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DAIRY INCENTIVE PAY4th Edition

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DAIRY INCENTIVE PAY4th Edition

GREGORY ENCINA BILLIKOPF, EDITOR

UNIVERSITY OF CALIFORNIAAGRICULTURE AND NATURAL RESOURCES

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The University of California prohibits discrimination against or harassment of any person employed by or seeking employment with theUniversity on the basis of race, color, national origin, religion, sex, physical or mental disability, medical condition (cancer-related orgenetic characteristics), ancestry, marital status, age, sexual orientation, citizenship, or status as a covered veteran (covered veteransare special disabled veterans, recently separated veterans, Vietnam era veterans or any other veterans who served on active dutyduring a war or in a campaign or expedition for which a campaign badge has been authorized). University policy is intended to beconsistent with the provisions of applicable State and Federal laws. Inquiries regarding the University's nondiscrimination policies maybe directed to the Affirmative Action/Staff Personnel Services Director, University of California, Agriculture and Natural Resources, 300Lakeside Drive, 6th Floor, Oakland, CA 94612-3550 (510)987-0096.

DAIRY INCENTIVE PAY (4TH Edition)

© 2005 by The Regents of the University of CaliforniaUNIVERSITY OF CALIFORNIA

Printed in the United States of America. All rights reserved.

Previous editions: 3rd, 1995; 2nd, 1991; 1st, 1986.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means,electronic, mechanical, photocopying, recording, or otherwise, without the written permission of the publisher and theauthor. Printing or reproduction of photographs in any form, except as part of complete chapters as indicated below, isstrictly forbidden. There is no implication that the people or farms depicted in the photographs were involved in theincidents recounted in the text. Printing of this book, or complete chapters of this book, is permitted for personal, non-commercial use as long as the author(s) and the University of California are credited, and this copyright notice isincluded. University faculty, educators, consultants, or others who wish to adopt Dairy Incentive Pay (4th Edition) as atext for their course or seminar, may obtain permission to make copies for course participants as long as: (1) theauthor(s) and the University of California are credited; (2) no changes are made in the text without written authorization;(3) this copyright notice is included; (4) there is no charge to students or participants for the materials (beyond the costsof duplication); and 5) you send an E-mail request along with your name, University affiliation, and course title toGregory Encina Billikopf (at [email protected]).

Internet ReleaseThis publication is posted at the Agricultural Labor Management Website:http://www.cnr.berkeley.edu/ucce50/ag-labor/

To those who work in dairy farms

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ABOUT THE AUTHORS

GREGORY ENCINA BILLIKOPF

Billikopf’s agricultural extension research and teachingefforts have focused on such topics as employee selection,compensation, performance appraisal, discipline andtermination, supervision, interpersonal relations, conflictresolution, and negotiation skills. Gregory has been a frequentnational and international speaker in the field, and has givenpresentations in Russia, Canada, México, Uganda, Colombiaand his native Chile. He manages the international agriculturalhuman resource electronic forum, AG-HRnet, is the author of Helping Others Resolve Differences (2004)and Agricultural Labor Management: Cultivating Personnel Productivity (2

ndEd., 2003).

MICHAEL OVERTON

Michael W. Overton, DVM, MPVM, is a Dairy ProductionMedicine Specialist with the University of California-DavisVeterinary Medicine Teaching and Research Center, Tulare, CA.Dr. Overton works with other faculty to provide on-the-farmtraining for veterinary students in the various aspects of dairyproduction medicine. He also teaches in a variety of continuingeducation programs for veterinarians and dairymen, where hismain interests are transition and reproductive management, aswell as economic modeling.

JIM REYNOLDS

Dr. Reynolds graduated from the UC Davis School ofVeterinary Medicine in 1982 and has practiced bovine medicinethroughout California. He began with the Chino ValleyVeterinary Group in Southern California and then spent 14 yearsin dairy and beef cattle practice near Sacramento, California.He completed a Residency program in Public Health with theCalifornia department of Health Services before becoming aclinician at the UC Davis School of Veterinary MedicineVeterinary Medicine Teaching and Research Center in Tulare. Dr. Reynolds lectures on calfmanagement and consults on International bovine projects.

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CO N T E N T S • vii

JOHN H. KIRK

John H. Kirk, DVM, MPVM, Extension Veterinarian,School of Veterinary Medicine, University of California Davis,Tulare, CA. Dr. Kirk works with the UCCE dairy livestockadvisors to support the dairy industry in California. While heprovides assistance to all dairy health and production issues, hisprimary interest is in prevention and control of mastitis and theproduction of quality milk and dairy beef.

GERALD HIGGINBOTHAM

Gerald Higginbotham is a Dairy Advisor for the Universityof California Cooperative Extension for Fresno and MaderaCounties. He received a B.S. and M.S. Degree in AnimalScience from Brigham Young University, Provo, Utah and aPh.D. in Nutritional Sciences from the University of Arizona.Dr. Higginbotham is a diplomate of the American College andAnimal Nutrition, which is sponsored by the American Registryof Professional Animal Scientists. A major focus of hisprofessional efforts has been in the area of dairy nutrition. Hehas conducted various field trials involving dairy calves as well as lactating dairy cows. Dr.Higginbotham also consults with dairy farmers on feeding programs.

STEVEN BERRY

Dr. Steven Berry is a Cooperative Extension Specialist inthe Department of Animal Science at the University ofCalifornia, Davis. He has been working in the area of hoofhealth and claw trimming for the last 12 years. His research hasconcentrated on the clinical treatment and prevention of digitaldermatitis and his extension teaching program involveseducating producers, veterinarians, nutritionists, and otherpersonnel about functional claw trimming to prevent lameness.He is currently working with a Spanish veterinarian to design a hoof trimming course for Hispanic dairyworkers.

DALE MOORE

Dr. Dale Moore is a veterinary epidemiologist who dealswith the collection, management and analysis of scientific data.She holds DVM, MPVM and PhD degrees, and is alsoexperienced in educational research. She holds a part-timeclinical appointment at the Veterinary Medicine Teaching andResearch Center in Tulare where she provides veterinaryconsulting services.

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ACKNOWLEDGMENTS

Many dairy farmers and managers,and dairy workers have contributed tothis work by participating in researchefforts—as well as in the photographs.We are particularly thankful to thosewho were willing to pioneer neworganizational interventions andconcepts, and share the difficulties andchallenges as well as successes theyhave encountered along the way.

We wish to thank those who havecontributed chapters to the previouseditions of this publication.

viii • AC K N O W L E D G M E N T S

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Incentive pay programs

are not simple to design,

but can result in great

benefits to both dairy

farmer and employee.

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PR E FA C E • ix

CONTENTS

Acknowledgments viiiPreface ix

Chapter 1 - Pay for Performance 1Chapter 2 - Internal Wage Structure 19Chapter 3 - Incentives for Increasing Pregnancy Rate 35Chapter 4 - Incentives for Calf Raising 43Chapter 5 - Milk Quality Incentives 51Chapter 6 - Feeding Management Incentives 63Chapter 7 - Hoof Care Incentives 69Chapter 8 - Herd Health Incentives 75

x • PR E FA C E

PREFACE

Jobs that call for creativity, analysis,and personal growth may provide thebest motivator of all: intrinsic rewards.Such satisfaction originates from withinthe employee. An intrinsically motivateddairy worker does not obtain hismotivation from external stimulationprovided by the dairy farmer. Anoveremphasis on external rewards maybe responsible for elimination ofinternally originated ones. There arepersonal and organizational objectivesthat simply cannot be realized throughpay.

On the down side, intrinsicmotivators, as wonderful as they mayappear, are not equally found among allworkers, nor do they always motivatethe type of performance you may desire.Pay can be a powerful management tooland a compelling motivator. Employeesoften consider pay a measure ofindividual achievement and socialstatus. The importance of pay, then,ought neither to be over or underrated.

We hope that in the pages of thefourth edition of Dairy Incentive Payyou will information on how to establishor troubleshoot an incentive payprogram at your dairy operation.Establishing incentives is not easy andmuch can go wrong. Certainly there areenough war stories to go around. Whenproperly established, however,

incentives can make a big difference inthe improved management of your dairy.In effect, they help employees learn tosee from a manager or owner’sperspective.

Chapter 1 lays out key managementprinciples regarding incentives. This is acritical chapter in that it outlines whysome incentive pay programs succeedwhile others fail, and it should be readin conjunction with the other chapterson specific types of incentives (chapters3 through 8).

Besides incentive pay or pay forperformance programs, dairy farmerssometimes have questions about how toset the wages for milkers in contrast tothose of calf feeders, cow feeders, orherd managers. Or, how much to pay inrelation to what a neighbor may pay.Chapter 2, on internal wage structures,is included to guide you in making thesetypes of decisions.

Chapters 3 through 8 deal withspecific goals you may want to achieve,such as increasing pregnancy rate andcalf health, incentives for improvingmilk quality, feeding management goals,and improving hoof or health care at thedairy.

Even dairy farmers who have nointerest in tying employee performanceto pay can greatly benefit from thispublication. There is much here onmanaging dairy employees in terms ofspecific dairy science measures.

Incentive pay is generally given forspecific performance results rather thansimply for time worked at the dairy.While incentives are not the answer toall personnel challenges, they can domuch to increase worker performance.

In this chapter we discuss casual andstructured incentives. Although eachrewards specific employee behaviors,they differ substantially. In structuredincentives, workers understand ahead oftime the precise relationship betweenperformance and the incentive reward.

In a casual approach, dairy workersnever know when a reward will begiven.

CASUAL INCENTIVES

The simplicity inherent in the casualincentive approach attracts many dairyfarmers who would not consider astructured incentive. Casual rewardsinclude a pat on the back, a sincerethank-you, a $50 bill, a dinner for two ata local restaurant, or a pair of tickets to

1Pay for Performance1

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Gregory Encina BillikopfLabor Management Farm Advisor

University of California(209) 525-6800

[email protected]

the rodeo (workers may have excellentsuggestions along these lines). You maywant to entitle dairy employees tochoose from a menu of several rewards.One farm employer provides a cataloguefrom which employees can order itemsunder a certain dollar value.

Accompanied by a specificcommendation, “This is for reducing ourtotal harvest-time machinery breakdowns,” the reward is more effectivethan “thanks for all you do.” To be ofuse, these casual incentives must begiven at unexpected intervals.

A bonus given routinely soonbecomes part of the expectedcompensation package. Casualincentives communicate to employeesthat you have noticed their efforts.People thrive on positive feedback.

Drawbacks. Three possibledrawbacks to the casual incentiveapproach may include (1) envy amongdairy employees, (2) feelings amongworkers that the supervisor may beacting out of favoritism, and (3) the useof rewards to maintain social distance.

While there are times when praisingworkers in public is appropriate, at othertimes it may do more harm than good.An example of the latter is whencoworkers hear a direct or impliedcomparison between the rewardedemployee and themselves.

Even though workers are likely totell others about their rewards anyway,the force of the comparison is reducedwhen you give casual incentivesprivately. Perceptions among workersthat rewards are given in a capricious orarbitrary manner, however, may stillremain.

One way of overcoming both envyand favoritism challenges may be byhaving workers nominate others forthese casual awards. The nominatingprocedure should be kept simple.Recognition coming from fellowemployees is unlikely to causeresentment and is one of the mostsincere forms of praise. This type ofrecognition could even be given inpublic. Unfortunately, chances are thatworkers at the dairy will be rewardedfor their popularity.

Sometimes employees are reachingfor a positive stroke: they hope that theirsuperior performance has been noticed.While casual incentives can be veryappreciated rewards, they can also beused to keep a social distance from thepersons to whom they are given. Thismay happen, for instance, if anemployee receives a monetary rewardwhen he was reaching for psychologicalproximity instead. Only you can discernyour employee’s needs in a givensituation. After all, both workers andsituations vary.

Suggestion Plans. Suggestion plansmay also be handled under a casualincentive system. You may want torecognize personnel for suggestionsresulting in savings or increasedproductivity. In one instance, a farmersaved thousands of dollars after anemployee suggested a more frequentadjustment to the scales.3

Employee suggestions that requiresmall capital or labor outlays toimplement, such as what was needed tokeep the scale adjusted, should generallyresult in larger rewards. Expensive ordifficult to implement suggestions maynot yield any pay reward but a simpleacknowledgment to the worker.

You must decide whether to rewardall workers or only the authors of anaccepted suggestion. There may be abalance that rewards teamwork andindividual creativity.

Regardless of approach, a functionalsuggestion system needs managementfollow-through. Receipt of workerrecommendations, as well as possibleaction to be taken, needs to beacknowledged promptly to those whomake the proposals.

2 • DA I RY IN C E N T I V E PAY (4 T H ED I T I O N)

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Casual rewards include a pat

on the back, a sincere thank-

you, a $50 bill, a dinner for

two at a local restaurant, or a

pair of tickets to the rodeo.

Not every suggestion will beaccepted, yet employees should be keptinformed on the status of suggestions. Astructured incentive plan, discussednext, helps both workers andmanagement improve communications.

STRUCTURED INCENTIVES

Structured incentives can help directemployee efforts. Other benefits includecost certainty and cost reductions for the

dairy farmer. Benefits to employeesinclude higher pay and satisfaction.

Dairymen’s feelings about structuredincentives generally fall into fourgroups:

1. Incentives work well—they haveeither helped motivate or maintain highworker performance. A Stanislaus dairyfarmer spends $5,000 to $7,000 eachyear to implement his incentive programand gets $55,000 to $57,000 back.

2. Challenges posed by incentives —Top concerns about incentives from a

PAY F O R PE R F O R M A N C E • 3

Public praising of an

employee may cause

jealousy between workers.

farm survey4 included: (a) poor qualitywork (or neglect of important goals notdirectly rewarded by the incentive); (b)no change in worker performance; (c)difficulty in setting standards; (d)change in work methods or technology;and (e) excessive record-keeping.

3. Incentives do not apply to presentneeds.

4. Incentives are not used because oflack of information on how to establishthem.

Workers are also divided in theirfeelings about incentive pay. One dairyemployee said incentives are whatfarmers pay when they do not want topay workers a fair wage. Anothermilker, in contrast, was very enthusiasticabout the incentive program the dairy

farmer had instituted: it made him feelpart of a team.

Workers in one study were evenlydivided between those who favoredhourly pay and those who liked piece-rate pay. The most common reason forpreferring piece-rate pay was increasedearning potential. Workers could acquiregreater earnings in fewer hours of work,even though it took more effort to do so.Worker preference for hourly work fellinto three general categories. Workers(1) felt that piece rate was unfair(mostly concerned about what theyviewed as game playing in how piecerates were set), (2) preferred the pace ofhourly paid work, or (3) associated otherbenefits with hourly pay.5 Whenproperly designed to protect bothdairyman and farm personnel, structuredincentives work well.

Examples of structured incentives

A structured incentive (1) must becapable of fluctuating (variable pay) asperformance changes, and (2) is basedon a specific accomplishment-rewardconnection understood by bothmanagement and workers.

Examples of typical incentives:• paid for number of cows milked

or hoofs trimmed• allowing workers to go home

early, with full pay, when theyfinish milking

• end-of-season bonus foremployees who stay to the end

• quality or production incentive• bonus for reducing production

costs or death loss• profit sharing.

Examples of payments or benefitswhich are not incentives:

• most mandated benefits such asunemployment insurance,workers’ compensation

• nonmandated benefits that do notfluctuate, such as housing

• wage increases, vacation, orrewards that, once earned, areseldom lost

• pay tied to time worked (exceptfor bonuses for attendance,difficult shifts, and the like).


Despite the benefits of piece-

rate pay, workers often (1)

feel it is unfair how piece-

rates are determined; (2)

prefer the pace of hourly paid

work; or (3) associate other

benefits with hourly pay.

STEPS IN ESTABLISHINGSTRUCTURED INCENTIVES

This section provides sevenguidelines helpful in deciding whetherto establish, and how to design andtroubleshoot, structured incentiveprograms at your dairy.

(1) Analyze the challenge anddetermine if incentives areappropriate.

(2) Link pay with performance. (3) Anticipate loopholes. (4) Establish standards and determine

pay. (5) Protect workers from negative

consequences. (6) Improve communications. (7) Periodically review the program.

Step No. 1. Analyze the challenge anddetermine if incentives areappropriate

The purpose of an incentive programneeds to be clear and specific. Poor calfhealth or milk quality, slow work, andsick leave abuse are examples ofspecific, measurable problems.

Just because a goal can be measuredin clear and specific terms, however,does not mean incentives are called for.

Incentives may not be appropriate tomotivate employees who lack theresources or skills to perform. Noamount of incentive will help anunskilled AI practitioner to improve hisbreeding record. Because establishingincentives is not simple, dairymensometimes opt for other solutions. Adairy farmer tried several ways toimprove an employee’s milk qualityperformance. A veterinarian was calledin to demonstrate proper milkingtechniques, but the improvement wasshort lived. The worker knew how to dothe job but was not doing it. Theproducer decided not to implement anincentive pay system. Instead, in a lastditch effort, he warned the milker:improve or be fired. The milkerimproved so much that the dairymangave him a raise a few months later.

One three-way classification ofemployee performance is (1) poor, (2)standard, and (3) superior. Standardperformance is what can be expectedfrom a dairy worker just because he hasa job. Rewarding workers withincentives for bringing their poor workup to standard would be like payingtwice for the same job: once for havingthe employee show up, the other forworking. Instead, an incentive pay


SIDEBAR 1-1

Safety Incentives

Safety incentives reward workerswith good safety records (oftenmeasured in terms of reportableaccidents) or for safety suggestionsmanagement considers worthimplementing. Rewards for goodsuggestions can be positive in the areaof farm safety as well as in reducingwaste, improving productivity, or otherareas. However, it seems peculiar tohave to pay workers not to get hurt.After all, it is the worker who has themost to lose by an injury or illness.Instead, farmers may improve theirsafety record through (1) a policyencouraging a safe working climate, (2)worker training, (3) hazard evaluationand correction measures, (4) safety

committees, (5) discipline for violationof safety rules, and (6) carefulemployee selection, including the useof post-offer, pre-employmentphysicals.

In some instances safety incentivesthat deal with reported accidents maybe construed to be illegal, as workersseem to be punished for filing workers’compensation claims.

If you still want to recognize dairyemployees for a long accident-freespell at the ranch, you may want totailor a casual incentive. The rewardshould be given to all and be a simple,low-key, non-monetary prize such as acompany hat or picnic. Along with therecognition, emphasis should be onsafety and on reporting job-relatedinjuries and illnesses, even thoseappearing insignificant.

program can reward workers whocontinue to produce superior work, orencourage those who already producegood work to excel.

Incentives designed to deal withfarm safety seem inappropriate to me.Such incentives may do more to deterthe filing of workers’ compensationclaims than to reduce accidents. Workersmay hide incidents of injury or illness inorder to earn a reward—or avoid thewrath of peers (see Sidebar 1-1).

A farmer who pays well, providespositive working conditions, and has awaiting list of employees who want towork for him, does not normally need toturn to incentives to improve punctualityor attendance, except for seasonal work.

Extra pay may also be provided torecognize particularly difficultconditions, such as staying through extrawet or cold months at the dairy.

Tradition is not always the bestindicator of what programs will workunder incentive pay.

Incentives are often needed tocounteract the effect that crew dynamicshas on performance.6 Dairy workersmay work down to the speed of theirslowest co-worker.

Step No. 2. Link pay withperformance

Some dairy farmers offer end-of-yearprofit sharing plans “because we didwell this year.” Lamentably, there aretoo many factors that affect dairy farmprofits besides worker productivity.Weather and market are two externalconcerns, while farm accountingprocedures can be an internal one.Personnel must trust that the dairyenterprise will report profits in a fair andhonest way.

Dairy employees do not always see alink between their efforts and dairyprofits. Another danger is a streak ofever increasing profits followed byseveral years of deficits simply causedby the price of milk. While manyworkers will be very understanding atreceiving a reduced profit-sharingpaycheck for a year, few will tolerate alonger drought without experiencingconsiderable dissatisfaction. Onemanager shared with me his excitementabout a substantial profit-sharing bonus.As a result, he worked much harder thenext year and felt defrauded when thatcheck ended up substantially reducedwhen compared to the first year. Hesoon left that enterprise.

In another instance, a worker at anequine and cattle facility explained, “Iput the same effort each month, but insome I get the added bonus of getting aprofit-sharing check.” The ranchemployee was explaining that he did notdo anything special to try and get ahigher bonus, but that some months hewould get one while in others he wouldnot. Since he was not putting any effortinto obtaining the bonus, the employeefelt that it was a windfall in thosemonths when he would get something.

Instead of being a motivator, profitsharing can discourage employees. Notonly are profits dependent on the effortsof the whole organization, but profitscan be fickle in dairy farming.


Dairymen may sometimes

provide an incentive for

employees to finish out the

season, such as a per hour

or per-unit incentive to be

given employees who stay

to the end of the season.

Risk sharing is related to profitsharing. Here employees are givenhigher profit-sharing bonuses in goodyears in exchange for getting a lowerbase pay than normal in unprofitableyears. That is, in contrast with thenormal system of profit sharing, in badyears the employees not only did notearn a bonus, but also lost part of theirbase salary; in good years, they earnedbonuses much greater to what theywould have earned normally. It is notsurprising that companies favor risksharing ventures more than employeesdo: “[The employee] gambles alongwith the company... Clearly, at-riskplans shift some of the risk of doingbusiness from the company to theemployee.”7

Any time employees are rewarded orpunished for that which they cannotcontrol, dairy employers are asking for acynical or disillusioned workforce. Allthis having been said, some dairymenmay wish to have a very small profit-sharing bonus as a teaching tool for topand middle management. Much betterthan profit sharing, however, is breakingdown all elements under the control ofemployees or management that affectdairy profits and rewarding personnelfor achieving results.

A Fortune 500 executive, afterexplaining three of his most importantgoals—making an importantcontribution to society, developingexcellent products, and making theorganization a good place to work—made quite an impact as a guest speakerby pretending to momentarily forget hisfourth goal: “The fourth goal . . . theremust be a fourth goal. I mentioned it ina speech at [a nearby university]. Ohyes, the fourth goal is to make a profit.”8

Sooner or later, then, when the profitpotential is there, the dairy enterprisewill make money as employees improvetheir ability to make changes in areasthey control.

Seasonal fluctuations and otherfactors may need to be considered whensetting incentives. When attempting tocontrol mastitis in the herd, for instance,a dairy manager has to considervariables beyond the control of her

workers. Because mastitis is caused byseveral factors, it is desirable to considerthem all. A milker would soon bediscouraged if, no matter how diligentlyhe used any specific preventiontechnique, the mastitis level wassensitive to improper machinerymaintenance or seasonal fluctuationscaused by environmental factors.

One way to categorize incentive payis by whether individuals, small groups,or all dairy personnel are covered.Individual incentive plans offer theclearest link between a worker’s effortand the reward.

