Lean Labor Management & Reward-based Pay: Sustaining Progress

Costs are down. Productivity is up. Now, how do you keep a good thing going?

You’ve implemented a pay-for-performance system. Associates are working smarter. They’re making more money. Morale, efficiency and productivity are up. Costs are down. So, how do you keep this good thing going? In the final part of this three-part series, Paul Vollmer shares insights gained on the front lines of a successful retail warehouse transformation.

In my last two posts, we explored the basics of implementing LEAN labor management, reward-based pay and engineered labor standards. We looked at the pros and cons, determining that while there are challenges, the pros overwhelmingly outweigh the cons. In fact, when it comes to boosting warehouse productivity and reducing cycle time for process-oriented work, there’s no more powerful tool. The question is, once your system’s up and running, how do you keep it going?

5 best practices to ensure your pay-for-performance program keeps on paying

Wondering how to keep things humming for the long haul? Make sure you:

1. Keep the program alive by rewarding and recognizing your rock stars
   As with any new program, excitement is high at the start; then fades as people get used to it. To keep the program alive, jumpstart enthusiasm by continually recognizing and rewarding outstanding performance publically.That might mean quarterly reviews praising associates who meet or exceed standards, sharing wins at town hall meetings, team-building outings,  t-shirts or car mugs for top performers. Recognition and rewards programs don’t just build morale, they keep your program fresh in everyone’s mind. Leadership should hand out the awards to make the recognition even more rewarding.
2. Recalibrate as things change
   If your program is similar to other rewards-based operations, you’re likely implementing continuous improvement initiatives. As a result, you may be reconfiguring building layouts, workspace, or processes. If the change to the actual work is more than 5%, adjust the work credits through time and motion studies to meet the new requirements.  This prevents disgruntled associates or paying bonus for work that is no longer accomplished.
3. Maintain Quality
   Without quality, speed is meaningless – you’re just turning out bad work, faster. While pay-for-performance programs increase employee engagement and naturally improve quality, some associates will attempt to sacrifice quality for speed. To keep that from happening, either ‘poka-yoke’ the process or develop quality checks to ensure associates do not sacrifice quality.Properly applied, pay-for-performance rewards and motivates associates that perform with focus and deliberate intention.  If an associate fails to perform safely or does not meet the quality standard there is no bonus.
4. Talk it up
   Want to keep your program going strong? Make sure you’re always marketing it. Talk about the program to staff and associates. Make sure everyone understands the program, its goals and how it’s working. Talk about the amount of bonuses paid out this year to workers. Constantly remind associates they wouldn’t be getting an extra 50 cents or dollar an hour without the program. You’ll be amazed at the results.
5. Stay the course, answer questions and coach
   Finally, to make your incentive-based system sustainable, keep doing what you’re doing. That means answering questions and coaching associates when they veer off course. If performance slips and associates aren’t hitting the standard, they may not attribute the slippage to their work. Often, they think the system has changed, when in reality they’ve slipped into old habits.The key Is to observe them in action, help them identify the gap and guide them back to standard. Successful pay-for-performance operations transform supervisors from “herders” into “coaches who help workers work more efficiently.”

Could a program that combines LEAN labor management, engineered labor standards and incentives be a win-win for your warehouse operation? What about once your system is in place? Do you know how to keep a good thing going?  Download our whitepaper to find out more.

Written by Paul Vollmer. Paul is Senior Director of Customer Logistics for Ryder Supply Chain Solutions. He has extensive experience managing large, complex, labor-intensive operations and designing/operating global logistics networks. Throughout his career, Paul has been an active sponsor in transforming supply chain operations.