Here are the example of incentive scheme which adopt OEE concept in TPM

1. YuYudhaSatdhaSatyayaYuYudhaSatdhaSatyaya
O v e r a l l E m p l o y e e E f f e c t i v e n e s sO v e r a l l E m p l o y e e E f f e c t i v e n e s s
start

2. Incentive
System
Job promotion
and salary
increment
Job promotion
and salary
increment
Types of RewardAssessment
Impacts
Long Term
As a mechanism to build in a performance
Objectives of Periodic (Monthly)
Incentive System :
Incentive
Framework
SampleIncentive
Evaluation
Incentive
Scheme
OEE OEE
calculation
OEE
To incentive
YSP 2
incrementincrement
Annual bonusAnnual bonus
Periodic
incentive
Periodic
incentive
Mid Term
Short Term
As a mechanism to build in a performance
based variable portion in individual monthly
take home pay
Allow a relatively significant different
of monthly income between good and
bad performers
Provide a more frequent periodic
assessment on individual performance

3. Incentive
Framework
Incentive scheme form variable portion of Take home pay more dynamic based on
his/her performance
Individual
monthly incentive
Individual
monthly incentive
Incentive
system
SampleIncentive
Evaluation
Incentive
Scheme
OEE OEE
calculation
OEE
To incentive
YSP
Department
performance
Department
performance
Individual
incentive rate
Individual
incentive rate
x
•A fixed percentage
over the basic salary
pre-determined by
policy
•Normally do not
change however it can
be revised quarterly,
semi-annually or yearly
•Depends on the
combined effect of
individual function
performance and
company performances
•Vary from month to month
and from individual to
individual
Basic Salary
and allowance
Monthly
Incentive
Commission
/overtime
Fixed Portion
Variable Portion
3

4. Incentive
Evaluation
Incentive
system
Incentive
Framework
SampleIncentive
Scheme
OEE OEE
calculation
OEE
To incentive
YSP
•The calculation method
must be straight forward
•The parameters used
must be quantifiable or
made quantifiable
through conversion of
qualitative data into
quantitative result
•As monthly processing
is required and the
scope of coverage is
wide, infrastructure and
resources must be
allocated to support the
performance evaluation
process
•The data must be readily
available and accessible
•Ideally, the data can be
extracted directly from
existing database to avoid
double entering
AccessibleAccessible ResourceResourceMeasurableMeasurable
4

5. Incentive
Scheme
Incentive
system
Incentive
Framework
Incentive
Evaluation
Background
• Necessity to leverage motivation
lever of employee to contribute
Objectives
• To recognize any employees who
consistently demonstrate outstanding
performance toward achievement of
SampleOEE OEE
calculation
OEE
To incentive
YSP 5
lever of employee to contribute
to corporate strategic objectives
by achieving a set of KPIs
Target for Cost and Quality
performance toward achievement of
productivity & error rate
• To differentiate clearly between outstanding,
mediocre and low performer

6. Incentive
system
Incentive
Framework
Incentive
Evaluation
OEEIncentive
Scheme
OEE is an integrated metrics that measure the level of
availability, performance rate, and quality resulting from an
employee
OEE
SampleOEE
calculation
OEE
To incentive
YSP 6
Availability Performance Rate Quality Rate
6 Big Losses
• absents
• lateness
• Idling
• Reduced Speed/ Capacity Losses
• Scrap/ Rework
• over SLA

7. Incentive
system
Incentive
Framework
Incentive
Evaluation
OEE
Calculation
Incentive
Scheme
OEE
• Availability = standard working hours – (hours lateness + hours absents)
Standard working hours
SampleOEE
To incentive
YSP 7
• Performance rate = Transaction done in that month
Targeted transaction in that month
• Quality = Transaction within SLA
Overall transaction
OEE = Availability x Performance Rate x Quality

8. Incentive
system
Incentive
Framework
Incentive
Evaluation
OEE to
incentive
Incentive
Scheme
OEE OEE
calculation
Individual Monthly
Incentive
Sample
YSP 8
XDepartmental
KPI
Individual
Incentive Rate
= Monthly dept KPI
Bonus UnitX
= Overall Equipment
Effectiveness
= Basic Salary/12

9. Incentive
system
Incentive
Framework
Incentive
Evaluation
SampleIncentive
Scheme
OEE OEE
calculation
OEE
To incentive
YSP 9
Assume that Department KPI achievement
for Loan Processing (Irfan) score is 4.05 or
equal to 81%
Assume that on that month Irfan never late nor
absents
OEE = Availability x Performance x Quality
OEE = 100% x 131% x 92.1%
OEE = 121%
If Irfan has gross salary Rp. 4 mio,
the incentive received by Ifan is
= Dept KPI x OEE x BU
= 81% x 121% x (Rp. 4,000,000/12)
= Rp. 325,757