Probably the best-known individualor small group incentive pay plan inagriculture is piece rate. Piece rate isnot suited to much of the work thattakes place at a dairy. There are othertypes of individual incentives, however,that can be given at the dairy.

Small group and farmwideincentives work better when it isdifficult to distinguish individualcontributions, or where cooperation andteam work are critical. Group incentivesdo not automatically foster team work,however. More productive workers mayresent less motivated or less talentedemployees.

A supervisor reported that when hiscrews were paid a group incentive, thefastest workers would slow down themost. This is not surprising, given thatthe fastest employees are four to eighttimes more effective than the slowest.Some of them may ask themselves,“Why rush when we will all get paid thesame?” When paid on a strict hourlywage sometimes workers “sort of kickthe tires, take a lot of trips to the


Instead of being a motivator,

profit sharing can discourage

employees. Not only are

profits dependent on the

efforts of the whole

organization, but profits can

be fickle. This is especially

true in farming where there

may be a rash of good years

followed by bad ones.

bathroom” and slow down in otherways. “The faster workers put a lot ofpressure on the slower ones,” explainedone farm manager, “and we have evenhad those who felt so harassed theywanted to quit. The system has createdtension and conflict among theworkers.”

As the tie between individual workand results is diminished, so is themotivating effect of the incentive on theindividual. If you use small groupincentives, it helps to have workerschoose and control their own teams, butthis is seldom possible at most dairies.When workers who have partial controlover results are not included in theincentive pay program, conflicts mayarise.

Step No. 3. Anticipate loopholes Being so specific about a single

result may cause workers to achieve it atthe expense of all others. Examplesinclude the herd manager who reducedthe average number of breedings perconception, but did so by culling severalof the best milk cows.

Allowing workers to “go home”(with a full day’s pay) when they finishmilking has the same motivating effectas most output-based incentive paysystems—and similar problems. Theincentive is to get done as quickly aspossible and go home.

Dairy workers rewarded fordetecting cows in heat may find anunusual number of cows in heat.Instead, workers could be paid fordetecting cows in heat that are laterconfirmed pregnant.

The number one loophole forquantity production incentives is oftenquality. If the dairy farmer does not takeany preventive measures, his milkerswho are paid by the cow (or allowed togo home as soon as they are finished,yet paid for the full shift) is moremotivated to finish quickly than to do agood quality job following all of themilking procedures.

Sidebar 1-2 speaks about keeping upgood quality when paying people forquantity-based performance.

Step No. 4. Establish standards anddetermine pay

This process involves clarifyingexpected performance, consideringagricultural variations, noting when it isfair to eliminate incentives,contemplating potential savings andgains, determining base wage versusincentive pay, anticipating effects oftechnological or biological change, andconverting standards into pay.

Clarifying expected performance.The first task is to establish and definestandards.

• When feeding, how close shouldthe feed be to the cows? Is theemployee supposed to come backand push the feed closer?

• Will mortality calculations part ofa greater calf health programinclude all calves—even thoseborn dead or killed by lightning?Or, will a veterinarian conduct acalf autopsy and decide if it wasa preventable loss?

• What are all the steps required inthe milking procedure?

Agricultural variation. Eachagricultural commodity has its ownidiosyncrasies that can be used todetermine work effort. In one orchardoperation,11 crop density is used todetermine how to pay for thinning fruitload. Weather conditions at a dairy may


Dairy workers rewarded for

detecting cows in heat (as

part of a breeding program)

may find an unusual number

of cows in heat. Instead,

workers could be paid for

detecting cows in heat who

are later confirmed pregnant.

affect ease of work and specific bonusesbased on actual temperatures orprecipitation may be given.

Elimination of incentives. Thespecific circumstances for eliminatingincentives should be clearly related to

the incentive and articulated ahead oftime. Employees on a milk qualityincentive could lose incentive earnings,for instance, if (1) the milk got hotbecause no one turned on the cooler, (2)cows with antibiotics were milked into


SIDEBAR 1-2

Approaches Toward ImprovedQuality while Paying Piece Rate orfor Quantity of Work

Hourly base pay with piece-ratepay. The greater the proportion of paygoing toward hourly pay, the lessimportance given to quantity of work.These farmers may not be getting theirmoney’s worth, however. Hourly paidworkers are substantially slower thanpiece-rate ones without obtainingsizable improvements in quality.9

Speed limit placed on workers. It istrue employees who work faster thantheir skill level will do so by neglectingquality. Unfortunately, limiting workerspeed, to be effective, would have totake place on a worker-by-workerbasis. A maximum speed standardestablished for all employees wouldlikely result in expectations overly highfor some and too easy for others.

Discipline. Minimum standards areset—or workers risk being disciplined.This tactic is perhaps the mostcommonly used and works relativelywell.

Quality incentive. This method maytake more time to set up but has thegreatest potential. Set up randomquality-control inspections or spotchecks. Substandard scores can resultin additional training or discipline.Superior scores earn a bonus. Here isan example outside the dairy industry:a cherry farmer may pay $3 per boxpicked, with a potential multiplier of1.084 for good quality or 1.25 forsuperior quality (about 25 or 75 centsper box, respectively). Three workerspicking 24 boxes each in a day wouldearn $72 (no bonus), $78.05 for goodwork, and $90 for superior work. Thequality bonus has to be high enough as

to provide greater rewards to thecareful employee over the one whopicks more boxes.

Earn the right to work in a piece-rate paid crew. An effectivemanagement tool is to have employeeswork on an hourly paid basis until theycan prove their complete understandingof quality considerations. Only whenworkers have shown a completemastery of quality are they moved to apiece-rate paid situation. For instance, amilker would have to prove sheunderstands milk quality proceduresperfectly before being permitted to gohome after finishing a shift. As acondition of working in the piece-ratesituation, milkers would be expected tokeep up high quality performance. Thisapproach can be effectively combinedwith discipline and the qualityincentive above.

When paying for quantity of

work performed, quality

incentives take more time to

set up but have the greatest

potential. Begin by identifying

a range of acceptable

individual performance. Then

set up random quality-control

inspections or spot checks.

Sub-standard scores can

result in additional training or

discipline, while good marks

earn employees an extra

bonus per unit.

the bulk tank, or (3) line filter changeswere neglected.

It makes little sense to eliminate abonus for reducing calf loss foremployees who commit unrelatedinfractions (e.g., displacing a tool,getting into a fight). Any prolongedelimination of incentives riskssurrendering any motivational effect theincentive program may have had. If thebreach is so serious, perhaps the dairyfarmer should consider workerdiscipline or termination.

Potential savings and gains. A dairyfarmer trying to increase calf health mayask: how much does it cost me everytime a calf dies?12 Unfortunately, manyemployers think more in terms of howmuch they expect workers to earn in anhour—rather than what the incentiveprogram does in reducing costs (e.g.,costs per acre). In a well-designedincentive pay program, a dairymanshould feel that the more his employeesearn, the better off he is.

There may be a point whereimprovements beyond a certain levelrequire a substantially greater effort, yetyield less significant results. Efforts maybe better directed elsewhere. There is asubstantial milk production increasewhen somatic cell counts reduce fromlog scores of 5 to 4 or 3, but a smallerproportional increase in milk quantitiesfor further improvements. For theworker to achieve the firstimprovements, also, is much easier.

Two conflicting principles must bebalanced here: (1) greater worker effortshould result in greater pay; and (2)greater employee earnings should resultin increased profits for the ranch. Youmay need to create a reward structurewith a ceiling beyond which noadditional pay increments are obtained.

Base wage versus incentive pay.Some incentives constitute 100 percentof a worker’s wages. Other incentivesare combined with base wage earnings(Chapter 2). As a rule of thumb, thepercentage of potential wagesrepresented by incentives shouldconsider the (1) amount of control aworker has over rewarded results, (2)importance of the rewarded results tothe overall position, and (3) possible

loopholes not covered by the rewardedresults.

For instance, work quantityincentives can constitute most of anemployee’s wages if she has completecontrol over the outcome, speed isimportant, and quality is taken intoconsideration so it is not neglected.

In contrast, a herd manager does nothave full control over calf health, nordoes calf health represent his only job.This same manager may also beconcerned with herd feed intake,improving milk quality and pregnancyrate, and supervision of milkers. A paysystem for such a manager shouldreflect the wide spectrum of what isexpected of her.

Anticipate effects of technological orbiological change. If new machinery,technology, biological stock or methodsare being contemplated, dairymen woulddo well to postpone introduction of newincentive programs until after suchchanges have been made and theireffectiveness evaluated. Otherwise, thedairy farmer will not be sure whether itwas the technological change or theincentive pay that brought about results.Workers may either be blamed or paidfor something over which they had littlecontrol. For example, thousands ofdollars can be spent on new equipmentthat would automatically improveworkers’ performance. If the incentivewas established before the equipmentwas purchased, it would mean payingtwice for the equipment: the direct costof the equipment plus the cost of thehigher remuneration to the workers. Anychanges in technology or measurementhave the potential for a change instandard and can lead to distrust if nothandled properly.

Converting standards into pay. If nohistorical performance data exists formaking sound pay decisions, you maywant to do the work yourself—or askothers you trust to do it. In no caseshould the people who will eventuallydo the work, or someone who has avested interest in the results (e.g., a herdmanager with relatives in the crew),perform the trial.

When dairymen ask employees towork first on an hourly basis until the


standard is set, workers may perform ata reduced level (while sometimesmaking it look as if they are strugglingor working very hard). Employeesrealize high performance during the trialwill result in lower wages once thebonus is fixed.

Once standards are set, a dairyfarmer may lower the requirements butnever make them harder. A farmerunderestimated worker performance.When the workers earned much morethan the farmer expected, he lowered thepiece rate. The farmer lost credibility,worker morale fell sharply, and manyleft for other jobs.

Step No. 5. Protect workers fromnegative consequences

Employees have a number ofreservations related to the use ofincentives. These include such things asfear of job loss, unfair pay, and ratereductions. In the section on loopholeswe considered how to protect the dairyfarmer when incentives are used. To alsoprotect employees we need to:

• Provide a fair wage. • Tell employees how much they

are earning. • Maintain fair standards. • Hire fewer workers for longer

periods. • Protect senior workers. • Provide timely performance

feedback. • Be sensitive to physical demands. • Encourage workers to take rest

breaks. • Provide a safe environment. • Avoid chance incentives.

Provide a fair wage. Workers aremore likely to feel incentives are anexcuse for low wages when they do notreceive a fair base wage to begin with.(That is, in those cases where there is abase wage plus an incentive, whichwould be the case in most dairy jobs incontrast to say, a fruit picker.)Employees may see incentives as eitherrequiring unachievable goals in order tomake a competitive wage, or onlypartially under their control. In contrast,when added to a generous base wage,incentives may be quite small and still

be well received. Workers may look atthem more as casual incentives; theyprovide positive feedback and a feelingof belonging to a team. If incentives arenot proportional to the amount of workinvolved, however, they are unlikely toprovide the intended long termmotivation.

Tell employees how much they areearning. Pickers at one California farmdid not find out what the piece rate wasuntil the end of each day when they gotpaid—which was strictly on a per buck-et basis. A worker thinning peaches didnot know how much he was earning pertree. In a third example, workers inVoronezh, Russia, who were puttingboxes together for packing fruit, did notknow how much they would get paidper box until the end of the month. Ineach of these cases, the farmer, the farmlabor contractor, and the enterprise man-ager respectively explained, “Our work-ers trust us.” It became obvious, howev-er, that the more buckets picked by thecucumber crew, the more trees thinned,or boxes built, the less they were goingto get paid per unit. One of the workersin the thinning crew expressed frustra-tion at not knowing what the piece ratewas and pointing to the end of the longrow said, “If I knew how much I wasgetting paid per tree, I would have al-ready finished the row and would be onmy way back.” These same principlescan be applied to the dairy operation.

Maintain fair standards. Even afteran incentive standard is fixed, workersmay be hesitant to show the dairyfarmer their full performance potential. Iwill give some examples from outsidethe dairy industry, but similar principlescan be understood at the dairy. A grapegrower called to express a fear that hisemployees were earning too much. “Ihave been thinking of reducing what Ipay per grapevine from 32 cents pervine to 28,” he explained. I explained tothe grower that the piece rate should notbe diminished, that half his crew wasapt to leave—the better half—and theother half would never trust him again.“I was just putting you to the test,” thegrower retorted. “I reduced the piecerate last week, and half the crew alreadyleft ...”


Crew members sometimes exertpressure on overly productive coworkersto have them slow down. They fearstandards will be increased (i.e., theywill have to put in more effort to makethe same amount) either now or infuture years. A worker described how ona previous job he had been offered $1per box of apricots picked. When hepicked 100 boxes for the day within afew hours the rate was suddenlychanged to 50 cents per box. Anotherworker explained, “If we are making toomuch on piece rate we are told to alsoweed, and that reduces our earnings.”14

At a large orchard operation, topmanagement was mistakenly focusingon average earnings per hour (bytranslating piece rate costs into hourlywages). Instead, they needed to focus oncost per acre or cost per job. Whenpiece-rate paid workers made what totop management seemed like overlyhigh wages, their pay rate was reducedwith disastrous results: the bestemployees left, and trust was destroyedfor those who remained.

In order to counteract management’stendency to lower the piece rate, aclever production manager formedcrews where high earning workers werebalanced out with slow ones. This kepttop management satisfied (because theaverage cost per hour was not too high)and yet allowed fast workers to earnmore with less fear of having their

wages cut.15 This practice, of course,does not solve the real problem, nordoes it entirely overcome thedisincentive to faster, more effectivework. For instance, this productionmanager may not want to use a practicaltest to improve the number of superiorcrew workers because of the wrongfuldependence on costs per hour as aproductivity gauge. It just wouldn’t lookgood to his supervisors if workersstarted earning more.

The changes in standard may not beblatant. For instance, when hourly paidworkers get a cost-of-living raise,dairymen may reason that those beingpaid a quantity or quality based bonusdo not need a raise as they are alreadyearning much more. Without the raise,the premium for effort given to incentivepaid workers is thus reduced. Yet thoseworking under a well designed pay forperformance system exert considerablymore effort.

The design of the incentive may bepoor, also. For instance, dairyman maygive employees an incentive forachieving a percentage of improvedproductivity over previous performance,such as improving milk grade. Oncecertain goals are achieved the dairyfarmer needs to be pleased with theimprovement rather than requiring apercentage improvement each year.There comes a point where the better weare at something, the harder we need to


SIDEBAR 1-3

Do Piece-Rate Paid Crew WorkersLeave after Making a Wage Goal?

Some farmers resist increasingincentive pay levels whencompensating seasonal crew workers.They have hypothesized that workershave a certain earnings goal for eachday and that once this goal is achieved,workers will go home. Economistswould explain this phenomenon as theincome effect: increases in incomeallow those in the work force to takemore time for leisure activities.

But economists also speak of thesubstitution effect: the greater the

wages, the more a worker forfeits byengaging in leisure time. A study innumerous crops showed that fewer thanthree percent of crew workers out ofmore than 440 left work after reachinga wage goal for the day. About 11percent of the respondents had at sometime left earlier in the day, but thereasons given were (1) getting overlyhot or tired or (2) not making asufficient wage (i.e., low wages or notenough to pick). In either case, theseworkers were generally willing to staylonger if the earning opportunities weregreater. Workers need to maximizeearning opportunities when they can befully employed. Leisure could comelater, during “down time.”13

work to make the next level ofimprovement. An “S” shaped curve canbe used to illustrate the phenomena.Improvement at first may be slow, thenvery fast, and then slow again. In somecases, of course, there may be another“S” shaped curve waiting for us evenwhen we thought we had improved allwe could.

In one farm operation employees“reached an expected threshold andthere was no further change” after that.The more workers improved, the harderit was to surpass previous performancelevels and gain an incentive reward.This employer dropped his incentiveprogram. I wonder if performancereverted to a lower level, too.

To conclude this set of exampleswith a more positive one, a prominentCalifornia vineyard operator called infrustration: “We have an employee whois earning $45 per hour by the piece! Wemust be doing something wrong!” Likethe other farmer, they wanted to cutpiece rates, but fortunately thesegrowers called before making thechange. I was able to explain that $45per hour for the best employee was notout of line to what the researchindicated. The best farm worker in acrew was capable of four to eight timesthe performance of the worst. Icongratulated this farm enterprise, theyhad achieved trust from the workers!

Sometimes dairymen get paid less

for their milk or have to pay more forthe commodities they purchase in orderto feed the cattle. When dairy farmersare forced to cut incentive wages inorder to stay in business, they are likelyto lose workers’ trust. Part of aneffective labor management policy is tocarry over dairy income to protectworkers’ future earnings. This will helpbalance out some of the rough spots soinherent in agriculture.

Some jobs require extra effort whileothers mean extra time (e.g., time spentimproving quality). Incentives shouldcompensate employees for the extraamount of time required to accomplish ajob. For instance, if employees spendabout half an hour more per milkingshift to improve milk quality, theincentive should pay more than the halfhour per shift the dairy farmer wouldhave had to pay on an hourly basis.

Hire fewer workers for longerperiods. Workers are less likely to slowdown when they realize there is plentyof work to do. When time frames are notcritical, it is often preferable to hirefewer, better-qualified people to do thejob. You can manage to save moneywhile providing a longer season andhigher pay rates for employees. Whilemost of the work in the dairy parlor andaround the animals is pretty constant,this principle needs to be taken intoconsideration when hiring people whowork in crops.


Dairymen will not derive the

full benefits of quantity based

pay until workers are

confident that high earnings

today will not translate into

reduced rates in the future.

Rather than just firing long termemployees who do not do as well underan incentive pay program, or in order tohave fewer employees, dairy farmerswill want to have a policy of reducingtheir work force by attrition rather thanby terminations.

Protect senior workers. Dairyfarmers may, through a careful selectionprocess, avoid hiring employees whocannot perform the job. Those whoemploy workers without first testingthem may want to introduce incentivesto encourage the most productiveworkers to stay and produce. Dairymenwho have poor performers in their staffmay wish to deal with this issue beforeintroducing an incentive pay program.

Sooner or later dairy farmers need todeal with long time employees who areno longer in their prime. Many dairyfarmers rightfully feel a sense ofresponsibility for these workers andoften find less strenuous tasks for them.For instance, some dairymen mayemploy older workers to do tasks thatare strictly paid by the hour and leavemore strenuous jobs for others. It is notuncommon for senior workers to outdoyounger ones, of course, andassumptions about worker capabilitiesbased on age are often unfounded.

Provide timely performancefeedback. Effective performanceappraisal and communication is critical.Supervisors need to provide effectivetraining and appraise workerperformance in a timely fashion. Dairyfarmers who have workers earn the rightto work on a quantity-based bonus (seeSidebar 1-2) by showing completeunderstanding of quality issues ahead oftime, are likely to end up with fewermiscommunications with theiremployees.

The simple act of making a list ofcriteria that are important to you andsharing those with workers will go along way towards improved quality.Taking the next step, of sharing withemployees how well they are doing, cancement good habits. It also helps toprovide samples of what is consideredgood quality work.

Be sensitive to physical demands.The physical demands of speed or

quantity based performance are suchthat workers need to work fewer hoursthan when paid by the hour,16 or riskhealth problems. This is especially sowith more physically demanding jobs inthe summer heat. Generally, themaximum workers can perform whenpaid by the piece is seven to eight hours.It is important to provide plenty of coldwater and have it sufficiently close tothe work being performed so workerswill drink it. It may be necessary toprovide worker training on theimportance of drinking sufficient water.Encouraging workers to drink early(before they become thirsty) and atfrequent intervals may reduce bodyfatigue.17

Encourage workers to take restbreaks. One disadvantage of quantitybased pay incentives is that employeesmay want to forego their breaks.18

Making sure employees take theirbreaks is likely to reduce injuries andmistakes as well as increase workerpreference hourly paid work. Whilethose who perform hourly paid taskstake breaks on the dairyman’s time,those on productivity incentives wouldhave to do so on their own time. Oneway to encourage employees to takebreaks when paid by the piece is tobring warm bread or cold sodas out tothe crews. Even more effective, is toinsist that workers take a rest and paythem for the break time, either on anhourly basis or as a proportion to theincentive they would have earned.

Provide a safe environment. Thehard pace of some incentive pay workmay increase back or other work-relatedinjuries.19 Farmers should considerergonomic measures that facilitate, tothe greatest extent possible, a workenvironment free of injury and illness.Some suggest worker pace should belimited to protect workers from injury.Unfortunately, as we said whendiscussing this issue as it related toquality, limiting the total performance ofworkers would only be effective on aworker-by-worker basis, as optimumpace varies among employees.

Dairy farmers may want to go to anoccupational medicine facility to designappropriate warmup or stretching


exercise programs for workers. Effectiveemployee selection, training, andsupervision can also do much to reduceinjuries.

Avoid chance incentives. Chanceincentives use luck (e.g., a chance atwinning a TV or trip) to reward specificworker behaviors or results. Often thosewho are poor are especially attracted togambling, hoping for things they areunlikely to achieve unless they getlucky. Employers who use chanceincentives are gambling for theemployee.

In the short run, some chanceincentive programs may produce thespecific behaviors or results dairymenare looking for. But how appropriate—or to use a stronger word, how ethical—is the use of such chance incentives?

Key questions dairy farmers mightask themselves before implementing achance incentive are: Is it fair to eachworker? Who benefits from theincentive? Is the incentive being offeredbecause paying each worker would costtoo much? Or because what each workerwould get would seem too little? Are allworkers rewarded for their work efforts?Is this incentive sustainable in the longrun producing good results for both theowner-operator as well as theemployees?

Step No. 6. Improve communications

To improve communication with andbetween employees:

• Build positive interpersonalrelations.

• Explain the program. • Prepare a bargaining style. • Provide feedback. • Be open for suggestions.

Build positive interpersonalrelations. Positive interpersonal relationsbetween management and employees, aswell as among employees, are a mustbefore installing a successful incentivepay program. Incentives often add sometension and stress, especially at first,before results showing success are clear.Added demands for positive two-waycommunication, feedback, andteamwork will increase. If interpersonal

conflicts already exist, they should beworked out first, rather than hoping theywill dissipate after the incentiveprogram is established.

Explain the program. A simpleprogram will help build trust. Atminimum, all workers need to knowwhat is expected of them and how theirperformance will translate into pay. Ithelps when the incentive plan ispresented to workers for review andcomments before implementation.Workers might spot not so obviousshortcomings or obstacles, and they aremore likely to accept the performancechallenge when they are involved.Better yet, is to involve workers in thedesign of the incentive pay programfrom the outset.

If an expectation is set thatemployees can very easily make the topincentive goal (e.g., for improvingquality), the incentive may act as ademotivator. Instead, dairy farmersshould encourage employees to try theirbest and begin by shooting for thelowest level. If the accomplishmentexceeds the workers’ expectations, allthe better.

Prepare a bargaining style. Somenegotiation on pay rates may betraditional. Know how much you paycompared to others, and consider allfactors in terms of how your dairycompared to other dairies and otheremployers workers may want tocompare themselves against (moreabout this in Chapter 2).

