Can Incentives Improve Reproductive Performance?

One of the most important drivers of profitability on a dairy is a successful reproductive program. The regular generation of pregnancies provides the constant supply of fresh cows required to maintain a high level of production as well as the heifer calves needed to meet the replacement and/or expansion needs of an operation. Performance based financial incentives are used in many industries to motivate employees to a higher level of performance. For example, most sales professionals are compensated, at least partly, with commissions thus their sales success greatly influences their earnings-but could a similar incentive for breeders motivate them to a higher level of performance?

A more common performance incentives offered on dairy farms is for milk quality, specifically for achieving and maintaining lower somatic cell counts (SCC) in the bulk tank. SCC is easily and regularly measured and most dairy owners receive a milk price bonus for keeping their SCC level below certain thresholds. When properly designed, a SCC incentive can provide a win-win scenario for employees and the dairy owner.

Performance incentives for breeders are not very common due to a number of challenges in structuring such an incentive. What is the best way to measure reproductive performance on a dairy?

• Conception Rate – Will likely promote breeding only the healthiest cows showing strong estrus signs while other cows that should have been bred may be passed over in order to preserve high conception rates. The result will be an insufficient number of cows bred and pregnancies created.
• Heat Detection or Service Rate – The other side of the coin...An incentive based on number of cows bred will likely result in too many cows being inseminated and a large drop in conception rate. In extreme situations pregnant cows may be bred and subsequently aborted.
• Number of Pregnancies Created – One concrete measure of performance is the actual number of pregnancies created. If the distribution of cows freshening over the year is relatively constant this may be the best measure of success. However, many dairies experience seasonal effects on Reproductive performance that result in the uneven grouping of cows freshening. As the number of cows eligible to become pregnant fluctuates seasonally so will the likelihood of a breeder meeting their incentive goals.
• Pregnancy Rate – Pregnancy rate measures the number of cows that become pregnant compared to the total number of cows eligible to become pregnant during a 21 day period (one heat cycle). This measurement takes into account both conception rate and service (heat detection) rate and may be the best measure of success over time. This measurement takes into account the seasonal grouping of pregnancy eligible cows and offers a flexible measurement for herds growing (or shrinking) in size.

Other challenges to face in creating incentives:

Do employees have the required skills, facilities, equipment and time to effectively perform their breeding responsibilities? How to account for management areas affecting reproductive performance such as nutrition, herd health, maternity and transition management which are out of the breeder's control? How to establish a base performance level and goals from which to measure improvement and offer incentives? What is the right amount to offer as an incentive? How to measure performance and create incentives for individualswho are part of a team? Will employees focus on earning their incentive at the detriment of other critical (non-incentive) duties they may have?

Discussions with your herd veterinarian, fertility specialist, other trusted advisors and your employee(s) will be useful in addressing these questions. An employee's thorough understanding of the concepts being discussed is essential for success. For Hispanic employees ensuring effective communication is critical so it may be wise to involve a bilingual specialist familiar with the subject at hand. Periodic review of an incentive program is necessary to evaluate its effectiveness in improving performance. If performance is not improving the incentive program may need to be tweaked or discontinued altogether.

Some owner/managers disagree with the idea of paying performance incentives, expecting employees to give their best effort for agreed upon wages. Performance incentives are no substitute for well trained employees, good quality facilities, well defined job descriptions and management structure, and open and regular communication with managers. Allocating resources to improve these areas will provide a better return than offering incentives. However, if the primary elements for breeding success are in place managers may consider employee incentives to help drive performance to the next level.

Article by: Brian Stahl, Sales Team Leader