a one-on-one. Once you believe you have a candidate who deserves a raise, you should sit down with that candidate and personally re-explain the rules and regulations of wage increases on your dairy. This is your opportunity to reinforce and clarify the stipulations for future wage increases.
In addition, know that the increments of wage increases are different between the U.S. and Latin America. In Latin America, they are given in thousands of dollars due to currency devaluation.
Here, wage increases might be given in $0.25 or $0.50 increments. Establishing good communication at the beginning of the hiring process and reinforcing it before giving a raise is fundamental to success.
• Explain the raise. When you increase an employee’s pay, notify the employee that their pay raise is now in effect when you are handing out paychecks. Most of the workers may not even notice that they received a raise because part of it gets diluted in taxable deductions.
It is important to make sure an employee sees the new wage rate and understands it the first time it appears in a paycheck to avoid miscommunication and hard feelings. Remember that many Latin American workers come from poor and rural areas where the way employees are paid is much different.
Taxes are a totally new experience for most of these employees, so having someone from your payroll department explain them and how they are deducted from their paycheck will help bridge the cultural gap. Most workers only pay attention to their final amount in their paychecks; therefore it is crucial to explain the regulations on taxes and wages.
• Hold quarterly review meetings. During these reviews, listen for employees’ feedback about their needs or concerns. Money is not the only motivator.
This is a good opportunity to find out what else encourages employees and perhaps create a better environment to encourage them to continue working for your dairy. For example, consider rotating night and day shifts every two to three months to keep employees engaged and make the workplace a fair environment.
• Don’t get cheated. During the hiring process, explain how you expect the workers to use hourly recording cards or your dairy’s time clock system. Describe how this system tracks the number of hours worked and that it is how paychecks are calculated.
Some of the frustrations I hear from owners and managers come when employees abuse the time clock or a different person punches in for another employee. If these frustrations persist, and additional communication does not resolve the problem, you may need to use an electronic fingerprint reader system or pay by the shift.
Volatile milk prices and high feed costs are plenty for a dairy owner to worry about. High labor turnover doesn’t need to be another concern. Set up clear written rules about dairy worker incentives, and both owners and employees will have a better understanding of wage expectations and fewer headaches. PD
Jorge Delgado is an on-farm support program manager for Alltech.
