The recession that began in 2007 was the worst economic downturn our country has seen since the Great Depression. Family-owned business Humtown Products was hit on all sides. The company saw its industry’s profits as a whole drop 65 percent. The company’s customers were going out of business left and right. Humtown was forced to lay off the majority of its workforce and went from 200 employees to 20 employees in two months.
“[It was like] hitting an iceberg,” said Mark Lamoncha, CEO of Humtown, “taking on water and sinking.”
Humtown Products got its start in 1959. Mark’s father, Russell Lamoncha, started the business out of frustration while working for an employer who Russell felt had poor labor practices. The company began as a pattern shop for machine parts. Mark and his brother Criss both began working in the family business at age 12. In 1977, the company began producing sand cores and molds that foundries use when casting parts in metal. Today, Humtown Products calls a 44,000 square-foot plant in Columbiana, Ohio, home. The company still specializes in producing patterns and sand molds.
Mark believes in human capital as a catalyst for company success. He sees himself as the coach of a team and views the workplace as a sporting event. After the economic downturn, Lamoncha was hungry for ideas about how to turn the company around. Lamoncha got the idea for paying his employees based on performance through careful studies of incentive plans at other companies. He liked the idea but saw that other companies were not implementing the program consistently. “They were good, but they came once a year. We needed instant gratification,” he said.
Lamoncha got to work creating a “Real Time Pay Rate” system. The result of his work was a computer system that shows employees how much they make each hour based on how much they produce. If an employee produces 10 parts per hour, he or she makes $10 per hour. If an employee produces 20 parts per hour, he or she makes $20 per hour. It is simple but has proven to be effective. As a result of the program, teams show a consistent interest in finding ways to increase their productivity.
Lamoncha wanted to couple his pay rate system with a method for determining job-fit. He met a Profiles International business partner in 2001 who introduced him to Profiles’ assessments. He decided to implement the ProfileXT® and Profiles Performance Indicator™.
Every candidate for a job at Humtown must take the ProfileXT®. The company values the assessment for its ability to create patterns that help identify possible successful employees. Lamoncha uses the assessment scores to determine which candidates to bring in for interviews. The Profiles Performance Indicator™ has been useful in helping Lamoncha coach employees and build effective teams.
“The Profile made an enormous difference in our efficiency by helping us find the right people for the job,” Lamoncha said.
The combination of Lamoncha’s pay rate system and Profiles International’s assessments has been astounding. The employee production rate has increased more than 300 percent. Increased productivity allowed Lamoncha to lower prices more than 70 percent and still maintain the same profit margin. Lamoncha provides Humtown employees with paid health insurance and long-term disability insurance. Despite his generous benefits, insurance costs are only 1.46 percent of the cost of goods sold thanks to the increased productivity of Humtown employees. Job-seekers flock to Humtown because of the company’s reputation as a generous employer.
Lamoncha’s pay incentives and Profiles International’s assessments were just what Humtown needed to get the company back on track. The success of the company since the changes is a testament to the importance of hiring the right people and giving them the motivation to work hard.