We can do all the strategizing, planning, and measuring possible, yet a fundamental question remains: How can we get people and organizations to perform at high levels? Unfortunately, there's no simple answer; success invariably depends on a mix of complex, inter-related factors, including metrics, performance standards, reporting methods, and rewards.
Elevating performance is closely related to the subject of metrics. But it's not about what the metrics are; it's about how they are used. Once an organization has chosen a few mission-critical metrics, it has a couple of subsequent responsibilities. One is to report performance results against those metrics—frequently, visibly, simply, and on a timely basis. The second is to plan what to do when targets are reached or exceeded—and then do it.
Failure to follow through with some type of reward inevitably makes people lose interest in doing what it takes to continue meeting targets. It is not a matter of having to bribe people to perform. It is very much a matter of demonstrating a positive cause and effect relationship between performance and payoff. That demonstration reinforces interest in and commitment to sustained high-level performance.
The details of the associated reward and/or recognition are less important than their consistent implementation. The payoff might be a group pizza party, a quarterly bonus, a field trip, or privileged parking spots. Group rewards are appropriate, whether they involve group benefits, or individual benefits delivered to all members of the group. This approach is particularly conducive to developing cooperation among team members, and to fostering healthy competition among teams. The key is to make the rewards as visible as the accomplishments.
Finding appropriate rewards
There is a tendency among the techno-geek community to want to use performance standards to generate incentive pay for working associates, be they drivers, order pickers, or customer service reps. We suppose there must be exceptions, but the concept generally is misguided. It smacks of the bad old days of "efficiency experts." Worse yet, it suggests parallels with the bad new days of piecework in Asian sweatshops.
But we do need to have performance targets— whether quantitative (more production, perfect orders) or qualitative (zero defects, on-time deliveries). And we must have ways to motivate people to achieve them—consistently. And there's a fair chance that hitting the numbers will contribute to meeting the organization's higher-level group objectives. What to do?
Begin by setting equitable, achievable targets. Not "stretch" goals that can only be met when the planets are aligned. Not generous allowances that can be achieved all day every day without breaking a sweat. Whether the specific standards are engineered, derived from historical data, or created through some other type of work measurement system is not material. Just stay away from guesses and management estimates.
Once standards are established, follow through with timely, visible reporting—by person. Recognize individual accomplishment orally, with gift certificates, with T-shirts—whatever makes sense in the culture and environment. But make the recognition relatively minor compared with group rewards for meeting group objectives.
Don't use day-to-day performance for disciplinary purposes—the program will immediately be discredited, and good performers' achievements will drop like a rock.
What it's all about
What the reporting process is really all about is highlighting both success and failure. Success, obviously, gets rewarded. But it also presents an opportunity—a responsibility, actually—for supervisors to interview the high-performing associates to determine what factors have contributed to their success. They might find, for example, that the answer is a process, a short-cut, an absence of obstacles, good weather, or the mix of tasks and transactions.
Failure presents an even greater opportunity. As with success, failure provides supervisors with an excuse to interview employees to try to determine what went wrong. That can have a couple of beneficial effects. First, it demonstrates to the workers that the company was sincere in its assurances that the measurement/reward program is simply that, not a disciplinary tool in disguise. The effects of this realization on morale and employee commitment can be enormous. The second is that it provides a forum for the workers to inform supervisors about factors that hamper their performance—barriers, obstacles, problems, bad processes, upstream failures, downstream disconnects, insufficient tools, lack of information, and poor communications. Supervisors then have the opportunity—the mandate—to analyze, prioritize, and remedy those problems.
Additionally, with continuous reporting of performance to targets, both working and supervising associates have a way to track how effective the problem solving and repairs have been. That's powerful indeed and far distant from punishment, reward, and incentive pay.
The metrics/standards disconnect
It's important to note that there's a big difference between performance metrics and performance standards. In the world of metrics, we are generally after outcomes, ideally outcomes that bear directly on customers and profitability.
In the realm of standards, we are working with details that, in the aggregate, contribute to the outcome metrics. Standards (and the processes of using them intelligently) also help us devise better processes, understand and improve costs, and plan/manage the labor component of the supply chain.
By way of illustration, standards might be related to number of stops, miles driven, parcels handled, or number of orders delivered. The performance metric, by contrast, would likely be on-time delivery percentage. In a DC, we might have standards for picks per hour, putaway productivity, fill rate, and the like. But a performance metric might be cost per order.
All of the above notwithstanding, there are times when performance standards are used in other ways. For example, many (if not most) operations have, or should have, a minimum production/quality standard. Inability to meet the minimum, assuming adequate training, can indicate a mismatch of skills and job demands. For example, in a DC, people with insufficient hand-eye coordination, with poor small motor muscle skills, or with alphabetic or numeric processing problems may simply be miscast in their assigned roles. Consistent performance below minimum standard will show this.
In other, happily unusual, cases, outside problems may manifest themselves in low productivity or quality. In those situations, documentation is important. But the issue is not failure to meet standards. Consistent shortfalls provide an indication that something else is wrong and that further analysis is necessary.
The way to get people to meet—or exceed—targets, goals, standards, objectives (at any level, from corporate to individual) is not to push them to strive for excellence. It is as straightforward as removing the obstacles that get in the way of performance. Once the barriers come atumbling down, they'll strive on their own to do what is expected—and needed.