One farmer encountered stiffresistance from employees regardingwages. They pointed out the neighbor’shigher wages. The farmer aggressivelytold workers they could look for workelsewhere if they did not like the rates.This situation ended up in a labordispute, as workers felt they had beenconstructively discharged (i.e., forced toquit) in order to save face.

Instead, this farmer could havecalmly explained how he arrived at thepay level and told employees he hopedthey would be able to work for him atthis wage. Perhaps the neighbor paysmore but keeps employees for a shorterseason or does not provide as manybenefits.


By posting wages where they can bereadily seen by all applicants, thedairyman avoids (1) surprising workers,(2) haggling, or (3) taking a chance on aconfrontation that may get ugly and outof hand.

Provide feedback. Dairymen need toprovide frequent feedback to employees,regardless of the usual pay interval. Forinstance, milkers may be paid on a bi-weekly basis but receive more frequentperformance feedback. Feedback maybe given in person or posted tosafeguard worker anonymity.

An effective method of providingmeaningful feedback is through aseparate paycheck, or “adder,”20 for the

incentive. For greatest effectiveness,adders should be given at a differentdate than the usual payday, or at thevery least, in a separate check. Thisreminds the recipient that the extracompensation is for a specific purpose(e.g., such as a wet winter or harvestmonths involving long hours) and willlast only as long as the condition merits.

Be open for suggestions. After theincentive is in place, workers may notbe pleased with it. A dairy farmer whoemployed five workers was approachedby two of them. They asked for a raiseand the elimination of the incentive payprogram set up a year earlier.

The producer, rather than ask the


If an expectation is set that

employees can easily

make the top incentive

goal (e.g., for improving

quality), the incentive may

act as a demotivator. A

herd manager, for

instance, may start each

month assuming he will

earn the full possible

award for reducing calf

mortality. This herdsman

will be discouraged when

he sees his bonus

vanishing as each month

comes to an end. Dairy

farmers can encourage

employees to try their best

but set up more realistic

expectations of what can

be achieved.

other workers if they also wanted toeliminate the incentive, asked everyone,“What can we do to improve theincentive pay system?” In the end, heended up with a successful program,with workers earning $300 a month inincentives.21

Step No. 7. Periodically review theprogram

Record keeping and statisticalanalysis are critical to determine thesuccess of the incentive pay program.Good controls are crucial so incentivepay results can be isolated and correctlyattributed to the pay system. If a dairyfarmer introduces other changessimultaneously, she may never know theimpact of the incentive program. Thereare a number of statistical tools that maybe used to analyze results. Yourcomputer spreadsheet may already allowyou easy access to these tools. You maywant to consult with a statistician, laborspecialist, farm advisor or county agenton what statistical tools to use.

Results may indicate directions forchange or improvement. Once theprogram is in use, changes must involveworkers in order to maintain the trustthat is so essential to the success of anincentive pay program.

Dairy farmers can benefit fromkeeping records even if they are notproviding incentives. These records canhelp establish base lines essential forestablishing standards for futureperformance.

In some cases, incentive programsare dropped too soon, without giving thesystems sufficient time to work. Severaldairy farmers who have establishedsuccessful incentive programs havementioned the need for patience—sometimes having to wait severalmonths for the program to function well.

SUMMARY

Incentive pay has the potential toincrease worker productivity if properlydesigned and maintained.

Even though employees know thatattention to detail, increased

productivity, or suggestions may bringabout rewards, casual incentives arecharacterized by the inexact orunexpected timing and amount of thereward.

Dairy farmers’ structured incentivesare most likely to succeed if they have(1) accurately established standards; (2)clearly linked superior performance withpay or a valued reward; and (3)carefully considered what type ofperformance the incentive stimulates.Effective incentives are designed so themore an employee earns, the more thefarmer benefits.

CHAPTER 1 REFERENCES

1. Billikopf, G. E. (1992). Establishing andTrouble Shooting Incentive PayPrograms (Chapter 83) (pp. 793-802).Large Dairy Herd Management, (VanHorn, H. H., and Wilcox, Editors) ,Champaign, IL: American DairyScience Association.

2. Billikopf, G. E. (1995, October). APMPStudy on Incentive Pay. Quote fromAmerican Nurseryman magazine portionof study.

3. Brown, W. A. (1994, January) TheExecutive Program for AgriculturalProducers (TEPAP), Texas A&MUniversity, Austin, Texas.

4. Billikopf, G. E. (1996, November-December) APMP Incentive-Pay StudyReport and Crew workers split betweenhourly and piece-rate pay (Vol. 50-6)(pp. 5-8). California Agriculture.

5. Billikopf, G. E. (1996, November-December). Crew Workers SplitBetween Hourly and Piece-Rate Pay(Vol. 50-6) (pp. 5-8). CaliforniaAgriculture.

6. Billikopf, G. E., and Norton, M. V. (1992,September-October). Pay MethodAffects Vineyard Pruner Performance(Vol. 46-5) (pp. 12-13). CaliforniaAgriculture.

7. Milkovich, G.T., and Newman, J.M.(1999). Compensation (6th ed.) (pp.317-318). Boston: Irwin/McGraw-Hill.

8. Donaldson, G., and Lorsch J.W. (1984).Decision Making at the Top. New York:Basic Books. In Lax, D.A., andSebenius, K.S. (1993). Interests: TheMeasure of Negotiation (2nd ed.) (p.131). Negotiation: Readings, Exercises,and Cases by Lewicki, R.J., Litterer,J.A., Saunders, D.M., and Minton, J.M.


9. See Billikopf, G. E., and Norton, M. V.(1992, September-October). Pay MethodAffects Vineyard Pruner Performance(Vol. 46-5) (pp. 12-13). CaliforniaAgriculture, and Billikopf, G. E., andKissler, J. (1988). Hourly Versus Piece-Rate Paid Vineyard Pruners (pp. 13-14).Cited in Billikopf, G.E. AgriculturalEmployment Testing: Opportunities forIncreased Worker Performance.Giannini Foundation Special Report88-1. Oakland, CA: GianniniFoundation of Agricultural Economics,University of California.

10. Billikopf, G. E., and Norton, M. V.(1992, September-October). Pay MethodAffects Vineyard Pruner Performance(Vol. 46-5) (pp. 12-13). CaliforniaAgriculture, and Billikopf, G. E., andKissler, J. (1988). Hourly Versus Piece-Rate Paid Vineyard Pruners (pp. 13-14).Cited in Billikopf, G.E. AgriculturalEmployment Testing: Opportunities forIncreased Worker Performance.Giannini Foundation Special Report 88-1. Oakland, CA.: Giannini Foundationof Agricultural Economics, Universityof California.

11. Saldaña, A. (1998, April 14). Personalcommunication. Naumes OrchardDivisions. Modesto, CA.

12. Collar, C. (1991, February 5) Incentivesfor Reducing Calf Mortality. EmployeeIncentive Pay in Dairies conference.University of California. Modesto, CA.

13. Billikopf, G.E. (1995, January-February).High piece-rate wages do not reducehours worked (Vol. 49-1) (pp. 17-18)California Agriculture.

14. Billikopf, G. E. (1996, November-December). Crew workers split betweenhourly and piece-rate pay (Vol. 50-6)(pp. 5-8). California Agriculture.

15. Saldaña, A. (1998, April 14). Personalcommunication. Naumes OrchardDivisions. Modesto, CA.

16. Billikopf, G.E. (1995, January-February).High piece-rate wages do not reducehours worked (Vol. 49-1) (pp. 17-18)California Agriculture.

17. You may want to review the AmericanCollege of Sports Medicine PositionStand on “Exercise And FluidReplacement.” Among the suggestionsoffered there, for instance, include theidea of keeping water cold and“flavored to enhance palatability andpromote fluid replacement.” Make sureto consult with your physician, however.

18. Billikopf, G. E. (1996, November-December). Crew workers split betweenhourly and piece-rate pay (Vol. 50-6)(pp. 5-8). California Agriculture.

19. Sandoval, L. (1990) Personalcommunication. Agricultural Workers’Health Center.

20. Belcher, D. W. (1974). CompensationAdministration. Englewood Cliffs, N.J.:Prentice-Hall.

21. Wagner, R. (1991, February 5). DairyFarmer Experiences With Incentives.Employee Incentive Pay in Dairiesconference. University of California.Modesto, CA.

Unless otherwise indicated, photos inthis chapter were taken by the chapterauthor.


To be effective, pay must be tied toperformance. While incentives (Chapter1) can yield the clearest link betweenperformance and pay, they are notsuitable to all jobs at the dairy. In thischapter we will look at wage structures,or time-based pay. Even though itsrelationship to performance may not beas salient as incentive pay, time-basedpay can also motivate increased workerperformance.

Pay issues covered in this chapterinclude (1) pay fairness; (2) what is

behind pay differences; (3) jobevaluations and market considerations;(4) elements of a wage structure; and (5)maintaining a pay structure.

PAY FAIRNESS (PAY EQUITY)In a casual survey I conducted,

workers said that they expected wagesto: (1) cover basic living expenses, (2)keep up with inflation, (3) leave somemoney for savings or recreation, and (4)increase over time.

2Internal Wage Structure

Jack

Kel

ly C

lark

Gregory Encina BillikopfLabor Management Farm Advisor

University of California(209) 525-6800

[email protected]

Workers also become concerned laterin their careers about supportingthemselves during their retirement years.Personnel who have lived in dairy-provided housing will find it especiallydifficult to afford payments on a newhome after they retire.1 Althoughbeyond the scope of this work, dairyfarmers may want to look intoretirement and tax deferred plans tocover some of these future needs.

Even if a dairyman devises a wagestructure to satisfy these expectations,worker dissatisfaction may arise if eitherinternal or external equity principles areviolated. Simply put, internal equityrefers to the relative fairness of wagesreceived by other employees in the sameorganization. External equity is fairnessrelative to wages outside the organiza-tion. Depending on the type of work andlocation, tests of external equity mayinvolve comparisons with other dairies,other types of agriculture, or evennonfarm corporations.

Employees will act to restore equityif they perceive an imbalance. Inevaluating the fairness of their pay,employees balance inputs (e.g., workeffort, skills) against outcomes (e.g.,pay, privileges). Workers mayexperience guilt or anger if they feelover or undercompensated. The greaterthe perceived disparity, the greater the

tension.2 Employees may seek balancein the following six ways:

(1) modify input or output (e.g., ifunderpaid, a person may reduce hiseffort or try to obtain a raise; ifoverpaid, a person may increase effortsor work longer hours without additionalcompensation);

(2) adjust the notion of what is fair(e.g., if underpaid, a worker may thinkhimself the recipient of other benefits—such as doing interesting work; ifoverpaid, an employee may come tobelieve he deserves it);

(3) change source of equitycomparison (e.g., an employee who hascompared himself with a promoted co-worker may begin to compare himselfwith another worker);

(4) attempt to change the input oroutput of others (e.g., asking others notto work so hard or to work harder);

(5) withdraw (e.g., through increasedabsenteeism, mental withdrawal orquitting);

(6) forcing others to withdraw (e.g.,trying to obtain a transfer for a co-worker or force him to quit).3

The issue of fairness is critical tocompensation administration and mostevery phase of labor management.Generally, workers and managers agree,in principle, that wages should take intoaccount a job’s (1) required preparation,responsibility, and even unpleasantness,4and (2) performance differences and/orseniority. Less agreement exists aboutthe relative importance of each of thesefactors. Challenges in applyingdifferential payment stem fromsubjectivity in the evaluations of bothjobs and workers.5

Equity considerations influence thesatisfaction of the workforce. Within abroader view, the stability of a nationmay be affected when the contributionsof any segment of society are eithergreatly exaggerated or undervalued.

WHAT IS BEHIND PAYDIFFERENCES?6

Dairy farmers sometimes ask if theyshould pay workers the same.Philosophical differences affect


Workers expect wages to:

(1) cover basic living

expenses, (2) keep up with

inflation, (3) leave some

money for savings or

recreation, and (4) increase

over time.

judgments employers make about theirwage structures. Some think allmembers of a society should receiveenough income to meet their necessities.Such employers may base pay more onthe needs than on the contributions ofthe individual dairy employee. To some,all jobs contribute equally to the dairy’sproductivity and, therefore, allemployees should be compensatedequally. By this standard, paydifferences are based on how well a jobis performed rather than what job isperformed. In a contrasting system thenature of the job—besides the quality ofperformance—is an important part ofhow pay differences are set at the dairy.

In making pay decisions at the dairyfarm, you have much flexibility withinthe constraints of the law, labor market,and local norms. The choices you makewill affect employee recruitment,retention, satisfaction and performance.

Alan, a former Farm Bureaupresident, was asked by his workerswhy irrigators were paid less thanequipment operators. After consideringthe question, Alan concluded these wagedifferences among his workers wererather arbitrary. He decided to startpaying everybody the same hourly rate.A dairy farmer, Cecilia, increases wagerates as employees move up the jobladder from milker to herd manager.

What do Alan and Cecilia gain orlose from their respective approaches?The single rate Alan has settled on isfairly high. He has raised lower wagejobs to the level of better payingpositions, rather than the reverse. Histotal wage bill is probably higher than itneed be, but it is buying him a relativelycontent work force. Simplicity is oneadvantage of this approach. Alan doesnot have to adjust rates for employeeswhen they work outside of their usualassignments—which is often.

Most dairy farmers require flexibilityin employee assignments. Individualsare called on to wear several hats anduse a variety of tools in their jobs. Onsuch a dairy, the worker who is diggingfence post holes and fixing corralstoday, might be planting alfalfatomorrow, pouring cement the next day,and entering herd data into a computer

next winter.Despite the practical advantages of

paying everyone identical rates, moreskilled workers may resent being paidthe same as others. Cecilia forgoes thesimplicity of Alan’s method in hopes ofusing pay as a tool to attract, retain, andmotivate qualified employees.

Paying different wages for differentjobs, however, tends to make peoplemore sensitive to job boundaries.Workers may resist taking on tasksoutside their normal routine. On herranch, Cecilia handles this by paying herworkers their regular rates when theyperform lower paid jobs. Whenemployees perform more highlyclassified tasks—which is not often—she pays them extra.

When several positions receive asimilar assessment, they can becombined to create a pay grade. Tosimplify, we will mostly speak of paygrades, but it is understood that paygrades may sometimes consist of asingle position.

Of course, pay is not the only factorthat affects dairy workers’ resistance totaking on tasks outside their normalduties. Employees quickly sense whenlower paying jobs are not as valued bymanagement. An occasional chance fora manager to milk the cows mayunderscore the importance of the job,and also serves as a good reminder ofwhat a milker does.

IN T E R N A L WA G E ST R U C T U R E • 21

Employees compare what

they earn to what others

within the dairy (internal

equity) and outside (external

equity) make. External equity

may involve comparisons

with other farms or even

non-farm corporations.

Once you decide whether personsholding different jobs should be paiddifferent rates, the next question iswhether pay rates should vary forworkers performing the same job (e.g.,calf feeder). If so, what factors coulddetermine pay differences within a job?

Since abilities and actualperformance vary remarkably amongindividuals, even in the same type ofjob, individual differences can beacknowledged if each job has a raterange (as in Figure 2-1). Higher rates or“upper steps” in the range could begiven to employees with longerseniority, merit (i.e., better performanceevaluations), or a combination of thetwo.

Establishing rate ranges requirescareful consideration. The relationshipsbetween grades and ranges havesymbolic and practical consequences. Aperson at a top step within a pay grade,for example, may earn more than a

person in a higher pay grade, but at alower step (Figure 2-1). Whether andhow much overlap to build into a paystructure is discussed later in thischapter.

While not recognizing differences inthe importance of positions, Alan couldalso establish rate ranges within his flatwage line (not pictured here). LikeCecilia, he would need to consider thebasis for pay differences with a givenjob.

JOB EVALUATIONS ANDMARKET CONSIDERATIONS

You can arrive at appropriate wagesfor positions on your dairy on the basisof two main management tools: (1) jobevaluations (based on compensablefactors such as education, skill,experience, and responsibility), and (2)the going rate (or market value) of a job.

Job evaluation

A farmer such as Cecilia who paysdifferent rates for different jobs usuallyfirst classifies the jobs on her dairyoperation. Through a job evaluation sherates the jobs on the dairy according totheir relative “importance.” Each jobmight be given its own rate, or jobs ofcomparable importance may be groupedor banded into a single wageclassification, or pay grade.9

Job evaluations compare positions ina dairy with respect to such factors as


SIDEBAR 2-1

Illegal Pay Differences

It is illegal to base pay differenceson such protected personal characteris-tics as sex, race, color and maritalstatus. The term “protected” is usedbecause employees are safeguarded bylaw against discriminatory practicesbased on these personal characteristics.Federal law, established in the EqualPay Act of 1963, explicitly requiresmen and women performing the samework to be paid the same—with fourkey exceptions:

. . . where payment is made pursuant to (i)a seniority system; (ii) a merit system; (iii) asystem which measures earnings by quantity orquality of production; or (iv) a differentialbased on any other factor other than sex. . .7

Blatant cases of sex-baseddiscrimination include instanceswhere men and women hold the samejobs yet are paid differently with noneof the defensible reasons applying.Somewhat veiled, but no less illegal,are cases where sex-segregated jobsare equal, except for their titles, andyet are paid differently.8

Rat

e of

Pay

($)

A

B

Job “Importance”

= overlap between A & B

FIGURE 2-1

Pay grades can have rate ranges. Each paygrade is represented by a rectangle; rateranges by the height of the rectangle.

education, responsibility, experience andphysical effort. Figure 2-2 shows asample job evaluation. In it, forinstance, much more value is given toresponsibility and education than tophysical requirements. The supervisor inthis example would earn about twicewhat an equipment operator would.

Figure 2-2 uses education as acompensable factor. You may prefer tothink in terms of what combination ofexperience and education would qualifya person for the job. This is an importantstep for determining the value of theposition to be filled. However, when itcomes time to hire someone, you maynot care what combination of educationor experience an applicant has as long asshe can do the job.

If education is used as acompensable factor, a bachelor’s degreemight be worth 200 points, a juniorcollege degree 150, a high schooldiploma 100, and an elementarydiploma 50 points. Some of the jobs atthe dairy might require a high schooldiploma, thus earning 100 points in thiscategory, while others might have noeducation requirement (0 pointsallotted)—regardless of the educationalqualifications of the person who mayactually apply. Similar ratings of jobswould be made for responsibility andother factors worth compensating.

You decide how much weight toallot various compensable factors andhow to distribute points within each job.For the job evaluation to be useful, adetailed list of compensable factorsneeds to be articulated. (The jobanalysis created during the selectionprocess can help. Or, for a sample dairyjob analysis, contact the author.) Youcan test the job evaluation by comparinga few jobs you value differently. Doesthe tentative evaluation match yourexpectations? If not, are there any jobfactors missing or given too much or toolittle value?

Workers may also participate in theprocess of evaluating jobs and can addvaluable insight into the essential jobattributes for various positions.10

Personnel involved in evaluating theirown jobs, nevertheless, are likely toexperience conflict of interest.

Although supervisors will normallymake more than those they supervise,this is not always the case. A veryskillful welder or veterinarian willprobably make more than his farmsupervisor.

Job evaluations, then, reflect therelative value or contribution ofdifferent jobs to a dairy. Once a jobevaluation has been completed, marketcomparisons for a few key jobs need tobe used as anchors for market reality. Intheory, other jobs in the job evaluationcan be adjusted correspondingly.


A very skillful welder or

veterinarian will probably

make more than his farm

supervisor. Piece-rate paid

workers often make more

than the crew leaders

supervising them, as well.

Poin

t val

ue

100

300

500

700

Res

pon-

sibi

lity

Edu

catio

n

Phys

ical

req.

Tota

l

= Laborer= Equipment operator= Supervisor

FIGURE 2-2

Compensable factors.

Market considerations

In practice, results of job evaluationsare often compromised—or evenovershadowed—by marketconsiderations. Labor market supply anddemand forces are strong influences inthe setting of wages. No matter whatyour job evaluation results may indicate,it is unlikely you will be able to paywages drastically lower or higher than

the going rate. Supply and demand factors often

control wages. When there are manymore milkers than available jobs, forinstance, the going wage decreases. Iffew good livestock nutrition specialistsare available for hire, they become moreexpensive in a free market. The marketmay also influence the migratorypatterns of dairy workers, for example,whether a worker stays in Mexico ortravels to Texas, Florida, Oregon, oreven into Canada.

Of course, the market is not totallyfree. Legal constraints affect wages(e.g., equal pay, minimum wage). Laborgroups, in the form of unions, cancombine forces to protect their earnings.They may prevent employers fromtaking advantage of a large supply ofworkers. At times wages are driven sohigh that corporations cannot compete ina broader international market. Someprofessional groups can also impact themarket. By limiting acceptance touniversities, a limited supply ofavailable professionals is set.

To establish external equity,employers need information about whatother employers pay in the same labormarket. While some employers arecontent to lean over the fence andsimply ask their neighbors what theypay, others conduct systematic wage andsalary surveys.11

Wage surveys need to describe jobsaccurately as positions may vary widelyeven for jobs with the same title. Atypical example is the huge difference inresponsibilities among herd managers.Surveys should seek information aboutbenefits given employees (e.g., farmproducts, housing). Of course, there areother “intangible benefits such asstability, the prestige of the position orthe institution [and] the possibility ofprofessional development.”12 Surveysneed to consider the number of workersper farm in a given classification. Wageson a farm employing many employeesaffect the going rate more than one withfew.

Yet another viable possibility is forthe person conducting the study to takeinto consideration the number of yearseach subject has worked.


Those who pay at or below

the market may have

difficulty attracting workers,

and may find themselves

frequently training people

who leave for higher paid

positions.

In some cases, farmers may competefor labor within a broader labor market.When compensating mechanics orwelders, for instance, you may have tocheck what those in industry are paid.

An important pay decision iswhether one will pay the going marketrate. Those who pay at or below themarket may have difficulty attractingworkers. Further, they may findthemselves training people who leavefor higher paid positions. Merely payingmore than another dairy, however, doesnot automatically result in higherperformance and lower labor costs.Even when well paid, workers may notsee the connection between wages andtheir performance. Dairymen who paytoo much may find it difficult to remaincompetitive. Furthermore, there areother factors valued by dairy employeesbesides pay, such as working for anorganization that values their ideas andallows them to grow on the job.

Reconciling market & job evaluations

In wage setting, it is usually morebeneficial to reconcile marketinformation and job evaluation resultsthan to singly rely on either. Uniquejobs at the dairy are more appropriatelypriced on the basis of job evaluations.You may depend more heavily on thejob market for common jobs.

In most cases, dairy farmers havefreedom to satisfy both job evaluationand the market. Where the market paysa job substantially less than a jobevaluation does, however, you can eitherpay the higher wage, reconsider jobevaluation factors, or pay the reducedwage. The dairyman has fewer viableoptions when the market would pay ahigher wage than the job evaluation.

