How to Implement a Work Performance Measurement System
Implementing a work performance measurement system can seem like a daunting task, especially if there has never been a system in place in the past. Fears of employee retaliation, decreases in productivity and the introduction of a union are all perceived barriers to successful implementation. The reality is, the top 20% of the workforce are your best performers and feel de-motivated when they observe that they are working harder than everyone else. The bottom 20% either has issues that need to be addressed or should not be working in your operation at all. With a little positive encouragement and coaching, it is possible to raise the performance of the remaining 60%. Of course, there will always be a very small minority that will resist all change. Are you going to let such a small percentage of your workforce run your operation?
Benefits of Implementing a Work Performance Measurement System- Increased productivity and accuracy; Quite often, the fact that employees know that they are being measured will yield a 5% improvement itself.
- Lower Turnover; once the system is in place, problems are identified quickly and resolved.
- Better labor planning & scheduling; With tighter specifications on what the workforce is able to do, planning hours for work content will result in fewer occurrences of overtime while meeting customer requirements.
- Decreased cycle time; Work will be completed in a shorter time frame using the same or less resources.
Steps to Implement a Work Performance Measurement System
- Segregate all Warehouse Functions by Department
The following is a list of typical departments:
- Receiving
- Put-away
- Replenishment
- Picking
- Packing
- Shipping
- Use Historical Budgets to Build a Baseline
If your operation does not track productivity by department, use the previous years’ budget to build a model. Units received and shipped is a good place to start. From there, assumptions may be made to estimate how many units were put-away, replenished, picked and packed. Once the volumes are estimated, payroll records may be used to estimate hours used by department.
- Set Productivity Targets Based on Historical Analysis
Now that you have developed a baseline, its time to set goals. Get input from your Supervisors, Lead Hands, etc. to get their input on what the targets should be. Targets are typically set at 5% - 15% above historical figures. By involving first-line management, you are also gaining their support in this initiative which will help with the change management process later on.
- Source ‘Scoreboards’ for Each Department
One of the causes for failure of a work performance measurement system is that it will be the next ‘flavor of the month’. The key to continuity is communication. Obtain large white scoreboards that display information such as performance last year, target this week/month, actual performance during the previous week/month, etc. Decide what comparisons are relevant for your operation in terms that the workforce is able to understand. It is imperative that these scoreboards are updated each week.
- Communicate, Communicate, Communicate
Ensure that Supervisors communicate the results for their departments on a daily basis, at the beginning of their shift. This is the continuous improvement philosophy used by the Japanese in their adoption of Total Quality Management (TQM). Address any issues that arise that prevent the department from reaching its goals. This will identify other challenges and opportunities to make operational improvements.
- Share the Rewards
One of the first questions employees will have is “What is in it for me?” You may want to offer employees an incentive when their department meets its target for the month. Incentives may be recognition, reward ‘points’ for a retail company, or a financial incentive. Employees take pride in their work when they reach a goal.
Caveats
Be careful when awarding incentives that are tied to productivity, especially if you have used ‘loose’ budget figures and made many assumptions to determine departmental productivity. What you think may be a great target based on past performance may not be that great at all. For example, assume the Picking department was picking at 90 units/hour and management has determined that a target of 110 units/hour is the best it can achieve. Based on engineered labor standards, which takes into account the work content of the picking operations (unit weights, distance traveled, etc.), it may be determined that the standard should be 130 units/hour. Imagine the surprise management would experience when employees perform at 140 units/hour if they received a financial incentive for higher productivity! The company is paying a premium wage for employees that are only delivering a fair day’s work.
Here is another piece of advice: Change takes time. Implementing a work performance measurement system will involve your Supervisors as well as your line employees. They will have feedback that will be very useful and can be incorporated into this initiative. It is important to listen to what everyone has to say. This will ensure greater buy-in and a smoother implementation.