Ci2-Uncmter Famine, Saturday, November 29,1986
Brockett’s Ag Advice
By John E. Brockett
Farm Management Agent
„* 7 Lewistown Extension Office
There are other incentive
orograms that are less involved
than ownership of assets. They
may be easier to administer on the
part of the employer and may be
acceptable to the employees.
Usually they will not require any
capital outlay on the part of the
employee and will not tie the
employee down to a particular
situation.
A Share of Income
Sharing in the income generated
by the employee’s efforts can have
some of the same benefits as
ownership of assets. Advantages
and disadvantages of this ap
proach in comparison to ownership
of assets depends partly on the
employee’s goals. This incentive
does not give the employee any
ownership interest. This removes
the equity incentive, but it also
removes ownership risk. As with
any incentive program, a written
agreement is essential. This
written agreement should
carefully spell out terms, limits,
responsibilities, possible times
when the incentive would not be
forthcoming, length of the
agreement, and review and
possible change procedures.
Examples; A Employee gets a
percentage of the net milk check or
return over feed cost. B Em
ployee gets a share of any quality
bonus paid to the employer for the
product produced by the em
ployee’s efforts. This could be
milk, cattle, potatoes, eggs, or any
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other product with a quality bonus
opportunity. C Employee gets a
percentage of the income over
fertilizer and chemical costs for
agronomic crops sold. D Em
ployee gets a percentage of the
income over the cost of the feeders
'from a feeding enterprise.
Advantages of this type of
program include (a) employee
returns are partly based on em
ployee participation, (b) employee
shares in the market gyrations, (c)
employee may watch for some cost
cutting or income increasing op
portunities. Since, this is usually
considered a bonus, the income
would be considered as part of the
employees salary for tax purposes.
Problems that may occur are
similar to some of those suggested
last week. (1) The farm may not
generate enough income to make a
meaningful payment to the em
ployee. (2) Manipulation of costs
and production may result in more
dissatisfaction than the incentive
delivers in good will. (3) The
employee may see poor employer
management as a detriment to the
employee’s welfare. (4) The
employer may resent the extra
bonus paid to the employee as
price-cost ratios change, unless the
payment is one that ties into that
possible change.
Payments for Improvements
There are several ways an
employee can be compensated for
suggestions, observations, and
work improvement. Payments
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could be made for cows seen in
standing heat. Calves bom live
and/or calves weaned could
trigger a bonus if the employee
was responsible for this phase of
the business. The same type of
payment could be used m a sow
farrowing business. The quality
bonus sharing mentioned above
could fit this type of incentive as
well. Reduced repair bills on field
machinery could be something
that could offer a bonus. Per
centage of an expected grain stand
that germinates could be a labor
improvement caused by more
careful planting techniques and
planter adjustment.
Pre-set Work Schedule
A pre-set work schedule with
days off and extra vacations
geared to certain time frames can
be an incentive. Example; If we
finish the first cutting of hay by
May 30, the employee can have two
extra days off the week of June 10
(when school is out). Or, work day
and night to get the com crop
harvested and you can have extra
days off for hunting. Or, if you can
figure a way to short cut certain
chores without reducing the
quality of the results, that extra
time is yours to do with as you
please.
Other Options
Some fanners have set up a
service time program with certain
guaranteed payments and/or
benefits after specified time spent
in the employer’s labor force.
Example; Employee to get a raise
of 3 to 5 percent after the first,
second, and third years of em
ployment. Or, employee will get
health insurance paid after one
year of service, a disability policy
paid after two years, a retirement
program started after three years.
Or, employee will get one week of
paid vacation time for the first
year to be increased by one ad
ditional week for each five years of
service.
The employer could agree to
raise at the employer’s cost a
certain number of animals (pigs,
steers, heifers) for the employee.
The employee can do anything he
desires with those animals. Or, the
employer could agree to allow the
employee to use the employer’s
equipment to operate a nearby
farm being controlled (owned or
rented) by the employee. These
could be tied in with length of
service or job performance or be
part of the original job package
offer.
As with any other incentive
program, a written agreement is
PFU Posts Policy For 1987
WILLIAMSPORT - Delegates
to the Pennsylvania Farmers
Union convention have completed
the task of hammering out the
general farm organization’s policy
position for 1987.
Highlights of the new policy
recommendations include ;
• Annual donations to the
William F. Matson Scholarship
Fund, in tribute to the outstanding
rural leadership Matson provided
as general manager of the Rural
Electric Association.
• Support of the philosophy
behind the Harkin/Gephardt
“Save the Family Farm Act,”
which would reduce government
expenditures while ensuring
farmers a fair return for their
production.
• A change in sod and swamp
buster regulations under the 1985
Food Security Act to allow for
grasses and legumes planted
continuously from January 1981 to
December 1985 as part of a normal
crop rotation to be considered
agricultural commodities.
• Reauthorization of federal
revenue sharing so local govern
ments are not left to choose bet-
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essential. It can save a lot of
potential misunderstanding in the
future. Misunderstanding is the
number one culprit that causes
employee incentive programs to go
awry. A good agreement may
allow employer and employee to
renegotiate the agreement if
circumstances change in the
future. Of course no one will be
happy with a change that results in
an economic loss to him. But, if the
procedure and circumstances are
spelled out in the agreement, there
may be less animosity and a
salvageable relationship that may
be impossible without such an
agreement.
ween eliminating services and
raising taxes which often
discriminate against landowners.
• Updating zone differentials to
accurately reflect milk trans
portation costs.
The new recommendations,
which were gathered from PFU
members during a series of local
meetings, will now be passed on to
the National Farmers Union for
consideration by its delegates at
their March 1987 convention in
Fort Worth, Tx. Together, the
organizations work on the local,
state and national levels to
preserve and promote family
owned farms.
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