ELEMENTS OF A WAGESTRUCTURE

Wage structures, we have said, helpillustrate many of the decisions you canmake about pay. We have alreadyintroduced most of the elements of awage structure (review Figure 2-1) andwill revisit them here.

Wage lines reflect wage differentials

between jobs. The steeper the wage lineslope, the greater the differences in paybetween jobs. In Figure 2-3, two dairyenterprises pay their lowest level job thesame. From this point on, wages for onefarm rise at a steeper rate.

Wage lines also reflect the overallpay level of the organization. Figure 2-4illustrates two dairies whose differentialbetween the highest and lowest paid jobare the same despite the differences inthe total wages paid.

The number of pay grades (jobgroupings sharing the same wage levels)and the scope of rate ranges may vary.Rate ranges are represented by theheight of a pay grade, that is, thedifference between the lowest andhighest pay within the grade. Forexample, the minimum and maximumsalaries for cow feeders might be $10and $15 per hour, with a potential $5pay range.

The more pay grades, the finer thedistinctions between jobs. Alternatively,broadbanding is the use of fewer paygrades with larger rate ranges.Broadbanding allows dairy employees to


Rat

e of

Pay

($)

Wage Line I

Wage Line II


Rat

e of

Pay

($)

Wage Line I

Wage Line II


FIGURE 2-3

Wages may begin at the same level but risesteeper at one farm.

FIGURE 2-4

Pay differential maintained.

step out of very narrow or rigid jobdescriptions. Broadbanding may resultin significant differences in jobs goingunrecognized, and pay equity concernsmay arise.13 In dairies with few paygrades, it may be that there are tallerrate ranges within each grade (Figure 2-5). This allows room for pay increaseswithin a grade. Where many grades exist(Figure 2-6) workers may also obtain anincrease by moving from one pay gradeto another (i.e., being promoted) as theyare by getting a raise within their grade.Some farms may have few grades andshort rate ranges, also.

There tends to be more overlapwhere a pay grade slope is flatter(Figure 2-7), or with larger rate ranges.We shall return to overlapping rateranges once more, as we discuss pay asa function of employee promotions.

Up to here—for simplicity—we havedepicted wage structures containingequal rate ranges for all pay grades (i.e.,the differential between the starting andtop wages within each pay grade are the

same). A fan structure is closer to reality(Figure 2-8).14 In this kind of structurethe rate ranges are comparatively tallerfor jobs at higher pay gradeclassifications. To someone earning $9an hour, an increase of 50 cents an hourwould be significant. To someonemaking $40 an hour, the 50 cent raisewould not be nearly as meaningful.

When asked how large pay raisesshould be, consistent with this principle,employees at the lower end of the payscale often respond in terms of specificdollar amounts (for example, $0.50 perhour), while those at middle and higherlevels tend to speak in terms ofpercentage increases.

MAINTAINING A PAYSTRUCTURE

Maintaining pay equity within acompensation structure after it has been


Rat

e of

Pay

($)

A

B

C


Rat

e of

Pay

($)

AB

CD

E


Rat

e of

Pay

($) C

Wage Line II

Wage Line I

A

BC

D


Rat

e of

Pay

($)

AB

CD

E


FIGURE 2-5

Few pay grades (broadbanding), with tallerrate ranges.

FIGURE 2-6

Many pay grades with shorter rate ranges. FIGURE 2-8

A fan type structure.

FIGURE 2-7

Flatter slopes lead to increased overlap.Note: Wage Line II is flatter than Wage Line I,and thus contains more overlap.

developed is an ongoing challenge. Herewe will look at:

• seniority-based raises • merit-based raises • promotion pay • out-of-line or color rates • cost of living adjustments

(COLAs) • flat vs. percentage COLAs • wage compression and minimum

wageEmployees traditionally progress

within a grade on the basis of meritand/or seniority. Decisions about payincreases should be fair, sound, and wellcommunicated to workers.

Seniority-based raises

Systems providing periodic raisesregardless of evaluated merit may bebased on the assumption that abilitygrows with time on the job, whichsimply is not always true. Many dariesuse pay increases to reward workers for“belonging” and for their length ofemployment with the dairy farm. Aslong as worker performance meetsminimum standards, they continue toreceive periodic raises.

Some dairy workers value thecertainty of seniority-based pay, andworkers’ needs for increases in paythrough time are met. Seniority-basedpay also promotes continuous serviceand may reduce turnover.

Dairy farmers who give raises on thebasis of seniority value the maturity andexperience of senior workers, but theyare sometimes relieved when seniorworkers leave. In some instances, seniorworkers cost organizationsdisproportionately higher wages andbenefits (e.g., longer vacations) thantheir contribution to the organization.This is not a reflection on the senioremployee, but rather, on a system thatundervalues the new employee with thepromise that in due time, new personnelwill be able to earn greater amounts.

In order to avoid having employeesclimb the pay scale too quickly, smallerbut more frequent pay increases may begiven early in an employee’s career.Increases later on are given at a slowerpace. These increases, without being

overpaid, must be large enough tomotivate employees to stay.

Merit-based raises

Merit wage increases are designed torecognize improved worker performanceand contribution to the organization. Intheory, in a merit system workers earnwage increments proportional to theirperformance. As with the senioritysystem, however, once someone climbsto a given wage level at the dairy hiswages are rarely reduced. Pay forperformance plans (Chapter 1) can solvethe problem of giving “permanent”raises based on present and pastperformance.

Incentives, however, can have adisrupting effect on an internal wagestructure. Dairymen who use incentivepay systems for some jobs and notothers may find workers in some lower


A herdsman who has one

cow and has earned a

second one will be very

pleased, while one who has

many will hardly notice the

addition of one more cow to

the herd (Weber’s Law).

When it comes to pay

increases, those at the lower

end of the pay scale may ask

for a specific dollar amount,

while those at higher levels

tend to speak in terms of

percentage increases.

“value” jobs earn more than those inhigher level ones.15 Dairies some-timesabandon their incentive programs orexpand them to cover more jobs.

Where pass/fail merit reviews areconducted at specified time-serviceintervals—and where employees tend topass—the process may be viewed as a“glorified seniority system.” Length ofemployment and wages are closelycorrelated within each job category. Insuch a system workers would experiencethe same positive and negative benefitsof a seniority system.

Dairy managers may feel undulyconstrained when given a choicebetween recommending a worker for afull step raise or nothing. To deserve noraise an employee must have performedquite poorly. If the choices were evenslightly expanded to include half orquarter steps (e.g., half step, step and aquarter), managers may be more likelyto reward workers commensurate withtheir performance.

Whenever performance reviewsaffecting raises are given at specifiedtime intervals, merit systemsautomatically include a seniority factor.Alternatively, performance reviews forraises could be triggered by otherevents, such as specific performanceaccomplishments, or skill acquisition(skill-based pay).

Some workers may merit fasteradvances to the top of the pay scale thanothers. Unfortunately, employees whoadvance too quickly may not have anyfurther economic increase to lookforward to, and experience a feeling ofstagnation. The only growth may meantrying for a promotion—or a jobelsewhere.

In order to avoid having employeesclimb a merit scale too quickly, upperlevels of the scale must be harder toachieve. Also, if the merit systemincorporates seniority (i.e., performancereviews are triggered by time spent on agiven pay step) reviews need to takeplace less frequently as people move upthe pay scale.

It turns out, then, that there are fewerdifferences than expected betweenseniority and merit based pay systems.In order to fully take advantage of merit

based pay, it is critical that dairyemployees understand how they will beevaluated. That is where the negotiatedapproach to performance appraisal canplay a key role along with the moretraditional appraisal (for moreinformation, contact the author).

Promotion pay

How much of a pay increase shouldaccompany a promotion at the dairy? Ifthere is a pay structure policy, theboundaries of such a decision alreadyexist. A tall rate range or steep wagestructure may permit room for largerwage increases after raises orpromotions. The wage differential willalso depend on the height of rate rangeoccupied by the employee within thepresent pay grade, as compared to theheight in the grade promoted to.Obviously, a greater pay increase willaccompany those promotions where theemployee moves up more than one paygrade.

Any time there is an overlapbetween jobs, some workers in a lowergrade may earn more than some workerson the adjacent higher grade. If workersare seldom promoted from one grade toanother at the dairy, this structuralcharacteristic rarely creates a dilemma.

When workers move from one gradeto another, difficulties may arise. Theremight be some pay overlap between thejobs of “assistant mechanic” and“mechanic.” Consider an assistantmechanic who, because of many yearsof work, has reached the top of his scaleand makes more than a journeymanmechanic who has been working for acouple of years. The journeymanmechanic is likely to tolerate the wagediscrepancy because even though theassistant is earning more temporarily,due to seniority, in time the wages of thejourneyman are likely to surpass thoseof the assistant, due to the higherpotential earnings in the journeyman’spay grade.

The challenge arises when thisassistant mechanic, who has topped outin his grade, decides to seek apromotion to mechanic. The assistant isunlikely to want to start at the bottom


step of the mechanic scale where hewould be making less than in hisprevious job.

One solution would be to start theassistant mechanic at a higher step levelin the mechanic grade. But if the newlypromoted mechanic ended up withhigher pay than the more experiencedjourneymen, questions of internal equitymay be raised. Both employees are nowperforming exactly the same job but theone with less experience (although moreoverall seniority) is earning the same asor more than the other. This pay equitysituation may become even morepronounced when the accomplishedmechanic has to help train the one whojust obtained the promotion.

You may help employees managecareer and development plans to avoidlosing pay when obtaining a promotion.They will have to apply for promotionsearly enough in their careers as not tolose the potential economic advantage.Another possibility is to give thepromoted employee a one-time lumpsum, or pay adder, to make thetransition into the temporarily lowerpaying job more palatable.

Another promotion payconsideration is the inherent risk offailure in the new position. The greaterthe risk of failure (that would call fortermination) that a promoted employeefaces in a new position, the larger thewage increase should be.16

Out-of-line or color rates

Sooner or later you will encountersituations where jobs are paid more orless than their actual worth in the labormarket. Different “color rates” arecommonly used by compensationspecialists17 to indicate particular out-of-line pay relationships (Figure 2-9): redand green illustrate either over or undercompensated jobs—when compared tocurrent worth.

Although the colors imply the farmerloses money with the first and gainswith the latter, both situations can bequite costly. If out-of-line rates are notcorrected speedily, both internal andexternal equity will be disturbed.

Red rates (so called because they

represent overpaid jobs). If rates areallowed to stay out of proportion to therest of the farm jobs, other workers mayfeel mistreated. Also, the wage bill willlikely be higher than it need be. Whenred-grade rates are cut abruptly, dairyworkers may experience difficultymeeting their financial obligations.Smoother alternatives includecombinations of freezing raises untilinternal equity is reached; exertingefforts to transfer workers to higherpaying jobs consistent with presentwages; or even adjusting ratesdownward immediately while giving


A grower who does not

keep wages competitive

may feel forced to start

inexperienced new workers

up near the middle of a pay

grade. If this is the case,

there may remain no sound

basis for pay differences

among workers.

Rat

e of

Pay

($)

RedGreenA

B

CD

E


FIGURE 2-9

Red and green rates.

workers a lump sum (or several) tooffset the downward adjustment.18

Green rates (underpaid jobs). Green-grade rates can be brought up into lineimmediately in one or two steps.19 Adairy farmer may attempt to cut laborcosts with green rates, but the benefitsmay be short term as it will be difficultto retain valuable workers.

Two likely green-grade indicators are(1) increases in turnover (withemployees seeking better paying jobs);and (2) feeling forced to startinexperienced new workers up near themiddle of a pay grade. If the latterapproach is taken, no sound basis forpay differences among workers mayremain.

Of course, it is possible a dairyfarmer does not have a green-grade rateproblem, but rather, her whole wagestructure may have failed to keep upwith the market (Figure 2-10).

Cost of living adjustments (COLAs)

Inflation can have especiallydevastating effects on a worker’s abilityto make ends meet. We have seen howdairy farmers whose pay structures fallbelow market values may have difficultyattracting and retaining personnel. Somecorporations (and often union contracts)stipulate a COLA based on theConsumer Price Index (CPI).20 Theindex is supposed to reflect cost-of-living changes. The prices of commoncommodities purchased by mostconsumers are observed and compared.

While the CPI can be a useful tool,some observers feel the list of commonarticles used to come up with the indexis not so common. The greatestchallenge posed by the CPI is that it actsindependently from labor market wages.In doing so, it may exaggerate andperpetuate inflation. Instead of using theCPI, farmers may prefer to monitorchanges in the labor market throughperiodic wage surveys. Geographicaltransfers—especially internationalones—may involve upward ordownward COLAs to reflect substantialdifferences in cost-of-livingrequirements.

Flat vs. percentage COLAs

COLAs may be given in terms offlat dollar amounts or percentageincreases. Those who argue in favor offlat increases feel workers at the lowerend of the earning scale need the COLAincreases more than those at the higherend. Across-the-board percentageincreases, they contend, have the effectof “further widening the gap in alreadydisparate incomes” between the havesand have-nots. Some even feel it wouldbe fair to give greater increases to thosewho make less.21

Those who favor percentage across-the-board increases allege flat increasescause wage compression. Wagecompression means differentialsbetween higher and lower paying jobsdecrease. For instance, if workersmaking $8 an hour and workers making$18 an hour both get a $2 an hourincrease, the first group obtained a 25percent increase while the second grouponly a 11 percent increase. If such atrend continues, proportionaldifferentials between occupationalwages can be all but eliminated. Aconceivable compromise may meanalternating between giving straight andpercentage increases.22

Wage compression & minimum wage

Increases in the minimum wage canalso cause pay compression in dairiespaying at, or near, the legal minimum.For instance, if starting hourly wages forcow feeders and milkers are $8.15 and


Rat

e of

Pay

($)

= going wages

= current wages

A

D

B

C

E


FIGURE 2-10

Current wages have failed to keep up withmarket reality.


SIDEBAR 7-2

Comparable Worth Doctrine24

We will first distinguish betweencomparable worth and equal pay forequal work, and then briefly reviewarguments in favor of and againstcomparable worth.

Some jobs at the dairy may be filledmostly by men while others mostly bywomen. This is slowly changing withfewer jobs being categorized as “men’swork” or “women’s work.” But it is notchanging fast enough for those whofeel “women’s work” is underpaid incomparison with different butcomparable “men’s work.” The moveto correct such pay differences is basedon the “comparable worth doctrine.”While the debate has dealt mostly withjobs segregated by sex, discussion canalso focus on jobs held mostly byminority groups, as is so common infarm work.

Earnings gap

Both advocates and critics of thecomparable worth doctrine agree somejobs are dominated by women andsome by men, and that women oftenearn less than men. Solutions andreasons offered by advocates and criticsare different.

The earnings gap between men andwomen has been cited by comparableworth advocates as clear evidence ofsex discrimination.25 When men andwomen who do the same type of workand bring similar experience and skillto the job are compared, their presentwages26 and future pay outlooks27

appear more even. Many reasons have been offered to

explain why men earn more thanwomen. The results of one studysuggest gender-differentiated valuesand preferences are a factor. Males maychoose higher paying occupations morefrequently while women may placegreater value on more stimulatingjobs.28

Some believe women in the past didnot invest as much time as men in

higher education, resulting in higherwages for men. This argument does nothold up today, however, when a greaterpercentage of women are pursuingprofessional occupations. Women areoften enrolled in greater numbers thanmen in veterinary schools. Anotherreason given for the higher earnings ofmales is their longer work experiencein general as well as greater senioritywith a given employer.29 It is morecommon for women to leave the laborforce to raise a family or to leave a jobto follow a spouse who has beentransferred.30

Market vs. job evaluation

Advocates of comparable worth feelmarket values used in wage settingsperpetuate inequities: “We’re talkingabout fundamentally altering themarketplace because the marketplace isinherently discriminatory.”31 Thoughadvocates acknowledge the subjectivityof job evaluations, they favor basingwages on job evaluations rather than onmarket comparisons.

Critics of comparable worth feelthat as long as women have a choice ofjobs, there is no need for thecomparable worth doctrine. Today,women are free to choose work inmale-dominated jobs and obtain higherwages.32 The law already requires thatwomen holding the same jobs as menbe paid the same wages. Assuringwidespread education and opportunitiesto all who desire them can help reduceinequities between the sexes and races.

Instituting comparable worth wouldresult in massive governmentintervention. This may mean eithersetting a national comparable worthpolicy or requiring the validation of jobevaluations within organizations.33 Ifgovernment—rather than individualemployers—would determine the valueof compensable factors, the dairyfarmer’s prerogative to manage wouldbe substantially curtailed. Finally, in agrowing world-market economy, anation that ignores market forces wouldcertainly be at a competitivedisadvantage.

$7.20, respectively, a new minimumwage of $8.00 would bring both toessentially the same starting wage(Figure 2-11).

In order to avoid raising thecomplete wage structure a farmer may,without raising the top wage, makeminor adjustments all along the wagestructure. Although one pay grade wouldnot take the brunt of the wagecompression, this approach may createpay compression throughout theorganization.23

SUMMARY

This chapter focused on internalwage structures, the framework forestablishing and maintaining payrelationships at a dairy. An importantfeature of a well-designed pay system isthe provision for rewarding performanceachievements with increased pay, eitherwithin the present job or through apromotion.

Pay is an important work reward formost people. Dairy workers expect theirwages will: (1) cover their basic livingexpenses, (2) keep up with inflation, (3)leave some money for savings orrecreation, and (4) increase over time.

Dairymen can set wages based on(1) job evaluations, and (2) marketvalues. In practice, results of jobevaluations must often defer to marketconsiderations. Once wages are set, paystructures must be continually evaluatedto assure competitiveness in attracting,retaining, and motivating personnel.


1. The Executive Program for AgriculturalProducers (TEPAP) (1994, January).Year II participant comments, TexasA&M University, Austin, Texas.

2. Adams, J. S. (1965). Inequity In SocialExchange. In Advances in ExperimentalSocial Psychology (Vol. 2: 267-299).Edited by L. Berkowitz. New York:Academic Press, Inc.

3. Adams, J. S. (1965). Inequity In SocialExchange. In Advances in ExperimentalSocial Psychology (Vol. 2: 267-299).


Rat

e of

Pay

($) C

E

B

D


Some believe women in the

past did not invest as much

time as men in higher

education, resulting in higher

wages for men. This

argument does not hold up

today, however, when a

greater percentage of women

are pursuing professional

occupations.

Vete

rinar

ian,

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FIGURE 2-11

Sample wage compression.

Edited by L. Berkowitz. New York:Academic Press, Inc.

4. Why Pay More? (1979, December 1). TheNew Republic (pp. 5-6).

5. Billikopf, G. E, and Rosenberg, H. R.(1994, December). What Is Behind PayDifferences? (pp. 12-13, 24) WesternGrower and Shipper.

6. Section was adapted from Billikopf, G. E.,and Rosenberg, H. R. (1994, Decem-ber). What Is Behind Pay Differences?Western Grower and Shipper.

7. Equal Pay Act of 1963, 29, U. S. C., 206{d} {1}.

8. Lorber, L. Z., Kirk, J. R., Samuels, S. L.,and Spellman, D. J. (1985). Sex andSalary: A Legal and Personnel Analysisof Comparable Worth. Alexandria, VA.:The ASPA Foundation. Also see,Cooper, E. A., and Barret, G. V. (1984).Equal Pay and Gender: Implications ofCourt Cases for Personnel Practices(Vol. 9-1). Academy of ManagementReview.

9. Billikopf, G. E., and Rosenberg, H. R.(1984, December 12). What Is BehindPay Differences? Western Grower andShipper.

10. Lawler, E. E. (1977, February). WorkersCan Set Their Own Wages Responsibly(pp. 109-110, 112). Psychology Today.

11. Billikopf, G. E., and Rosenberg, H. R.What Is Behind Pay Differences?Western Grower and Shipper.

12. Rodríguez Silva, W. (1999, April).Universidad de Santiago, Santiago,Chile. RHumanos Forum [RHuman349].

13. Henderson, R. I. (1982). CompensationManagement: Rewarding Performance(3rd ed.) (pp. 284-285). Reston, Va.:Reston Publishing Co., Inc.

14. Henderson, R. I. CompensationManagement: Rewarding Performance(pp. 299). Also see Belcher, D. W.(1974). Compensation Administration.(p. 285) Englewood Cliffs, N. J.:Prentice-Hall.

15. Sayles, L. R. (1957, May). The Impact ofIncentives on Inter-Group WorkRelations—A Management and UnionProblem (pp. 483-490). Personnel; andWhyte, W. F. (1957, March-April).Economic Incentives and HumanRelations (pp. 73-80). Harvard BusinessReview in Belcher, D. W. (1974).Compensation Administration (p. 308).Englewood Cliffs, N.J.: Prentice-Hall.

16. Patten, T. H., Jr. (1977). Pay: EmployeeCompensation and Incentive Plans (pp.291-298). New York: Free Press.

17. Sibson, R. E. (1967). Wages and Salaries

(Revised ed.) (pp. 129-131). New York:American Management Association;cited in Belcher, D. W. CompensationAdministration (p. 287).

18. Belcher, D. W. CompensationAdministration (pp. 287-288).


20. Van Giezen, R. W. (1982, November). ANew Look At Occupational WagesWithin Individual Establishments.Monthly Labor Review. U. S.Department of Labor, Bureau of LaborStatistics.

21. Mullinax, P. E. (1978, March 13). OurUnfair Pay Raises (p. 19). Newsweek.


23. Thompson, D. R. (1972). Handbook ofWage and Salary Administration(Chapter 4: 29-32). New York:McGraw-Hill.

24. Billikopf, G. E. (1987, April 1). A Lookat the Controversy SurroundingComparable Worth (pp.55-56, 58, 50-51,64, 68-70, 72, 74-75). AmericanNurseryman.

25. Greenfield, S. (1984). Review of Women,Work, and Wages: Equal Pay for Jobs ofEqual Value, by Treiman, et al. (Vol. 9-3). Academy of Management Review.

26. Gold, E. M. (1983). A Dialogue onComparable Worth. New York: ILRPress, Cornell University.

27. Major, B., and Konar, E. (1984). AnInvestigation of Sex Differences in PayExpectations and Their Possible Causes(Vol. 27-4). Academy of ManagementJournal.

28. Major, B., and Konar, E. AnInvestigation of Sex Differences in PayExpectations and Their Possible Causes.

29. Lorber, Kirk, Samuels, and Spellman.Sex and Salary: Legal and PersonnelAnalysis of Comparable Worth.

30. Bunzel, J. H. (1972, Spring). To EachAccording to Her Worth? The PublicInterest. Also see, Gold, E. M. (1983).A Dialogue on Comparable Worth. NewYork: ILR Press, Cornell University.

31. Bunzel, J. H. To Each According to HerWorth?

32. Gold, E. M. A Dialogue on ComparableWorth.

33. Lorber, Kirk, Samuels, and Spellman.Sex and Salary: A Legal and PersonnelAnalysis of Comparable Worth.

Unless otherwise indicated, photos inthis chapter were taken by the chapterauthor.



