Incentives for Lean

by Staff
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Incentives address the main barrier for having LEAN become the way an enterprise does business each day, each week and each year. That barrier of course is resistance to change.

The cover story of MEAT&POULTRY’s April issue featured some of the industry’s leading companies discussing how they use incentives to recruit, retain and maximize productivity from employees. The front page had a hundred dollar bill and a hook. This graphic representation conveys the idea that when it comes to incentives, most programs are based on dangling carrots to pull initiatives along, rather than pushing them through.

Motivation is an essential element of transforming and sustaining a LEAN enterprise. The fundamentals of LEAN are sustained only when the majority of management and workers seek continuous improvement. "Kaizen," the Japanese word for continuous improvement, requires the thoughts and action of many to never stop improving. Kaizen is seen as many small improvements adding to productivity, reduction of cost, capacity increases and minimal waste.

Money certainly works as an incentive for changing to a continuous improvement mindset. On the other hand, the hook, carrot or stick works only for the short term. Long-term motivation however, is ultimately more complex than an incentive program. Sometimes what employers think is an incentive, may become a problem. They are advised to consider what incentives motivate people when it comes to embracing LEAN manufacturing.

LEAN manufacturing is a way of thinking. Lean stresses the elimination of waste. This elimination of waste is a simple notion. Everyone understands how wasting raw materials, boxes, trays, labels and packaging can add up to real money. More importantly, less waste of people’s time and more productive shifts create capacity within the enterprise. Incentives should ensure employees are motivated to minimize waste. Attempts to motivate however, may have the opposite effect. For example, incentives out of balance between two important manufacturing parameters, such as productivity and workplace safety.

These two parameters are not mutually exclusive when the perspective is human nature. Incentives stressing throughput may contribute to working faster with less regard for safety. This is not good management. A better approach is stressing both productivity and safety. In this manner, management’s incentive programs would maintain balance between safety and productivity. Another important part of incentive programs is that management emphasizes measurement with integrity. Some fundamental questions about waste can trigger surprising answers in meat and poultry processing facilities. For example, "On average, how many pounds of raw meat are scrapped per day?" Or "how many trays are wasted on line five each week?"

LEAN cannot catch on without measurement integrity. It is not a competition between lines or between supervisors. If it becomes a contest, beware. LEAN is about waste reduction throughout an organization. The competition is down the street or in a neighboring state. Internally, the measurement of competition must be to reduce waste from the best baseline. That type of measurement requires integrity. One way to enhance integrity is to check consistency in the early stages and make the numbers and graphs available for everyone to see. Transparency and visibility are great leadership principles for maintaining and using metrics effectively. One LEAN manufacturing client posts metrics in the plant but also in the cafeteria and break room. That kind of visibility gets positive attention.

Incentive systems should support the principles of LEAN. Lean tools and principles are focused on company-wide waste reduction and improving profit margin. Given this focus, it pays to implement profit sharing in a LEAN company. Overall profit will improve with each reduction in wasteful systems or practices. Some of these changes will be small, while others will yield significant results, but overall waste reduction is the key. Since LEAN thinking has people focus on eradication of waste and waste reduction increases profit, profit sharing system wide reinforces the type of diligence and perseverance needed to sustain LEAN implementation and innovation. What does not work is awarding specific prizes or incentives for one team.

Competition may be the name of the game for business in general, but leaders need to ensure competition is not encouraged between or among LEAN groups within the same corporation. Further, the biggest "Returns On Lean Initiatives" or ROLI will usually come from reducing wasted motion, stock and waiting between sections of a corporation. For many clients the call for "more meat" or "more chicken" reflects the need for improving flow between office orders, perishable inventory and processing. Waste of motion and inventory may continue when the food is boxed but awaits a truck or a shipping destination. Both of these common situations point toward cooperation and communication between working groups. The leadership wisdom here is not to set up barriers by having incentive programs to encourage internal competition. Instead, strive for cooperation in the overall reduction of waste.

Finally, the most sustaining motivation or incentive for continuous improvement is within the employee. When employees can make changes to minimize waste they become effective workers and involved in LEAN. This involvement and influence within the work setting is a very powerful motivator for further improvement. Dr. Frederick Herzberg researched motivation throughout many corporations in the latter part of the 20th century. His conclusions and recommendation still stand today.

Fundamentally, contributing to the way work is performed motivates people to continue improving work practices. Herzberg saw individual’s influencing their work as the ultimate motivator. He was obviously on to something.

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