There is much that dairy farmers do not have control over, and what they

do control, they control through people. How these people are hired,

managed and motivated makes a huge difference. Labor management is

much more than forms and paperwork. It is more about finding creative

new ways of increasing productivity and reducing loss.

Reproductive efficiency has majorimpacts on profitability of dairies,primarily through its impact on averagemilk/ cow/ day, but also due to itsimpact on culling and the number ofcalves born. Despite improvedunderstanding of the financial impactsof poor reproductive management,reproductive efficiency has been on thedecline within the dairy industry for thelast 50 years. Consequently, producershave expressed renewed interest in

designing incentive pay programs fortheir employees to try to improvereproductive performance. However,effective incentive programs forreproductive management are rare anddifficult to design and maintain. Beforeattempting an incentive program, oneneeds to understand the key influencersof success, the major limitations facedby breeders, and the concepts andmetrics of monitoring reproduction.After a more complete understanding of

3Incentives for Increasing Pregnancy Rate

Jack

Kel

ly C

lark

Michael W. Overton, DVM, MPVMDairy Production Medicine Specialist

University of California, DavisVeterinary Medicine Teaching and Research Center, Tulare

(559) 688-1731, ext [email protected]

the complexities associated withreproductive management, producerswho still desire to design and implementan incentive program should proceedcautiously and work together with theirveterinary advisor.

Whether in-house or from outsidecompanies, dairy breeders face the sameobstacles with improving reproductiveefficiency…locating cows in heat andsuccessfully placing semen into thesecows.

CRITICAL FACTORS NOTCONTROLLED BY BREEDER

Health problems such as lameness,prolonged anestrus, mastitis, andendometritis are usually beyond thecontrol of the breeders, unless they arealso involved with the day-to-daymanagement of transition cows and theherd's nutrition program.

Recent studies have demonstratedthat the effect of milk production on


Good reproduction starts with

healthy fresh cows and the

cornerstone of fresh cow

management is a structured

monitoring and treatment

program.

fertility within herds is minor comparedto other critical factors such as calvingdifficulty, twins, retained fetalmembranes, metritis, and ketosis.1;2

Excessive weight loss during the earlypostpartum period, often associated withone of the preceding disease problems,leads to an increased risk for metritis,endometritis, and prolonged anestrus, acondition marked by a delayed return tonormal ovulation patterns. Each ofthese conditions leads to problems withreproduction such as poor heatdetection, lower conception rates, andhigher risk for early embryonic deaths.

With such a wide variety ofproblems that may impact reproductiveefficiency, there is the potential for alarge disparity between the effort of thebreeder and the actual success of thereproductive management program.

Disease control and preventionstrategies, along with nutritionalmanagement and cow comfort, interactto impact reproductive efficiency.Unfortunately, these factors are often outof the control of breeders and no amountof financial incentives will allow eventhe best breeding manager to achieve thetargeted goal for reproduction if cowhealth is the limiting constraint. Thenet result is mounting frustrations andan ineffective incentive program.

BIASED MEASURES

Historically, dairy managers andconsultants have used calving interval(CI) or days open (DOPN) as indices ofreproductive performance. Generally,most advisors agree that the optimallactation length to maximize milk/ cow/

IN C E N T I V E S F O R IN C R E A S I N G PR E G N A N C Y RAT E • 37

Sample pregnancy rate (PR)

calculation for an imaginary

100 cow dairy that continues

breeding cows until 301 days

in milk and has a voluntary

waiting period of 50 days.

Cyclenumber

Days inMilk

# ofEligibleCows (cow

cycles)

# of HeatsServiced

BreedingSubmis-sion Rate

# of Preg-nancies

ConceptionRate (CR)

PregnancyRate (PR)

1 50-70 100 56 56% 20 36% 20%

2 71-91 80 63 79% 22 35% 28%

3 92-112 58 36 62% 13 36% 22%

4 113-133 45 25 56% 8 32% 18%

5 134-154 37 21 57% 6 29% 16%

6 155-175 31 17 55% 5 29% 16%

7 176-196 26 14 54% 3 21% 12%

8 197-217 23 12 52% 3 25% 13%

9 218-238 20 10 50% 3 30% 15%

10 239-259 17 9 53% 2 22% 12%

11 260-280 15 7 47% 2 29% 13%

12 281-301 17 8 47% 2 25% 12%

469 278 59.3% 89 32% 19%

day in the herd, without regard totransition management issues or risk ofculling, is something less than 11months. Adding a 40-60 day dry periodto the end of an 11-month lactationresults in a calving interval of 12-13months.

Both CI and DOPN are actuallybiased estimates since they only provideinformation for positive outcomes(pregnant cows) and exclude allremaining animals. Calving intervalonly measures the reproductiveefficiency of cows that becamepregnant, maintained the pregnancythrough a normal gestation length, andcalved again. It neglects cows that failto become pregnant or that are culledwhile pregnant. In addition, there isconsiderable lag in this metric due to thetime it takes a cow to become pregnantand deliver her calf. While DOPN isslightly better, it still does not considercows that have failed to becomepregnant and is very susceptible to theeffects of culling.

For example, clinical experience hasshown that the calculated averageDOPN is almost always going to be

higher for high producing cows.However, to interpret this metric asmeaning that high producing cows aremore difficult to get pregnant is oftenincorrect. As a group, high producingcows stay on the dairy longer than lowproducing cows. Consequently, thesehigh producing cows receive moreopportunities for additional breedings,which results in longer average daysopen and higher services per conception.While the fertility may not be differentper unit of time, high producers havelonger average DOPN because they areretained for their milk production. Onthe other hand, low producing cows tendto either become pregnant or end upbeing culled due to their lower milkproduction, resulting in a shorteraverage DOPN.

PREGNANCY RATE (PR) Pregnancy rate, defined as the

proportion of eligible cows that becomepregnant each 21 day cycle, is thepreferred parameter for evaluatingreproductive performance. PR is a truerate (considers risk of success or failureper unit of time) and is calculated bydividing the number of pregnanciesproduced within a 21-day cycle by thenumber of eligible cows present duringthat same 21-day period. PR is a lessbiased parameter than either DOPN orCI since it considers all eligible cows(not just successes) and contains much


A key component to

improving pregnancy rates is

accurate and intensive heat

detection.

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less lag than CI. It is more sensitive todetecting recent changes in reproductiveperformance and provides usefulinformation for most of the lactatingcows.3 Based on database surveys asreported by Steve Stewart, Bruce Clark,Don Niles, and David Galligan(personal communications), PRnationwide appears to averageapproximately 14-16%. Yet, theultimate goal for optimum reproductivemanagement is a PR of 25-30%.

Since PR is a function of both heatdetection efficiency (HD) andconception rate (CR), attempts toimprove reproductive performance mustconsider both factors. Heat detectionefficiency refers to the percent of cowsfound in heat. In reproductivemanagement, the better term to consideris breeding submission risk (BSR) sinceonly the cows that are found in heat andinseminated affect the ultimate goal ofmore pregnancies. Previousrecommendations have been made tobase incentive programs on heatdetection and the number of cowspresented for breeding. While dairieswant to increase the herd's heatdetection intensity, paying breeders inthis manner promotes overzealousrecording of heats. Inaccurate oroverzealous heat detection will usuallylead to a dramatic decrease inconception rate due to breeding cowsthat are not truly in heat. Sinceconception rate is influenced by both theaccuracy and intensity of heat detection,as well as handling of semen and cowuterine health, overzealous heatdetection may also result in more earlyembryonic death or abortions due toinseminating cows that are alreadypregnant.

Another type of reproductiveincentive that has sometimes beenpromoted is to base breeders incentiveson conception rate. This approach isalso problematic. Within herds,breeders can make their conception ratesimprove dramatically by hand-selectingcows to inseminate. For example, ifbreeders only inseminated healthy, wellconditioned cows that displayed verystrong signs of estrus such as standingfor multiple mounts and discharging

large amounts of perfectly clear, thickvaginal mucous, their conception rateswould rise. However, many other cowsthat might become pregnant ifinseminated, might be skipped. Theresult would be higher conception rates,but fewer pregnant cows.

While conception rate can be easilydecreased by overzealous breeding, it ismuch more difficult to positively impactcompared to heat detection. Breedingsubmission risk can be positivelyimpacted with the implementation ofeither estrus synchronization or by usingovulation synchronization protocols.Since estrus synchronization protocolsdo not control the moment of ovulation,detection of estrus is required.Ovulation synchronization protocolshave gained in popularity because oftheir ability to dramatically improvebreeding submission risk or rate.Examples of these programs includedOvsynch and Cosynch. Each of theseprograms utilizes combinations of


A well organized breeding

cart, good record keeping,

and attention to semen

handling details are

important steps to improving

conception rates.

GnRH (Cystorelin®, Fertagyl®,OvaCyst®, etc.) injections andprostaglandin (Lutalyse®, Estrumate®,Prostamate®) injections to synchronizeovulation and allow dairymen to delivera timed AI. These programs have beenproven to work well, assuming thatcows are able to respond, uterine healthis good, and the injections are actuallydelivered at the appropriate times.

Table 1 demonstrates how PR iscalculated for an imaginary dairymilking 100 cows with a voluntarywaiting period of 50 days. In thissimplistic example, all 100 cows calvedtogether and remained in the herd forthe entire 250+ day breeding period.Starting with the first cycle, 50-70 daysin milk (DIM), 100 cows wereconsidered eligible for breeding. Duringthis time, 56 cows were inseminated,resulting in a heat detection rate of 56%,assuming that all cows detected wereactually inseminated. Of the 56 cowsinseminated, 20 pregnancies resulted,yielding a conception rate of 36% (CRis calculated by dividing the number ofpregnancies, 20, by the total number ofinseminated cows, 56). The pregnancyrate for the first cycle is 20% (PR iscalculated by dividing the number ofpregnancies, 20, by the total number of

eligible cows, 100). The second cycle ismuch better. During the period of 71-91DIM, 80 cows were eligible and 63were inseminated. With a CR of 35%,the resulting PR is 28% or 22/80. Thereason that this cycle has a higher PR isbecause a timed AI program such asOvsynch was used on all cows notinseminated during the first cycle,resulting in a higher breedingsubmission rate of 79%. To calculatethe total PR after the first 2 cycles, weadd the # of pregnancies (20 + 22) anddivide by the total # of eligible cowcycles (100 + 80). The result is 24.4%.The goal of a successful reproductiveprogram is to get cows pregnant asquickly as possible, once the voluntarywaiting period has ended. [Editor'snote: In thinking through an incentivepay program, breeders ought to berewarded according to the difficulty ofthe task, so in this case, the incentivepay structure would be higher duringperiods when no synchronizationprotocols are used. The idea is to payfor effort involved. Otherwise, the dairyfarmer will pay twice: a higher bonusobtained by using a synchronizationprotocol (breeders are more successful)plus the cost of purchasing thesynchronization program.]


Utilizing a team approach to

reviewing breeding records

can help identify problem

areas more quickly.

If an incentive program forreproductive management is stilldesired, there are several alternativesthat may offer improvements overpaying for heats or conception rates.The first is to pay for improvements inPR. Conservative estimates by theauthor for the value of 1 unit change inPR are approximately $10-20/ cow inthe milking herd. The dairyman couldchoose to give a breeder a bonus forimprovements in whole herd PR. Forexample, in a 1000 cow dairy with abaseline PR of 16% (whole herd,including bulls), moving the herd to18% could theoretically result in aneconomic gain for the herd ofapproximately $20,000 per year. Thebreeders could be awarded a percent ofthat gain for the year for improving PR.[Editor' note: There are two somewhatopposing incentive pay principles thatneed to be considered simultaneously:1) As goals are more difficult to achieve,employees should receive higher pay (sothat effort is rewarded evenly); and 2)The greater the amount of incentiveearned by an employee, the greater thebenefit to the dairy. Because breederswill be better able to achieve increasesin the baseline at the lower PR levels(10-11%), greater incentives would needto be provided for achieving the moredifficult higher levels (over 20%). Onthe other hand, dairymen will seeproportionately greater economic gainswith improvements at the lower than thehigher levels. Say a 10% increase at the10% PR level (moving to 11% PR) will

yield substantially greater savings than a10% increase at the 25% PR level(moving to 27.5% PR). There comes apoint where improvements beyond acertain level require too much effort forthe return. A dairy farmer needs to beclear as to where that point is.]

In order to use PR change as anincentive, the breeder must understandthe concept of PR and the various forcesthat influence it including cow health,heat detection, conception rate, andmovement of cows into bull pens. Theauthor's research shows that keepingcows in AI pens longer results inimproved PR's. Records used forevaluation and incentives should reflectthe overall risk of becoming pregnantfor the entire herd by evaluating the PRof both AI and bull pens. If only AIpens are considered for incentives andbreeders have the ability to influence themovement of cows or the classificationof breeding eligibility, problems mayresult due to manipulation of the systemjust to improve the AI numbers. Cowswith fertility issues might be moved tobull pens or classified as "do not breed,"thus removing them from the eligiblepopulation. To prevent this potentialsource of abuse, safeguards must be putin place such as using whole herd PRand not just the AI pens and monitoringof the proportion of cows recorded as“do not breed.”

Another possible incentive involvespaying for compliance within thebreeding system. As previouslymentioned, pregnancy rate is determined


Good cow comfort can help

reduce lameness and

improve not only milk

production, but also

reproduction.

by both breeding submission rate andconception rate. Paying bonuses forimproved compliance within theOvsynch program should lead toimproved PR assuming cows areactually inseminated. For example, cowsare started on Ovsynch by receiving aninjection of GnRH. In order for theprogram to be successful, cows mustreceive all injections and be inseminatedas per the protocol unless observed inheat prior to its completion. Incentivescould be set up to pay for levels ofcompliance within the system such as95% or 98% of cows receiving aninsemination within 10 days of receivingthe first GnRH.

SUMMARY

Effective incentive programsfor reproductive management are veryrare and can be difficult to design.Knowledgeable breeders or workers canfind ways to manipulate the system totheir advantage or may becomefrustrated over a lack of control withinthe dairy system. Before attempting anincentive program, dairy producers,breeders, and their veterinary advisorsneed to understand the key influences ofsuccess, the major limitations faced bybreeders, and the concepts and metricsof monitoring reproduction. Commonlyused incentive programs from the past

such as reducing days open, or payingfor improved heat detection orconception rates independently, oftenresult in failures within the system.Producers who still desire to design andimplement an incentive program shouldproceed cautiously, work with theirveterinary advisor, and consider basingincentives on pregnancy rate changes orimprovements in compliance within thereproductive management system.


1. Grohn YT, Rajala-Schultz PJ.Epidemiology of reproductiveperformance in dairy cows. AnimalReproduction Science 2000; 60:605-14.

2. Loeffler SH, de Vries MJ, Schukken YH.The effects of time of diseaseoccurrence, milk yield, and bodycondition on fertility of dairy cows.Journal of.Dairy Science 1999;82:2589-604.

3. Galligan DT, et al. Optimal EconomicGoals in Reproduction: UnderlyingConcepts from Semen to Culling inProceedings of the NationalReproduction Symposium. Jordan, E. R.55-64. 1994.


Calf raising on dairies is veryimportant to the profitability of a dairy.Managed properly, the calf program cansupply a surplus of healthy replacementcattle to the dairy. If managed poorly,the calf program can consume moneyand resources, strain relationships andcause the dairy to purchasereplacements. Dairy calf raisingprograms have many variations and caninclude several different managementareas and systems on the farm.Successful calf raising begins with the

health, condition and sanitation of thelate-gestation pregnant cows and heifersand ends when the heifer enters themilking herd. This discussion will focuson the system from birth to weaning,because this is the most labor intenseperiod of calf raising and takes the mostskill and management.

Dairies can raise their replacementheifers on site, have them custom raisedat calf ranches for any part of thegrowing cycle, or sell them after birth.

4Incentives for Dairy Calf Raising

Jim ReynoldsChief or Service, Dairy Production Medicine

UC Davis School of Veterinary Medicine(559) 786-4584

[email protected]

Bria

n M

anni

ng

CALF RAISING SYSTEMS ONDAIRIES OR CALF RANCHES

Calf raising systems can be outlinedas the following parts:1) Calves must be born in a clean and

dry area.· Sanitation determines the pathogen

load, or exposure to bacteria andother disease agents. Calves borninto dirty conditions will be exposedto pathogens.

· Calves born into wet conditions willlose body temperature and will needto expend energy to stay warm.Holstein calves are born with about48 hours of energy reserves.

2) Dystocias must be attended bytrained people in appropriatefacilities.

· Well-designed maternity areas allowworkers to attend a cow in laborwhen she needs help. This will

result in more live calves, better cowreproductive health and better calfhealth.

· Poorly designed facilities require extralabor or result in ignoring cows thatneed assistance. This will increasethe still-born rate and the number ofcalves born distressed.

· Attending dystocias is a skilled taskthat truly requires training so thattrauma to the cow is minimized andthe chance for a live calf ismaximized. The herd veterinarianshould be used to help train theworkers involved with deliveringcalves.

· Appropriate and sufficient quantities ofequipment, lubricants anddisinfectants must be available to theworkers at the maternity area.

3) Calves must be fed adequate amountsof clean colostrum within a fewhours of birth.

IN C E N T I V E S F O R DA I RY CA L F RA I S I N G • 45

Healthy calves start from

birth: a clean and dry calf

from birth is essential. The

goal for the maternity area is

to provide clean bedding and

appropriate are for both the

dam and the calf.J.

W. S

chro

eder

, ND

SU

· Calves have an absolute requirementfor colostrum. Cattle are a speciesthat does not transfer antibodiesfrom the dam to the fetus duringpregnancy. Therefore, the newborncalf is dependent on colostrum forpassive immunity as well asinitiation of maturation of theimmune system.

· Colostrum has twice the solids andconsiderably more energy andprotein than regular milk or milkreplacer.

· Calves need colostrum for energy,protein, antibodies and to initiate thedigestive enzymes and parts of theimmune system.

4) Calves must be housed in clean anddry facilities.

· Sanitation is one of the keydeterminants of the pathogen load inthe calf's environment. Filth andmanure expose calves to pathogens,clean housing protects calves.

· Manure, mud and water decrease theinsulating ability of hair and reducethe calf's ability to regulate bodytemperature. A wet calf will use upto 20% of it's' energy to stay warmin cold weather.

· Fly control is very important becauseflies transfer pathogens around a calffacility. Keeping the area in andaround calf housing clean, dry andfree of manure and water is veryimportant.

· Calves must be able to turn aroundwhen kept in individual hutches.

· Calves must be provided dry bedding,shade from direct sunlight andshelter from rain or snow.

5) Calves must be fed adequate amountsof energy and protein for growth andhealth.

· Whole milk provides more caloriesthan most milk replacers.

· Calves in positive growth are healthierand require less medical treatmentthan calves that lose body condition(fat stores) during early growth.

· Body condition scores of calves from 7to 28 days of age should not getbelow 3 (1 to 5 scale). Thin calvesare the result of inadequate energy.

6) Rumen development must bemanaged properly.

· Calves are born with small,undeveloped rumens.

· Rumen development occurs as aresponse to volatile fatty acids(VFAs) released during digestion ofcarbohydrates.

· Grain intake determines VFAproduction. Therefore, it isimperative that calves are presentedfresh, palatable grain daily so theywill eat grain and make VFAs.

· A calf can develop a rumen, become afunctional ruminant and get energyfrom grain by about 3 weeks of lifeif managed properly.

· Clean water must be provided to calvesdaily. Calves need water to stayhydrated and grain intake isdependent on water intake.

7) Calves must be observed daily bytrained personnel for attitude, bodycondition score, hygiene and health.

· Workers must be trained to understandhow to observe calves for the aboveparameters.

· Workers must be trained to implementtreatment protocols when theyrecognize sick calves.

· Calf health is determined by positivegrowth, which can be measured by


J.W

. Sch

roed

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DS

UNewborn calves have an

absolute requirement for

colostrum. Colostrum

provides more energy and

protein than regular milk or

milk replacer and is the only

source of antibodies in the

newborn calf.

body condition score observations.· Workers must have the ability or

authority to correct problems inhousing maintenance, feeding,handling or treatment or be able todirect their observations tosupervisors who will implementnecessary actions.

· Calves that require euthanasia must beidentified and humanely euthanized.

8) Calves should be moved fromindividual housing to group pens assoon as possible.

· Individual housing and liquid feedingis more expensive than grouphousing and solid feeding.

· Calves can only be removed fromliquid feed after they have developedrumens and are eating and digestingover 1 pound of grain daily for atleast 3 days in a row.

· Target body weights should beestablished for each facility thatallow healthy transition fromindividual pens to group pens.

· Calves can generally be smaller whenmoved into small groups of 5 to 10calves. Calves should be largerwhen moved into groups of over 30calves.

· Most dairies target 175 pounds forcalves before moving fromindividual pens to group pens.

INCENTIVE PAY PROGRAMS INCALF RAISING PROGRAMS

Causal incentive pay programs,where the employee never knows whena reward will be given, are used onsome farms. Examples of these


The goal in the hutch system

is to have calves that are

alert and curious. All calves

must have fresh and clean

water and grain available

everyday so that they

develop rumens quickly and

maintain normal hydration.

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programs are when employees are givengifts, such as restaurant vouchers orcash gifts, when the owner or managerfeels that work has been productive orthe farm income has been good. Theseunstructured attempts to direct employeebehavior by spontaneous rewardsusually fail in the long term because theunderlying reasons for the rewards, suchas hard work or increased income, havenot been clearly defined and areachieved only by happenstance and notmanagement.

Successful calf raising requiresclearly defined goals, objectives andtactics. Workers should be trained totheir jobs and tasks and understand whatthe outcome goals are for their specificareas of work. Only then will structuredincentive pay programs work. Incentivepay can be arranged for any work doneby employees that produces moreoutcome or better results than they areexpected to provide for their base salary.

Incentive pay can be set for any ofthe areas described in the calf raisingsystem outline above. Any effective andlasting incentive pay program willrequire considerable interest and effort

by management. Management will haveto establish targets, collect the data orinformation related to each target,analyze the information and report toeach employee whether or not the targetwas met. If the employee did not meetthe target(s) it is necessary to tell theemployee why they will not get theincentive pay and work with them tocorrect the situation. Many times targetsare not met for reasons that are out ofthe employee's control but requiremanagement or the supervisor'sinvolvement. For example, a workermay do a very good job of feedingcolostrum to the calves but the milkingcrew may be providing the wrong milkto the calf worker, or they may not becooling the evening colostrum, thusallowing bacteria to incubate. Ifmanagement does not correct the partsof the system that are outside theworker's control the worker may becomedisgruntled and the incentive programmay become a disincentive program.

Actual dollar amounts to be givenfor each targeted incentive program aredifficult to determine and will dependon the particular farm. Losses from calfdeaths, less than desired weight gainsand more than desired medicine costscan be calculated and the expectedsavings shared with employees when thetargets are met.

Potential areas for incentive pay inthe calf raising system could then be thefollowing:

Rates are usually defined as numberof cases/ number of eligible animals permonth. The analysis can be doneweekly of quarterly, depending on thesize and needs of the farm. [Editor'snote: Even if the employees are notpaid right away, the more frequent thefeedback, the better. This is especiallytrue when getting started on an incentivepay program]

DOA rate (dead on arrival)

This is usually defined as calves thatare born dead or die within the first 24hours after birth. The rate variesconsiderably by dairy due to thefacilities, worker training, staffinglevels, pre-partum cow nutrition, pariety


An easy way to monitor the

nutrition program in young

calves is to observe body

condition as they grow.

Body condition can be

scored from 1 (emaciated or

very thin) to 5 (fat) based on

the amount of covering over

the pelvis and ribs. Calves

should not be less than 3

body condition score as they

grow. The calf pictured is

about a 3 and represents a

healthy calf.

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of the dam, housing and the owner'sattitude and desires.

Calculation: number of calvesDOA/number of calves born per timeperiod.

Suggested targets: < 5% = excellent;< 10% = achievable.

Possible corrective actions whentarget not met: increase staffing toaccommodate increases calving load,retrain employees, investigate pre-partum cow and heifer conditioning.

Colostrum feeding

Because calves require colostrum itis imperative that they receive itpromptly. Colostrum feeding iscommonly monitored by testing theblood of the calf for evidence ofabsorbed maternal antibodies. This canbe done either by radialimmunodiffusion, salt precipitation(sodium sulfite turbidity test) or by totalserum protein determination (TP). Totalproteins are determined with a hand-held refractometer and are easiest andmost practical for on-farm use. Calvesare born with about 4.5 mg/dl of TP.Levels over 5.0 mg/dl between 2 and 8days of age indicate that the calfreceived and absorbed maternalantibody proteins. Levels can be ashigh as 6.5 to an occasional 7.0 mg/dl.Dehydration and age interfere withinterpreting TP values.

Monitor: routinely (weekly ormonthly) test a sample of calves fortotal serum protein. Usually 10 calvesare bled for this test.

Suggested targets: >80 % of calvesshould be above 5.0 mg/dl TP. > 50 ofcalves should be > 5.5 mg/dl TP.

Possible corrective actions whentarget not met: verify quality ofcolostrum with colostrometer, verifygood quality colostrum is arriving atmaternity area on time,

Nutrition and growth rates in youngcalves

Positive growth of calves is thesingle most important thing associatedwith health in calves. If calves aregrowing and gaining weight they can

resist disease. If they are losing bodycondition or weight they will get sick.Calves are expected to grow at least 1.7to 2.2 pounds per day from birththrough the end of the liquid feedingperiod (usually 60 to 80 days of age).Body condition is an excellent tool tomonitor the feeding program.

Monitor: body condition scores incalves in the individual hutches. Onceper week determine the proportion ofcalves too thin (< 3 BCS ) or normal (3or > BCS).

Suggested target: > 80 % of calvesless than 30 days old should be 3 orgreater BCS ( 1-5 scale).

Possible corrective actions whentarget not met: Review the amount ofenergy available in the milk replacer andthat the milk replacer is mixed properlyand the correct amount fed. Calves mayrequire increases in calories dependingon ambient temperature and pathogenload. The milk replacer may needadjustment to control the body conditionscores within desired limits.

Rumen development

Calf rumen development isdependent on volatile fatty acidproduction in the rumen from bacterialbreakdown of carbohydrates. This iscompletely manageable and shouldhappen as early as possible so that thecalf will receive energy from grain, acheaper feed than milk or milk replacer.Calves can be developed into functionalruminants by 25 days of age.

Monitor: calculate the proportion ofcalves chewing their cuds in the 25 to35 day-old group.

Suggested target: at least 20 % ofthe calves in this group should bechewing cuds when observed resting.

Possible corrective actions whentarget not met: review bucketmanagement. Make sure clean water isavailable from day 1 of age and grain isclean, fresh and palatable.

Health of calves

Measuring the mortality (MR) ormorbidity rate are outcomes that are toolate in the management system to bevery useful for economics or welfare.


The mortality rate is commonlycalculated and is useful as a clearmeasurement of success or failure of thecalf raising system. The morbidity rate(number of sick calves in a time period)is difficult to determine accuratelybecause the recognition and diagnosis ofcalf diseases can be subjective byemployees and most calf ranches ordairies do not adequately recordmorbidity information.

Calculate: divide the number ofcalves that died in a time period by thenumber on the ranch during that timeperiod. An easy way to estimate thedenominator is to average the begginginventory and the ending inventory (addthe number of calves in the system atthe beginning of a month and thenumber at the end of the month anddivide by 2). It is most useful todetermine mortality rates for specificage, or management, groups such as MR

for calves less than 30 days of age andMR for calves in the group pens.

Suggested targets: overall MR forthe replacement system: < 2 % per year= excellent, < 5 % per year =achievable, < 10 % per year = averagedairy or calf ranch.

Possible corrective actions whentarget not met: Review all areas of thecalf raising system, but focus onsanitation and nutrition.


1. This chapter builds on Carol Collar’schapter in the 3rd edition of DairyIncentive Pay.


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Consumers, processors and regulato-ry agencies are increasingly interested inthe safety and wholesomeness of milk,which in turn has resulted in a greateremphasis on management practices thatinsure the production of high qualitymilk. Despite technical advances inmilk processing, the quality of milk isstill determined at the dairy farm.

Milkers have the important, yet

routine, job of harvesting the milk fromthe udder of the cows in a manner thatmaintains milk quality and protects theudder from infections. In addition, themilkers have the responsibility ofwashing and sanitizing the milkhandling, cooling and storage system onthe dairy. They handle a complex set ofequipment and chemicals that affectmilk quality. During milking they detectcows with clinical mastitis. Other non-

5Milk Quality Incentives1

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John H. Kirk, DVM, MPVMExtension Veterinarian

University of California, DavisSchool of Veterinary Medicine, Tulare

(559) 688-1731 Ext [email protected]

milking employees also influence milkquality. Some employees manage thebedding and housing areas where thecows live. Other employees provideantibiotic treatments for cows that areinfected with mastitis and manage thecows while they are in the hospital pen.Given that these employees have aconsiderable influence on milk quality,there are important questions as to howto motivate them to maintain highstandards of performance. The use ofincentives to motivate dairy employeesis often cited as the means to improveperformance. The effectiveness ofincentives depends on the programdesign and should be a part of a largerprogram of employee supervision andtraining.

MILK QUALITY MEASURES

Milk from the dairy is frequentlyanalyzed for several milk qualityparameters. Such data is generated bothon the dairy and by the milk processor.There are actually so many parametersthat are analyzed that employees caneasily be overwhelmed by theinformation. It is the job of the dairymanagers to select and underscore thedata that is most appropriate to thespecific goals sought after. The dairymanager must transform the data into

information that the employees canrelate to their daily job performance.Here, we will consider some of the mostcritical milk quality measures.

Standard Plate Count (SPC)

The SPC is the total quantity ofviable bacteria in a millimeter (ml) ofraw milk expressed as CFU/ml (colonyforming units per ml). The bacteria arecounted but not specifically identified.The SPC is performed on milk samplescollected from the bulk tank. This isusually done at least monthly by themilk processing plant. The SPC isprimarily an indicator of the sanitationused by milkers as they milk the cows,the capacity of the equipment to rapidlycool the milk to less than 40 F within 2hours after milking, and the cleaningand sanitizing of the milking equipment.

Thus, the SPC will be elevated whencows are milked with wet or soiledudders and teats, with unclean orinadequately sanitized milkingequipment, or the system fails to rapidlycool the milk to less than 40 F. The SPCmay also be elevated when cows withmastitis due to Streptococcus agalactiaeor environmental Streptococcus speciesare milked into the bulk tank. Damagedor over-used inflations or liners mayalso influence the SPC.

Milking employee influence on SPC:Employees are responsible for (1)attaching the milking units only to cowswith clean and dry udders and teats; (2)reporting problems with wash and drypen equipment, or lack of towels orsupplies to clean and dry the udders andteats to management; (3) followinginstructions for properly cleaning andsanitizing the milk system; (4) detectingcows with mastitis at each milking; and(5) ensuring that protocols for handlingand treatment of cows with mastitis arefollowed (milk from cows with mastitisor those treated with antibiotics shouldnot be sent to the bulk tank).

Influence by other employees onSPC: Workers responsible for properlybedding the free stalls and corralsshould provide adequate bedding tokeep the cows clean and dry. Failure toprovide a clean, dry, comfortable place


When milkers properly clean

and dry the teats before

attaching the milking

machine, they will harvest

high quality milk.

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for the cows to rest may result in overlydirty cows arriving at the milk parlorand may make it more difficult for themilkers to properly prepare the cowsprior to milking.

Management influence on SPC: Themanagement is responsible for mainte-nance and function of the wash and drypen equipment, provision of adequatesupplies of towels in the milking parlor,provision of cleaning and sanitizingchemicals, function of the water heatersor adequate amounts of hot water for thecleaning equipment, maintenance of themilking equipment function and thefunction of the milk cooling equipment.Management is also responsible for pro-viding clean, dry housing areas for thecows. Management is responsible totrain the milkers in the proper milkingtechniques.

SPC guidelines: SPC counts of<5000 CFU/ml are achievable andindicate high quality milk. Realistically,SPC of <10,000 CFU/ml. can beconsistently achieved on most dairiesand are acceptable. SPC counts >10,000CFU/ml. indicate a need forimprovement.

Laboratory Pasteurized Count (LPC)

The LPC is the measure of bacteriathat survive after pasteurization in thefinished milk products. These bacteriacome from the environment of the cow(Streptococcus sp. and the coliforms)and incubate on the milking equipment.These surviving bacteria produce offflavors and reduce the shelf-life of dairyproducts. The LPC is performed on bulktank milk samples at least once permonth by most milk processors. TheLPC generally reflects the sanitationlevel during milking and the adequacyof the milking system cleanup betweenmilking periods. Worn rubber liners orgaskets may harbor bacteria andcontribute to the LPC count. The LPCand the coliforms counts may beelevated with wash-up problems.

The LPC will be elevated when themilking system is not adequatelywashed and sanitized allowing thecontaminating bacteria to grow.Elevated LPC counts occur when thewash water is under 120 F, there isinsufficient agitation of the wash waterduring washing, with faulty air injectors,

MI L K QU A L I T Y IN C E N T I V E S • 53

Milkers should insure that the

milking equipment is properly

cleaned and sanitized

between milking periods and

should maintain the

cleanliness of the equipment

during milking to insure high

quality milk.

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by lack of enough or low quality soapsand chemicals, and incorrect use ofsoaps and chemicals. The sources ofthese bacteria are wet, dirty udders andteats and failure to properly prepare thecows before milking.

Milking employee influence on LPC:Milkers are responsible for milkingcows with clean, dry udders and teats.They should also alert the managementwhen worn rubber liners or gaskets arenoticed. The milkers are responsible forfollowing the wash and sanitationprotocols to insure an adequatelycleaned and sanitized milking system.

Influence by other employees onSPC: Workers responsible for properlybedding the free stalls and corralsshould provide adequate bedding tokeep the cows clean and dry. Failure toprovide a clean, dry, comfortable placefor the cows to rest may result in overly

dirty cows arriving at the milk parlorand may make it more difficult for themilkers to properly prepare the cowsprior to milking.

Management influence on SPC: Themanagement is responsible formaintenance and provision of cleaningand sanitizing chemicals, function of thewater heaters or adequate amounts ofhot water for the cleaning equipment,maintenance of the milking equipmentfunction and the function of the milkcooling equipment. Management isresponsible for training employees toproperly clean and sanitize the milkingsystem.

LPC guidelines: LPC counts <50CFU/ml are attainable. LPC countsshould be <200 CFU/ml. Counts >200CFU/ml are considered high and shouldbe investigated.


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While the milkers are

responsible for using the

milking equipment properly

to collect milk of high

quality, the managers of the

dairy are responsible for

overall maintenance of the

milking equipment and

training employees.

Coliform Count

The coliform count reflects the ex-tent of fecal bacteria in the milk. Thecoliform count is performed on raw milksamples from the bulk tank. Coliformcounts are usually performed at leastmonthly by the milk processor. The col-iform count may reflect milking cowswith wet, manure soiled udders and teatsor growth of coliforms within the milk-ing system. Cows with coliform mastitisrarely influence the coliform count.

The coliform counts may be elevatedwhen milkers fail to properly clean anddry the udder and teats prior to milking.Counts may be elevated when dirtymilking equipment is used to milk thecows or when the water source iscontaminated.

Milking employee influence on thecoliform count: Milkers are responsiblefor milking cows with clean, dry uddersand teats. The milkers are responsiblefor following the wash and sanitationprotocols to insure an adequatelycleaned and sanitized milking system.

Influence by other employees on thecoliform count: Workers responsible forproperly bedding the free stalls andcorrals should provide adequate beddingto keep the cows clean and dry. Failureto provide a clean, dry, comfortableplace for the cows to rest may result inoverly dirty cows arriving at the milkparlor and may make it more difficultfor the milkers to properly prepare thecows prior to milking.

Management influence on thecoliform count: The management isresponsible for maintenance andprovision of cleaning and sanitizingchemicals, function of the water heatersor adequate amounts of hot water for thecleaning equipment, maintenance of themilking equipment function and thefunction of the milk cooling equipment.Management is responsible for trainingemployees to properly clean and sanitizethe milking system.

Coliform count guidelines: Coliformcounts are attainable at <50 CFU/ml.Counts of 10 CFU/ml are associatedwith high quality raw milk. Coliformcounts > 100 CFU/ml suggest a need toinvestigate the source of the counts.

Preliminary incubation count (PIC)

The PIC count is a measure of bac-teria that will grow at refrigerator tem-peratures. The PIC gives an indicationof the on-farm sanitation and holdingtemperatures of the milk in the bulktank. It is similar to the SPC in that it isperformed on raw milk from the bulktank; however, in the PI testing the milkis held at 55 F for 18 hours before cul-turing in the same method as the SPC.

The PIC may be elevated when themilking handling and cooling system isnot properly cleaned and sanitized orwhen cows are milked with poor udderpreparation. Failure to rapidly cool themilk (<40 F within 2 hours), marginalcooling or prolonged storage times mayresult in high PI counts. Expanding themilking cow numbers and extending themilking times without increasing thecooling capacity may result in elevatedPIC.

Milking employee influence on PIC:Employees are responsible for attachingthe milking units only to cows withclean and dry udders and teats.Employees are responsible for reportingproblems with wash and dry penequipment or lack of towels to clean anddry the udders and teat to the dairymanagement. Employees are responsiblefor following instructions for properlycleaning and sanitizing the milk system.Lack of supplies or faulty equipmentshould be reported to the management.Employees should report problems withcooling the milk to the management.

Influence by other employees on thePIC: Workers responsible for properlybedding the free stalls and corralsshould provide adequate bedding tokeep the cows clean and dry. Failure toprovide a clean, dry, comfortable placefor the cows to rest may result in overlydirty cows arriving at the milk parlorand may make it more difficult for themilkers to properly prepare the cowsprior to milking.

Management influence on PIC: Themanagement is responsible for provisionof adequate supplies of towels in themilking parlor, provision of cleaningand sanitizing chemicals, function of thewater heaters or adequate amounts of


hot water for the cleaning equipment, aswell as the maintenance and function ofthe milk cooling equipment.Management is also responsible forproviding clean, dry housing areas forthe cows. Management is responsible totrain the milkers in the proper milkingtechniques and operation of the cleaningand sanitation of the milking equipment.

PIC guidelines: The PIC values aregenerally higher than the SPC. A PIC 3to 4 times the SPC suggests a potentialproblem with cleaning and sanitation ofthe milking system or poor udderpreparation prior to milking. Highquality milk will have a PIC of <10,000CFU/ml. Counts of <50,000 CFU/ml areacceptable. PIC >50,000 CFU/ml or >4times the SPC should be cause forconcern.

Sediment

Sediment is a measure of thecleanliness of the cows being milked.Sediment is the fine debris that iscapable of moving through the milkfilter into the bulk tank milk. Highsediments may also be associated withhigh bacteria counts.

Sediment may enter the milk whenextremely fine sand is used in thebedding materials of the cow housing. Itmay also enter the milk when themilkers are not using water to clean theudders and teats prior to milking.

Employee influence on sediment:Sediment may enter the milk when themilkers are told not the wash the uddersand teats prior to milking the cows.Sediment may also be found whenmilkers are not properly preparing theudders and teats during wet weather.

Management influence on sediment:Sediment may increase in the milk whenthe management instructs the milkersnot to wash the udders and teats prior tomilking. Sediment may also occur whenmanagement decides to use fine sand inthe bedding areas for the cows.

Sediment guidelines: Sedimentshould not be detected in the milk.

Added water

The milk is tested by the milkprocessor for added water using a

freezing point test. When water is addedto the milk, the freezing point will bealtered. Added water is commonly foundwhen water is accidentally left in themilking system between milkings.

Employee influence on added water:Added water may be found when themilkers fail to properly drain themilking system between milkings.

Management influence on addedwater: The management should instructthe milkers to insure that the milkingsystem is completely emptied of wash orrinse water prior to every milkingperiod.

Added water guidelines: No addedwater should be detected.

Antibiotic drug residues

Antibiotics are commonly used totreat mastitis or other conditions in dairycows. Each antibiotic has labelinstructions that indicate the approvedreasons for using the antibiotic, the doseor amount of the antibiotic, how oftenthe antibiotic dose should be repeated,the route of administration, and the typeof cow permitted to be treated with theantibiotic. Each antibiotic preparationalso has a specific withdrawal time forboth milk and meat. The withdrawaltime is the time from the last treatmentwith the antibiotic until the milk ispermitted to be put in the bulk tank forshipment to the processor.

Antibiotic residues occur whenemployees fail to follow the specificlabel instructions when treating cows.They may also occur when treated cowsare accidentally milked into the bulktank before the withdrawal period iscompleted. Residue may also occurwhen employees fail to clearly identifytreated cows with chalk marks, legbands or neck chains. They may alsooccur when written records oftreatments are not kept or are notchecked prior to returning the treatedcow to the milking herd. Treated cowsshould be housed and milked separatelyfrom main milking herd.

Milking employee influence onantibiotic residues: Residue may occurwhen employees milk treated cows thathave been identified as treated.


Other employee influence on antibi-otic residues: Non-milking employeesmay be charged with properly treating,identifying and separating milking cowsfrom the main milking herd. Employeesmay inadvertently cause an antibioticresidue by using an antibiotic in a man-ner other than indicated on the drug la-bel. Residue may also occur when em-ployees treat cows and fail to properlyidentify the cows and separated from themilking herd. Employees may causeresidue by removing treatment identifi-cation and returning the treated cows tothe milking herd before the milk with-drawal time has been completed.

Management influence on antibioticresidues: Management is ultimatelyresponsible to train all employees inproper antibiotic use and drug residueprevention. Management along with thedairy veterinarian should developwritten protocols for use of antibioticsand records systems to properlydocument antibiotic use as a mean toprevent residues.

Antibiotic residue guidelines:Antibiotic residue in milk should not bepermitted.

Somatic cell counts (SCC)

Low levels of somatic cells arenormally found in milk (<100,000cells/ml). The somatic cell count can bemeasured on bulk tank milk or milkfrom individual cows. When mastitisoccurs in a cow, the somatic cell count(SCC) in the milk for that cow willincrease in approximate proportion tothe severity of the infection within theudder. Milk production is inverselyrelated to SCC. An elevated SCC in aparticular cow will also influence thesomatic cell count of the bulk tank milk(BTSCC). Elevated BTSCC will reducethe quality of the milk from the herdresulting in lowered herd milkproduction, loss of quality milkpremiums, reduced cheese yields anddecreased shelf-life of the finishedproducts.

The individual cow SCC increaseswhen there is an infection within theudder. These infections are causedprimarily by bacteria and mycoplasma.

The source of these pathogens may beinfected cows or the environment.Infected cows transfer infections duringthe milking process on the milkingmachine and hands of the milkers.Environmental infections enter the udderthrough the teats from sources in thecow housing areas in between milkingperiods. Both clinical and non-clinicalcases of mastitis contribute to theBTSCC. The BTSCC is reflective on aqualitative basis to the extent ofindividual cow SCC or mastitisinfections.

Milking employee influence on SCC:The milkers play an important role in


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Fore-stripping of each

quarter prior to attaching the

milking units allows for early

detection and treatment of

mastitis resulting in lower

somatic cell counts.

the control of mastitis: particularlycontagious mastitis that spreads fromcow to cow during milking. Milkersshould only put milking units on cowswith clean, dry udders and teats.Milking units should be promptlyremoved from the cows when milkceases. Every cow should be treatedwith a post-milking teat dip that coversat least 90% of the teat. Milkers shouldpre-strip all cows in order to detectclinical mastitis at the earliest time afterthe onset of mastitis. Milkers shouldfollow the dairy protocol for informingthe dairy management when cows withclinical mastitis are detected.

Non-milker employee influence onSCC: Bedding in the housing areasshould be kept clean and dry to preventexcessive growth of bacteria that maycause mastitis from environmentalsources. Employees that treat cows with

mastitis should use appropriateintramammary infusion methods toprevent the introduction of pathogensinto the mammary gland and the spreadof pathogens to other cows. Employeesthat treat cows with mastitis should notreturn the treated cows to the milkingherd until they have clinically normalappearing milk. Employees that milk thecows in the hospital pen should be verycareful not to spread mastitis from onecow to another via the milking units ortheir hands.

Management influence on SCC:Management should insure that milkersare properly trained in the application ofmastitis prevention and control measuresduring the milking process. Thereshould be a written or pictorial protocolprovided to the milkers stating theprocedure for handling cows detectedwith clinical mastitis. Workers who treat


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All teats should be

completely covered with teat

dip after the milking

machines are removed at

the end of milking to control

contagious mastitis and

produce high quality milk.

cows with mastitis should be trained inproper intramammary infusiontechniques. Management should provideadequate bedding materials and aschedule for bedding management thatprovides for a clean, dry place for allcows to rest. Management should use aprogram of total dry-cow antibiotictreatment for all cows at the end of theirlactation. Management should reviewinformation on the prevalence ofmastitis within the herd on a regularbasis and send chronically infected cowsto market.

Guidelines for SCC: On anindividual cows basis, cows with SCC<250,000 cells/ml have a low risk ofbeing infected with mastitis at any stageof lactation. Cows with SCC >250,000cells/ml have an increased risk of beinginfected. Almost all cows with a SCC>500,000 cells/ml will be culture-positive for a mastitis pathogen.Repeated SCC > 250,000 cells/ml on aconsecutive or intermittent basis 2 or 3of 4 test periods) indicates a chronicinfection. BTSCC <200,000 cells/mlindicate high quality milk. BTSCC>300,000 cells/ml suggest a need toreview the dairy mastitis prevention andcontrol program. In some milkcooperatives, BTSCC >400,000 cells/mlwill result in a lower price for the milk.For sale off the dairy in California, theBTSCC must be <600,000 cells/ml.

Clinical mastitis

Clinical mastitis is the form ofmastitis that is visibly apparent to themilkers. Clinical mastitis will result inabnormal milk (flakes, clots, watery)and possibly signs of sickness in thecow as well. Milk from cows withclinical mastitis should not be milkedinto the bulk tank milk for sale. Milkfrom cows with clinical mastitis willalso have elevated SCC and be of poorquality. Cows detected with clinicalmastitis should be segregated from themilking herd and handled according tothe herd protocol. Early detection andtreatment of clinical mastitis can beexpected to reduce the incidence ofchronic, non-responding cases ofmastitis.

Most all forms of mastitis pathogensare capable of causing clinical mastitis.The Staphylococcal sp., Streptococcalsp. and mycoplasma generally causemild clinical mastitis that may becomechronic while the coliform bacteria oftencause severe, life-threatening mastitis.

Milking employee influence onclinical mastitis: Milkers should pre-strip all cows prior to milking in orderto detect clinical mastitis at the earliesttime after the onset of mastitis. Milkersshould follow the dairy protocol forinforming the dairy management whencows with clinical mastitis are detected.The milkers play an important role inthe control of mastitis particularcontagious mastitis that spreads fromcow to cow during milking. Milkersshould only put milking units on cowswith clean, dry udders and teats.Milking units should be promptlyremoved from the cows when milkceases. Every cow should be treatedwith a post-milking teat dip that coversat least 90% of the teat.

Non-milker employee influence onclinical mastitis: Bedding in the housingareas should be kept clean and dry toprevent excessive growth of bacteriathat may cause mastitis fromenvironmental sources. Employees thattreat cows with mastitis should useappropriate intramammary infusionmethods to prevent the introduction ofpathogens into the mammary gland andthe spread of pathogens to other cows.Employees that treat cows with mastitisshould not return the treated cows to themilking herd until they have clinicallynormal appearing milk. Employees thatmilk the cows in the hospital pen shouldbe very careful not to spread mastitisfrom one cow to another via the milkingunits or their hands.

Management influence on mastitis:Management should insure that milkersare properly trained in the application ofmastitis prevention and control measuresduring the milking process. Thereshould be a written protocol provided tothe milkers stating the procedure forhandling cows detected with clinicalmastitis. Workers who treat cows withmastitis should be trained in properintramammary infusion techniques.


Management should provide adequatebedding materials and a schedule forbedding management that provides for aclean, dry place for all cows to rest.Management should review informationon the prevalence of mastitis within theherd on a regular basis and sendchronically infected cows to market.

Guidelines for clinical mastitis: Areasonable goal is to limit clinical casesof mastitis to 2 cases or less per 100cows per month. This goal for clinicalmastitis might be expressed as <24% ofthe cows affected per year.

It should be clear at this point, thatthe production of high quality milk is acomplex task with inputs from themilkers, other dairy workers and thedairy management. Each group willneed to complete their tasks with a highdegree of proficiency in order for themilk to be of high quality.

MILK QUALITY INCENTIVEDESIGN

Chapter one deals with the design ofan incentive pay program at the dairy.

Specific issues that need furtherunderscoring for milk quality incentivesare included here. Feedback should beoffered soon after the task is completedto reinforce the desired performancebehavior. If weekly or monthlyperformance data are available--forexample, bacteria counts in milk--it isdesirable to issue incentives on thatbasis as well. When rewards come onlyonce a year for benchmarks achieved inthe distant past, the employees may failto associate the reward with the qualityof the performance. Furthermore, aquarterly or annual reward may be toodistant to positively motivate today'sperformance.

Many of the milk quality criteria arecomplex, and involve conditions thatcannot be perceived by the humansenses. Hence, management must beable to educate and train the employeeso that they can clearly see how theirperformance affects the desiredoutcomes. Similarly, the employeesmust perceive that the goal is withinreach, and within reasonable employeeperformance expectations. A farm that


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anni

ng

On dairies where milkers

meet their milk quality goals,

the dairy management can

reward them for their efforts

by using a well designed

incentive program.

attempts to move from poor milk qualityto superior milk quality in a very shorttime by placing responsibility solely onthe employees is sure to fail. Theemployees will perceive the goal asunattainable, no matter how attractivethe incentives.

It is imperative that managementselect the appropriate performancecriteria to be monitored and linked toemployee incentives. Incorrect monitorswill quickly reveal themselves, asemployees become frustrated by effortsthat do not achieve the desired results.For example, most farm managersmonitor total milk shipped on a dailybasis. On occasion, daily milkproduction is monitored as a means ofassessing the extent of mastitis in adairy herd. The linkage between udderhealth and milk yield has beenscientifically proven. It is incorrect,however, to extend that association andassume that all milk yield variation isdue to mastitis. Clearly, managementfactors like nutrition and feeding have afar greater influence on milk production.

The largest pitfall of most milkquality incentive programs is the lack ofchecks and balances. A dairy producerhad a significant problem with severeacute clinical Coliform mastitis.Management believed that if these casescould be caught early enough, treatmentwould be more effective and less harmwould come to the cow. The manageralso believed that the milkers did notlike to identify sick cows, as it requiredspecial handling of the cow that onlyslowed them down and prolonged thework day. In an attempt to deal with theproblem, the manager instituted afinancial incentive of five dollars foreach case of clinical mastitis that wasdetected early. As a result, the detectionrate nearly tripled and most of the caseswere incorrectly diagnosed. Theopposite is also true--if you pay fordecreased cases of clinical mastitis youmay initially find a decrease in thenumber of cases reported by employees,only to find elevated SCC's and moresevere cases of clinical mastitis later.

SPECIAL CONSIDERATIONS

A review of the major milk qualitycriteria indicates that employees do nothave complete control over the qualityof milk produced, nor the rate of newmastitis infections. Since it is notpossible to establish a perfect correlationbetween milker's performance, milkquality, and mastitis control, dairymanagement must be able and willing toadjust the criteria when the situationwarrants. For example, some dairycows are kept in the herd, even thoughthey are subject to recurrent episodes ofmastitis. Data from this type of cow isnot used in the determination of theincentive award.

Milk quality data can behave inways that are somewhat unusual; i.e.,subject to extreme variations resultingfrom specific farm conditions and prac-tices. Techniques such as averaging,high and low throw out, seasonal aver-ages, trend analysis, and zero toleranceare useful tools and will assist in the eq-uitable measurement of performance.

1. Averaging. For data that does notdiffer by orders of magnitude; i.e., 10.s,100.s, 1000.s, etc., simple averaging isappropriate. The bulk tank somatic cellcount, for example, could be averagedover many weeks and the incentive goaldetermined by the monthly averagevalue. In this manner one or two higheror lower counts in a short time periodwould not influence attainment of thegoal.

2. High and low throw out. Milkquality data is subject to erratic andgreat variations. Throwing out thehighest and lowest value for the monthor quarter may be appropriate when afew erratic values are evident. All of thebacteria count data, SPC, LPC, CC, andthe PI can behave this way. In contrast,prolonged elevation in the bacteriacounts is a very clear evidence of aproblem.

3. Seasonal Averages. In somelocations, weather and managementfactors may change conditions whichemployees cannot mitigate. In such acase, the average seasonal performance


can be calculated to establish the normor goal from which incentives aredetermined. Employee performanceexpectations are adjusted for seasonalweather or management practices.

4. Trend analysis. Trend analysis, asophisticated analytical tool, is usefulfor determining if any one or set of datapoints is within the normal andexpected variation. Using trendanalysis to set a course forimprovement in performance is similarto the step-wise goal process, butinstead of a series of steps, the goal isto follow a declining or inclining ramp.In step-wise analysis it is easy to tellwhen performance is on step. If wehave a straight line goal for bulk tankSCC, for example, how can we tell ifany given SCC is on the proper trend?For those that use computers and spreadsheets the answer is easy. The trend isselected from the management goal;i.e., in the next 48 months, bulk tankSCC should drop from 700,000 to150,000 cells per ml. of milk. A fewmonths of data will determine and helppredict the normal variation. Thecomputer can then indicate which SCC

values are better or worse than thoseexpected along the trend to lowersomatic cell counts and incentivesawarded accordingly.

5. Zero Tolerance. Some milkquality parameters may be tooimportant to consider trend movementor step-wise movement. Zero toleranceis another form of fixed goal, exceptthat the goal is no occurrences.Examples of the use of zero tolerancemight include antimicrobial residuesand added water. Both problems cansubject the producer to economic lossesand fines. The legal standard is zerooccurrences. Effective antimicrobialresidue avoidance requires that theemployee have the knowledge, tools,and authority to act to keep the milkresidue free. This requires knowledgeof what drugs are used and whichspecific farm tests are needed.

CONCLUDINGCONSIDERATIONS

Employee incentives are powerfultools if used correctly and fairly toimprove milk quality. Management andemployee must become veryknowledgeable about the milk qualityfactor they choose to improve. Theycan obtain positive results by focusingon one problem at a time and bymaintaining crystal clearcommunications.

CHAPTER 5 REFERENCES ANDRECOMMENDED READING

1. This chapter is an update of Milk QualityIncentives (Dairy Incentive Pay 3rd

Edition) by Richard H. Bennett.Substantial portions of that chapterwhere preserved here.

Peters, Tom & Waterman, R. H. In Searchof Excellence, Harper & Row, 1991.

Guidelines for Effective Installation,Cleaning, and Sanitation of MilkingSystems (NDPC2), September 1993,Northeast Dairy Practices Council,(315) 449-7547.


Bria

n M

anni

ng

Employee incentives can be

powerful tools if used

correctly and fairly by

management to motivate

employees to increase

production of high quality milk

on dairies.

If feed quantity or quality for cowsis poor, milk production will suffer.Feeding management in many casesrepresents the difference between 20,000and 22,000 pounds of milk per cow peryear. There are no secrets or magicformulas for achieving efficient andprofitable milk production from afeeding program.

It is essential that feeding personnelrealize the importance of keeping cowsproperly fed and managed throughoutthe lactation cycle. This means that

dairy farmers need to communicate totheir feeders the consequences of poorfeeding practices.

MAXIMIZE DRY MATTERINTAKE

Peak or maximum daily milkproduction for most cows occurs 6-8weeks after calving with peak feedintake not occurring until 12-15 weeksinto the lactation. This results in a

6Feeding Management Incentives

Gerald Higginbotham, Ph.D., PASDairy Farm Advisor, Fresno / Madera CountiesUniversity of California Cooperative Extension

(559) [email protected]

nutritional deficit which needs to bemade up by mobilizing nutrients fromthe cow's body. If there is a shortage ofthese nutrients, then peak productionwill suffer.

It is important during the earlylactation period to bring fresh cows tofull feed as rapidly as possible. This canbe achieved in several ways. First, offerdry cows 6-8 pounds of concentrate perday two to three weeks before calving.This enables the rumen microorganismsto adjust to the milking cow rationsmore rapidly. Second, gradually bringfresh cows to full concentrate levels.Concentrate should be limited to 6-8pounds per meal. Third, feed at least16-18 pounds of high quality alfalfa hay.This will minimize the chances of a cowgoing off feed. Fourth, avoidovercrowding of the fresh pen. Freshcows are usually timid upon entering thefresh pen. As a result, they usually donot compete well at the feed manger ifpens are overcrowded.

One objective of feedingmanagement in order to achieve andmaintain high production is to maintaina proper balance of nutrients whichminimizes fluctuations in the rumen,maximizes digestion, and ensures asteady flow of nutrients to the mammarygland (Muller, 1992). Within theframework of existing housing, feedingequipment, frequency and time ofmilking, and available labor, dairyproducers should strive to provide anutritionally balanced diet 24 hours eachday to enhance the opportunity formaximum dry matter intake and toachieve ruminal fermentation thatmaximizes digestion and rumenmicrobial production.

MONITORING OF FEED INTAKE

As mentioned previously,maximizing of dry matter intake is thegoal in feeding dairy cattle. Dairyfeeders need to understand the importantrole they play in getting fresh cows offto a good start.

Part of feed management begins byfeeding cows according to theirpredicted feed intake level. Since cowsrequire pounds of nutrients and not

percentages, predicting feed intakebecomes important in balancing rationsfor the desired production level. Mostdairies will employ a nutritionist whowill formulate a feed ration based on thecow's average body weight, days inlactation and milk production along withthe level of milk components such asmilk fat and protein. Based on theseparameters a requirement will be givenfor a minimum level of feed intake thatthe cows should be achieving. Variousfactors can affect feed intake such asheat stress, infrequent feeding, feed notavailable 20+ hours per day or moldyfeed being fed. If cows eat more thantwo pounds below their predicted intake,something is depressing their feedintake. Feeders need to be keenly awareof this and be directed by managementaccordingly

Cows whose dry matter intake arecalculated at more than two poundsabove predicted values are generallywasting feed. Cows prefer fresh moistfeed and feed that is fed in excessusually dries out and is not verypalatable. Excess feeding also results inmold buildup which when consumed bycows can result in abortions or low milkproduction. Ideally, feed bunks shouldbe cleaned daily in order to prevent theoccurrence of molds. This is especiallytrue if considerable amounts of wetfeeds are fed.

Underfeeding or overfeeding ofcows is usually the result of not makingadjustments when pen sizes arechanged. Although it is not practical totake a daily accounting of pen numbers,a once weekly count is recommended toensure proper utilization of feed andequipment.

FEED MANAGEMENTMONITORING

Various areas of feedingmanagement can be monitored in orderfor bonuses to be considered to feeders.Areas to concentrate on are as follows:

1. Bunk management - As mentionedearlier, moldy feed can cause bothreproductive and palatability problems.


Feeding areas should be cleanedfrequently to prevent the build-up ofmoldy feed. It is generally a dairymanagers responsibility to monitor thefeed bunk area, but all too often dairyfeeders are given this task. Anexplanation to feeders on why feedingareas need to be cleaned frequentlyshould be conducted. This gives them abetter understanding of feedmanagement principles.

Incentives to feeders for maintaininga clean feed bunk area would be aworthwhile investment. It should benoted though that it is easy to underfeed

and thereby get a clean bunk.2. Feed storage facilities -

Management of feed storage facilities isthe first line of defense against feedwaste. Feeders should keep all feedcovered when possible in order toprevent loss due to both wind and rain.

If silage bags are used, they can beprone to high losses when the openedend of the bag is not managed properly.Bags should only be exposed enough toallow gathering of feed. Any holesmade in silage bags need to be patchedpromptly in order to prevent occurrencesof mold. With silage trenches, the silage

FE E D I N G MA N A G E M E N T IN C E N T I V E S • 65

Dairies using total mixed

rations (TMR) are aware that

good mixing practices are

desirable.

J.W

. Sch

roed

er, N

DS

U

face should be kept smooth to preventthe occurrence of mold. Excess silageshould be kept at a minimum at the footof the face. This feed can deterioratequite rapidly in feed value.

Wet feeds such as citrus pulp,brewers grains and vegetable by-products can mold easily, thereforefeeders need to be observant fordeterioration of feed quality. A load ofwet feed usually needs to be utilized,depending on the weather, within 10-14days of delivery. Incentives forminimizing feed losses and mold build-up would be advantageous on manydairy operations.

3. Calculated expected feed usageversus inventories - If inventories arebelow expected uses, then some wastemay be occurring or expected feed useneeds to be reevaluated. The key toimproving feed inventory control andreducing feed waste is setting up a well-understood and effective monitoringsystem for measuring feeddisappearance charged against inventory.Many examples can be cited of a dairythat experienced a significant healthchallenge with fresh cows, or a dairythat lost a large amount of milkproduction and income over timebecause of errors that were made in themixing or feeding program, yetessentially no records were available todetermine specific causes to allowimplementation of a better managementplan (Barmore, 2001). Experienceshave shown that by establishing as partof a feeder's job description theexpectations for monitoring feeding and

mixing, and at the same time giving thefeeder the monitoring tools, thatsignificant reductions can be made inthe variation that occurs from load-to-load or day-to-day.

Barmore, 2001, discusses ways bywhich feed intake can be monitored. Asimple method of monitoring feedinginvolves recording daily amounts ofration offered and refused, and thencomparing this to inventories taken on aregular basis. This requires that a feedintake log be kept for each pen or groupof cows, while all feed purchases arerecorded for actual scaled amounts, andwhen they are delivered.

Another method of monitoringfeeding and inventory is to use aspreadsheet, where actual weights of theration offered daily can be recorded bypen or group along with the feedrefusals. These amounts can beautomatically subtracted from therunning inventories if available in thespreadsheet. Computerized softwarescale interfaced programs are rapidlybecoming of interest due to their abilityto automatically capture feeding andmixing information without requiringthe feeder to hand-enter data. Theseprograms record automatically the actualamounts loaded and fed relative toprojected, capturing any deviations anderrors for each ingredient and pen. Anexample printout from this type ofsoftware is shown in Figure 1. In thisexample, the feeder for this dairy hadclose to a 6.0% error by loading toomuch molasses into the feed truck.These errors can be costly most notably


Feed intake is the main

factor which governs milk

production.

Am

eric

an J

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attle

Ass

ocia

tion,

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hio

for a large dairy where multiple loadsare fed through out the day. Incentiveprograms could be developed to rewardthe feeder for keeping the error ratebetween 1.0 and 2.0%. Dairy farmersshould have scales on their feedingequipment calibrated annually to makesure that it is weighing correctly.

Time of delivery and mixing timescan also be monitored by day of week orfeeder. Computerized feeding systemscan perform inventory tracking based onwhat is actually loaded and unloaded.This in turn can be used for feedforecasting and purchasing.

To monitor proper mixing of a totalmixed ration, samples can be taken forlab analyses of the finished product.One should be cautious in interpretingthe lab results as this method can givean inaccurate picture of the feedingprogram.

INCENTIVE PROGRAMS FORFEEDERS

It is not enough for a feeder to knowthat sufficient feed needs to be availablefor cows 23+ hours of the day. Feedersshould know what the consequences arefor not delivering sufficient feed to agroup of cows.

Feeders need to know what they cando to maintain or improve feed intake.A growing number of feeders arecoming to dairies with no experience.Even those with previous experiences

often need training to acclimate them tothe dairy's equipment and practices.

Many factors can effect milkproduction so incentives tied to thefeeder may need to be also associatedwith other employees on the dairy.Suggestions for possible incentiveprograms for feeders (beyond regularsalary) are included below. 1. So many cents per hundredweight of

milk for keeping feeding areascleaned. This should be rewarded ona monthly basis after discussion withthe feeder on what is to expected forthis incentive to be realized.

2. A specified amount per 100 poundsof milk over so many poundsshipped per month (example: somany dollars per hundred weightover a million pounds monthly in a500 cow herd).

3. A specified amount per 1,000 poundsmilk produced in 365 days or lessover 22,000 pounds for eachcomplete lactation (example: somany dollars per 1,000 pounds over22,000 pounds).

4. So much per 100 pounds of milkproduced over 22,000 pounds ofmilk per cow annually (example: somany cents per 100 pounds over22,000 pounds times number ofcows).

5. A specified amount for keeping feedloading and unloading error ratesbetween 1.0 to 2.0 %.

FE E D I N G MA N A G E M E N T IN C E N T I V E S • 67

Figure 6-1. Feed loading

detail with feeder deviations.

(Courtesy, DHI Computing

Service, Inc., Provo, Utah.)

On many dairies, heat detection canbe a problem. Feeders can aid in thissince they are in contact with themilking strings at various timesthroughout the day. Bonuses to feedersfor catching hot cows can add to adairy's reproductive efficiency (seeChapter 3 for details). It is importantthough not to delegate too much addedwork load to feeders as this will causeless time in the feed management area.

With regards to incentive programswe usually equate a financial reward fordoing a better than normal job. But, justbeing recognized for doing a good jobmay be satisfaction enough for certainemployees. Individuals who doconsulting work on dairies specificallyin the feed management area will oftenmeet with just the feeders on a dairy todiscuss the importance of their job. Inone instance, a consultant has had apizza party for the feeders and othersassociated with the feeding program.The owner of the dairy will supply theemployee's with time off from theirwork schedule or an extra hour of pay inorder for the workers to attend thismeeting. The consultant will talk abouthow important their job is, and whatskills are needed to do a good job as afeeder (Bakke, personalcommunication).

SUMMARY

Visual appraisal of a feeder'sperformance is generally the only waythat dairy managers can gauge a feederscompetency. Quantitativemeasurements such as milk yield can beused, but many other factors effect milkproduction. Bunk management alongwith feed storage supervision areimportant areas for which to considerincentives.

Feeders are an integral part of thedairy's work force. A carefully designedincentive pay program will helprecognize their valuable contribution tothe dairy.


Barmore, J. A. 2001. Monitoring andmanaging feeding, inventory, andshrink. Four-State Applied Nutritionand Management Conference.LaCrosse, WI.

Muller, L. D. 1992. Feeder managementstrategies. In Large Dairy HerdManagement. H. H. Van Horn and C. J.Wilcox, eds. American Dairy ScienceAssoc., Champaign, IL.

Porterfield, R. A. 1984. Labor managementin dairy farms. Arizona DairyNewsletter, September.


One of the most important

duties of a feeder is feed

bunk management.

Lameness, mastitis, and reproductionare the three most common causes ofcows leaving the herd prematurely.Many of the losses associated withlameness can be prevented by gooddairy management and proper attentionto hoof health (hoof trimming andprompt treatment of lame cows).Lameness can be due to infectious ornon-infectious causes. Infectious causesare digital dermatitis (footwarts),footrot, interdigital dermatitis, and heelhorn erosion. Non-infectious causes are

due to disruption of horn production ortrauma and are commonly lumped underthe category of "laminitis". Some of thefactors that influence the incidence oflaminitis are nutrition, feedingmanagement, cow comfort, timestanding on concrete, and husbandry.

If a dairyman wishes to establish anincentive program for good hoof health,the first thing that must be done is todetermine the "normal" level oflameness in the herd. One of the toolsfor determining and monitoring

7Hoof Care Incentives

Steven L. Berry, DVM, MPVMSpecialist - Dairy Management and Health

University of California, Davis(530) 752-1279

[email protected]

lameness in the dairy herd is locomotionscoring. Locomotion scoringinformation is available from thefollowing website:http://www.availa4.com/locomotion/index.html.Further information on lameness canalso be obtained from the author.

Locomotion scoring must be done ina location where the cows have a levelwalking surface and good footing. Cowsmust be observed standing and walkingwith special attention paid to the postureof the back (flat or arched). Keep inmind that older cows will tend to scorehigher and may need more attentionthan younger cows. [Editor's note: inan incentive pay program, this would

have to be considered so that dairyworkers are not punished or rewardedfor the average cow herd age.] Thescores are as follows:

Locomotion Score 1: Normal gait.Animal stands and walks normally andwith a flat back. All feet are placed withpurpose.

Locomotion Score 2: Abnormal gait.Stands with a flat back and walks withan arched back. Gait is slightlyabnormal.

Locomotion Score 3: Mildly lame.Stands and walks with an arched back.Takes short strides with one or morelegs.

Locomotion Score 4: Moderately


If a dairyman wishes to

establish an incentive

program for good hoof

health, the first thing that

must be done is to

determine the “normal” level

of lameness in the herd.

lame. Arched back standing andwalking. One or more limbs favored butat least partially weight bearing.

Locomotion Score 5: Severely lame.Arched back standing and walking.Animal refuses to bear weight on onelimb. May refuse or have great difficultyrising from lying position.

Note that the above definitions areslightly different from those on the

website or on the current issue of"Locomotion Scoring of Dairy Cattle".We are currently revising thelocomotion scores according to ourobservations of cows on confinement(freestall) dairies. Cows scoring 3, 4, or5 are considered lame and should beexamined and treated appropriately.According to research by PeterRobinson at UC Davis (see article onwebsite above), cows scoring 3 were

HO O F CA R E IN C E N T I V E S • 71

Before Trimming: Here is a

front foot of a cow. The

outside claw (on the right)

has a toe that is

approximately the right

length, while the inside claw

(on the left) is too long and

will need more extensive

trimming.

During Trimming: Here the

hoof trimmer is removing the

excess horn using an electric

grinder motor with a cutting

disc. Most of the hoof

trimming can be done with

the electric grinder, which is

easier on workers but

necessitates great care since

it can cut very rapidly.

After Trimming: A small

amount of horn has been

removed from the outside

claw, leaving the heel intact.

More horn was removed from

the inside claw making it the

proper length and is now

balanced with the outside

claw so that weight bearing is

more even between the

claws. Also, more horn has

been removed from the toe

area making the cows weight

distribution more even from

the toe to the heel.

four times more likely to score 4 or 5the following month than were cowsscoring 1 or 2. Some older cows withchronic laminitis will exhibit alocomotion score of 3 even though thereare no visible lesions and her feet areproperly trimmed and balanced. Most ofthese cows will require more frequentexamination and trimming but if theyare good milk producers, more seriouslameness might be prevented and thecows kept in the herd.

A herd with a very good locomotionscoring profile might have 90% of thecows scoring 1 or 2 with 10% scoring 3,4 or 5. It should be possible with anexcellent hoof health program tomaintain 1% or less of the cows scoring4 or 5 (that is 10 cows scoring 4 or 5and 90 cows scoring 3 on a 1000 cow

dairy). While cows with a locomotionscore of 3 do not appear very lame, theyhave already lost considerable moneyfor the producer by decreased dry matterintake, milk yield, and reproductiveperformance and an increased likelihoodof premature culling.

If an incentive pay system is to beimplemented on a dairy, then it must bedesigned to reward the worker forperformance that is under his control.For instance, if a worker is paid by thehead for hoof trimming, then he willprobably trim more cows but there willbe no incentive to only trim cows thatneed it. Whereas, if a worker is paid anincentive to maintain or improve hoofhealth on a dairy and is allowed tochoose the cows to trim, he might bemore inclined to pick the cows that need


Cows that have properly

designed, bedded, and

maintained freestalls will

spend from 10-14 hours per

day lying down and

ruminating. This lying time is

critical for optimum milk

production and prevention of

many lameness problems.

trimming to prevent more seriouslesions.

Let's consider two scenarios forimplementing a hoof health program ona dairy:

Scenario 1: An outside hoof trimmeris hired to trim cows on the dairy. Thehoof trimmer is presented with lamecows and dry cows to trim on the day heis there. The cows are picked by theherdsman or manager on the dairyfacility. The hoof trimmer gets paid bythe cow for trimming and any treatmentsused for lame cows. In this case, theincentive is for the hoof trimmer to trimcows and apply treatments since he getspaid on a piece basis. The hoof trimmercould do a very good job and yet theprevalence of lameness might stay thesame on the dairy because the hooftrimmer is not getting the cows he needsto decrease the lameness. If it is theherdsman's job to pick cows for the hooftrimmer then it may be possible to paythe herdsman a differential incentivebased on the prevalence of lamenessfrom month to month. In order to assesswhether the lameness prevalence wasdecreasing it would be necessary to haveanother, objective person (the manager,veterinarian, or owner) assess thelocomotion scores on a regular, perhapsmonthly, basis. Problems with thisprogram that are out of the herdsman'scontrol would be the nutritional program(ration formulation, mixing, and feedbunk management), cow comfort(freestall maintenance and bedding),alley flushing, and time standing onconcrete during milking. In my opinion,it would be better to establish a hoofhealth management team with plainlystated goals of performance for allmembers involved than to establish anincentive program for just one person.

Scenario 2: Some larger dairies arebuilding special needs facilities, whichinclude a hoof trimming chute on thedairy. Some producers are interested inhaving workers on the dairy trim thecows rather than hiring an independenthoof trimmer. Since the average case oflameness costs the producerapproximately $300 per case and it isvery easy to make cows lame withimproper trimming, I always encourage

dairy producers to make sure thatworkers are properly trained infunctional hoof trimming. There areseveral schools in the US and abroadthat teach the theory and practicalaspects of hoof trimming. For thisscenario to work well, someone withmanagement responsibility would haveto monitor the lameness prevalence andserve as a quality control supervisor forthe person(s) doing the actual trimming.It would also be very helpful if thesupervisor or manager had training inproper functional hoof trimming so thatnew personnel could be trained asturnover occurs. It should be possible totrain the worker doing the hooftrimming to observe the cows and spendsome time each day identifying whichcows need to be trimmed or treated. Inthis way, the hoof trimmer has partialownership in the program and is nottrimming cows that do not need to betrimmed. If the hoof trimmer was givenresponsibility for picking the cows thatneeded to be trimmed and treated, itshould be possible to design anincentive program based on monthlylocomotion score prevalence. [Editor'snote: A good way to train workers tosee with skilled eyes is to have theworker score 100 cows in terms ofwhether or not trimming is needed.After finishing this task, this worker'sopinions are compared to those of askilled rater. They can then both look ateach cow where there are differences ofopinion and discuss these. Over time, asthe worker's ability to discern whichhoofs need trimming, this responsibilitycan be increasingly delegated.]

From my perspective, hoof healthwould benefit more from formingmanagement teams and rewardingresults with responsibility and salaryrather than a specific incentive program.I think that workers would respond todeveloping further skills in cow care andhaving their opinions valued bymanagers and owners. One of theproblems with training on-dairy workersto trim cow claws is that they may learnthat they could make more money as anindependent hoof trimmer and turnovercould be a problem unless steps weretaken to ensure loyalty and job

HO O F CA R E IN C E N T I V E S • 73

satisfaction. [Editor's note: A welltrained employee may well be worthpaying more in recognition for specialskills. This pay may come either interms of an added incentive (Chapter 1)or wages (Chapter 2). The employeecan benefit from such appreciation, andthe dairy can save money.]


S. L. Berry. Locomotion Scoring of DairyCattle. Eden Prairie, MN: Zinpro Corp.2001.

S. L. Berry. How Do Well Managed HerdsManage Feet? Proceedings: 2004 HoofHealth Conference, Hoof TrimmersAssoc. Inc., Phoenix, AZ:17-19, 2004.

E. Toussaint Raven, R. T. Haalstra, and D. J.Peterse. Cattle Footcare and ClawTrimming, Ipswich, UnitedKingdom:Farming Press Books, 1989.127 pages.


This cow has a locomotion

score of 5 and will not bear

weight on her left hind foot.

She is losing body condition

because her feed intake is

lower than normal.

All of the areas on the dairy areinterrelated and can have effects on cowhealth and herd performance. It shouldbe emphasized that every individual onthe farm plays a vital role incontributing to herd health andperformance. Performance can bemeasured in pounds of milk, milk fatand protein production per cow,reproductive performance, and heifergrowth or age at first calving. Healthcan be measured by calculating disease

incidence. This chapter will highlightsome of the more important areas inwhich employees can impact overallhealth of the herd which can affect herdperformance.

Most employees on the dairy reallydo want to do a good job. They like thecows and want to help them. What isoften missing, however, is the training toprovide the knowledge of the best herdhealth practices and the reasons whythose practices are the best ones to

8Herd Health Incentives

Dale Moore, DVM, MPVM, PhDAssociate Professor, Department of Population Health and Reproduction

Veterinary Medicine ExtensionUniversity of California, Davis

(559) [email protected]

UC

Dav

is S

choo

l of V

eter

inar

y M

edic

ine

improve the health of cows. Adequateand proper training should be the firststep to the management of the health ofthe dairy herd.

What are the herd health areas forwhich the employees have directresponsibility? Employees can beresponsible for implementingvaccination programs, transition cowmanagement, maternity pen and calvingmanagement, fresh cow management,hospital pen management (includingtreatment), and environmentalmanagement. Each of these areasrequires attention to details to beeffective. A path analysis model torepresent the complex of influences of

many of these areas on health andperformance in early lactation is givenin Figure1.1-3

VACCINATION OF HEIFERS ANDCOWS

Sound herd vaccination programs areessential for the health of cows andheifers and for the prevention of anumber of infectious causes of abortion.Employees are often asked to performvaccinations of all heifers and cows butoften lack knowledge of some of thedetails to make these tasks effective atreducing the chances of disease.Vaccination programs require the


knowledge of who to vaccinate, when tovaccinate, where to vaccinate and howto vaccinate. The herd veterinarian cancraft a comprehensive vaccinationprogram for the herd and makerecommendations about what vaccinesshould be used specifically for the herd.What the employee then needs istraining on handling the vaccine (properstorage with no freezing, nor heating nor

leaving on the dashboard) so that itremains an effective stimulus to produceimmunity; the proper dose of vaccine toprovide enough of a stimulus to produceimmunity; and the correct route ofvaccine administration. All these aspectsof vaccination are on the vaccinepackage inserts. Providing the trainingon how to read the insert or providinglanguage-appropriate label directions is

HE R D HE A LT H IN C E N T I V E S • 71

What are the herd health

areas for which the

employees have direct

responsibility? Employees

can be responsible for

implementing vaccination

programs, transition cow

management, maternity pen

and calving management,

fresh cow management,

hospital pen management

(including treatment), and

environmental management.

Each of these areas requires

attention to details to be

effective.

Gre

gorio

Bill

ikop

f

paramount to effective vaccination.Incentives for getting the job of

vaccinations done correctly have notbeen developed. If a producer paidincentives for the proportion of the herdvaccinated, it could make a difference,but monitoring this is very difficult.Counting the doses of vaccine used doesnot mean that they were actually givento the cows and heifers. An objectivemeasure on which to base incentive payis hard to find.

TRANSITION MANAGEMENT

A good transition from the dryperiod into early lactation can preventnumerous health and productionproblems later on. There are veryspecific areas in which employees havean influence. This section will focus onthe period from dry off through the freshpen. Areas to monitor and possibleincentives will be provided at the end ofthe section.

Dry cow management

Dry cows are rarely “managed”other than providing dry cow treatmentat dry off. Once put into the dry pen,they are left on their own. Critical areasto pay attention to, however, are corralmanagement to provide cows withclean, dry resting areas, thereby

reducing chances of new intramammaryinfections; dry cow nutrition; andidentification and movement of cows tothe close-up pen three weeks beforecalving.

Close-up cows

Cows in the close-up pen are therefor several reasons. First, they aremoved so as to receive a transition dietthat prepares their rumens for thelactating cow ration by providingsubstrates that elongate rumen papillae,and giving them a lead-time to adapt tonew feedstuffs. Second, they areseparated from other cows, andhopefully not overcrowded, so that theycan eat more feed because they naturallystart to decrease intakes in the twoweeks before calving. And, third, manyclose-up cows are fed anionic salts intheir diet for prevention of milk feverand subclinical hypocalcemia. Stockingdensity, dry matter intakes, and anionicsalt feeding are areas that can bemonitored.

Every week the cows are in theclose-up pen, an employee can obtainurine samples from ten close-up cowsthat have been in the pen for at least twodays. Recommendations are to haveurine pH's in the 6.0-7.0 range. Thisinformation should then be provided tothe feeder, nutritionist or veterinarian ifchanges to the diet need to be made.

In addition to pH monitoring,employees need to recognize thatmaximization of feed intake throughestimation of dry matter intake andfrequent feed push-ups is essential in theclose-up pen. Employees can provideinformation on the weight of the feed,numbers of cows in the pen and thepounds of feed refusals so that drymatter intake can be estimated andimproved. The final stage in close-uppen management is to have employeesable to recognize the signs of imminentpregnancy and know when to movecows to the maternity pen.

Maternity pen and calvingmanagement

Maternity pen hygiene, allotment ofthe appropriate space per cow, and


No one employee is solely

responsible for herd health.

It requires a team effort.U

C D

avis

Sch

ool o

f Vet

erin

ary

Med

icin

e

comfort (bedding) are essentialingredients in effective maternity penmanagement. Calving managementguidelines to reduce risk of injury orinfection to cows or heifers can beprovided to employees through “calvingschools” conducted by the herdveterinarian. Training should includeidentification of calving problems,delivery techniques, and when to call forveterinary assistance. Employees shouldalso be able to perform rudimentaryphysical examinations after calving tocheck for uterine or vaginal tears andassess overall cow health. An incentivethat some producers have used is onebased on the proportion of live calves atbirth (or a reduction in stillbirths). Thiscould have a bad consequence, however,because it could result in the employeedeciding on earlier, unnecessary calvingintervention that could cause moreuterine and vaginal tears, infections,abscesses or downer cows. Targets forlive calves between zero and 24 hours ofage are <6-8% of all births, with anaction level of >10%.4;5

Just-fresh cows

Employees working with these cowsneed to understand and be able toperform sanitary colostrum harvesting.They need to be able to identify freshcow mastitis, retained placentas, andassess cows for fevers. Once the cowsare milked for 3-4 days, they are thenmoved to the fresh pen.

Fresh cow programs and fresh cowtreatment protocols - Fresh cowmonitoring programs are popular inCalifornia to detect problems early andinitiate the appropriate treatment inorder to reduce fresh cow healthproblems' effects on early lactation milkproduction and subsequent cow fertility.Producers should work with theirveterinarian to develop detection,monitoring, and treatment protocols forspecific conditions. These programsusually rely on monitoring signs ofillness and rectal temperatures for thefirst 10 days in the pen.6 Employees alsoneed training in how to identify thosesick cows that may need furtherexamination and know when to sendcows to the hospital pen.


Potential ways to assess the

progress of transition cow

management include the

proportion of cows culled in

the first 60 days in milk and

early lactation milk

production.

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In addition to fresh cow treatmentprograms, employees need to payattention to fresh cow comfort, hygieneand stocking density. Cows in the freshpen should not exceed 90% of freestallcapacity (stocking density) and at least35 inches of bunk space per head in thepen. They are still ramping up for peakdry matter intake and need fresh feedoften.

Transition cow managementmonitoring and incentives

Few producers are actuallymonitoring the effectiveness of theirtransition program because effectivemonitors have been elusive. Recently,some new information has providedsome hope for making decisions aboutinterventions in transition cowprograms. There are three possible areasto monitor that are relatively easy to setup and may provide bases for incentivepay for employees. One caveat,however, is that because of theinterrelated nature of transition cowmanagement, multiple employees maybe involved in an incentive plan.

Potential Monitors for Transition CowPrograms7

1. Proportion of herd removed within60 days in milk (DIM) - On mostdairies, herd removal in earlylactation (<60 DIM) is almostalways due to death or forced cullingbecause of disease or injury.7 Theproportion of cows leaving the herdearly in lactation can serve as avaluable monitor for transition cowprograms. About 25% of allremovals leave within 60 DIM(about 6-12% of the entire herd).This represents a tremendous directeconomic impact on herdprofitability. To use this monitor onwhich to base incentive pay, theproducer must set up the monitor sothat distinct cohorts of cows thatcalve are evaluated for whichspecific employees hadresponsibility. A benchmark goal isgiven as no more than 6-10% of theentire lactating herd removed within60 DIM. In addition, improvement

in documenting the reasons forremoval could improve the ability totarget specific areas of transitionmanagement improvement.

2. Early lactation milk production -Milk production in early lactation istied to how well cows went throughtheir transition. There are threepossible milk production monitorson which to base incentives: peakmilk, cohort peak milk and averagefirst test day milk.

a. Peak milk - This measure isinfluenced by age, season ofcalving, as well as genetics of thecow. Average peak milk adds a lotof momentum to the measurebecause of the time betweencalving and peak, and theexperience of all the cows in theherd.

b. Cohort peak milk - This measurestill has some of the disadvantagesof peak milk and requires a specialset-up within the farmcomputerized record-keepingsystem to extract the data. There isstill a lag between what happenedaround calving and when peakmilk occurred, but the measure islooking only a specific calvingcohort of cows, e.g. those calvingeach month.

c. First test milk production - Thismeasure reduces the lag time fromcalving, but the amount of milkproduced is highly correlated tothe days in milk at first test. Firsttest-day milk production mayoccur anywhere from a few daysin milk (guidelines suggest no lessthan 10 DIM) to over 30 DIM.One recommendation is to lookonly at a calving cohort of cowsthat had a first test between 15 to25 days in milk (M. Overton,personal communication). Firsttest milk production (15-25 DIM)may be the most sensitive andearliest measure of transition cowmanagement.

3. Rates of metabolic disease in earlylactation - Measuring monthly ratesof diseases associated with transitionmanagement and rewardingemployees responsible could be a


direct means to provide an incentivefor overall transition management.Disease rates within the first 30 daysafter calving could be calculated formonthly calving cohorts of cows forwhich the employees hadresponsibility. Although this soundsstraightforward, these calculationsare difficult because most producersdo not keep adequate health ordiagnosis records for sick cows.Although large farms havecomputerized record-keepingsystems for production andreproduction data, they may notcapture health data or only recordtreatments and not the diagnoses. Aveterinarian could help set up healthevent codes that can be appropriatelysummarized.7 A secondconsideration is that a simple,standard, agreed-upon clinicaldefinition needs to be made for eachdisease. Another consideration is thatthe employee who might receive theincentive is not the same one whomakes the diagnosis or enters it intothe computer. An impartial third-party should be involved. Potentialgoals for post-calving diseases:

a. Milk fever, 3-5% of cows calvingwithin 30 days

b. Retained placenta, 5-8% of cowscalving within 30 days

c. Displaced abomasum, 3-5% ofcows calving within 30 days

What is critical is that the producerknows what these measures currentlyare in the herd so as to establishreasonable, attainable goals.

HOSPITAL COW MANAGEMENT

Maintaining the health of the rest ofthe herd means isolating and effectivelytreating cows that are ill or injured.Hospital cow management requiressome knowledge of physicalexamination, recognition of commondiseases and a set of treatmentprotocols. Employees also need to knowwhen to call the veterinarian or producerif they are not seeing treatment success.A close working relationship with theherd veterinarian who can help hospital

pen employees better manage sick cowscan result in fewer culls, fewer deaths,and a faster return of cows to thelactating pens.

ENVIRONMENTALMANAGEMENT

Environmental management includescorral management, to minimize mudand maximize shade and cooling so thatcows can utilize nutrients for fetalgrowth, maintenance and future milkproduction; water trough sanitation andmaintenance; bedding and stallmaintenance, to optimize cow comfort;and flush alley systems management, forthe timing and frequency of flushing.Incentives for corral or freestallmanagement could be based onobservations by an objective third party.For example, the herd veterinarian orother dairy consultant could providedata on cow comfort and hygiene attheir regular visits on which incentivepays can be based. This could, however,result in a potentially adversarialrelationship between the staff andconsultant. [Editor's note: spot checkson cow comfort and hygiene should takeplace on an irregular basis, perhapsusing a random number calculator todetermine the day and time of the dayon a rotating basis, else workers mayknow to increase their efforts on dayswhen the veterinarian or consultant isscheduled.]

CONCLUDING THOUGHTS

Because of the interrelationships offeeding, milking, reproductivemanagement, and environmentalmanagement and the effects thatnutrition, lameness, fertility, and mastitishave on immunity and milk productionperformance of the herd, it may bedifficult for the producer to identifyspecific areas for incentive pay for herdhealth practices. The employee may nothave individual, complete control overthe standard measures of herdperformance because of theseinterrelationships. For example, ahospital pen manager can become easily


Effective, meaningful

employee training is critical

to maintain a healthy,

productive herd.

overwhelmed if the milkers have highsensitivity for pulling cows with mastitisfor treatment. Or, if the fresh penmanager does not quickly detect andtreat fresh cows, more cows will go intothe hospital for further treatment.

What will motivate employees toperform optimally in the farm's herdhealth programs?

* Disease monitoring.* Specific job goals and specific

tasks to reach those goals.* Adequate training, retraining and

reinforcement of what to do and why itis important.

“Hear, see, do, say, and say whiledoing” will ensure proper training.

* Appropriate and effective feedbackbased on observations of jobperformance.

* Adequate animal holding facilitiesand equipment so that the employee canprovide optimum care most efficiently.

* Recognition by management thateach detail of what the employee does tomaintain or improve the health of cowsis important.

* Regular staff meetings to discusshow to integrate what is happening onthe farm and more efficiently manage allthe different areas for herd health andperformance.


1. Erb HN, Smith RD, Oltenacu PA, GuardCL, Hillman RB, Powers PA et al. Pathmodel of reproductive disorders andperformance, milk fever, mastitis, milkyield, and culling in Holstein cows.Journal of Dairy Science 1985;68:3337-3349.

2. Curtis C, Erb HN, Sniffen CJ, SmithRD, Kronfeld DS. Path analysis of dryperiod nutrition, postpartum metabollicand reproductive disorders, and mastitisin Holstein cows. Journal of DairyScience 1985; 68(2347):2360.

3. Correa MT, Curtis C, Erb HN, ScarlettJM, Smith RD. An ecological analusisof risk factors for postpartum disordersof Holstein-Friesan cows from thirty-two New York farms. Journal of DairyScience 1990; 73:1515-1524.

4. Quigley JD, Nyabadza C, Benedictus G,Brand A. Monitoring replacementrearing. In: Brand A, Noordhuizen JP,Schukken YH, editors. Herd Health andProduction Management in DairyPractice. Wageningen: WageningenPers, 1996: 75-168.

5. Reneau JK, Kinsel ML. Record systemand herd monitoring in production-oriented health management programs.In: Radostits OM, editor. Herd Health.Philadelphia: W.B. Saunders, 2001: 107-146.

6 Guterbock WM. Diagnosis andtreatment programs for fresh cows. VetClin Food Anim 2004; 20:605-626.

7. Nordlund K, Cook NB. Using herdrecords to monitor transition cowsurvival, productivity, and health.Veterinary Clinics of North America:Food Animal Practice 2004; 20:627-649.


Attention to the details in the

maternity pen can have an

effect on future

reproduction, milk

production, and survival in

the herd.

jack kelly clark - college of agriculture & natural …...consulting services. mediaworks, uc...

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