Approach Lean Comprehensively and Systematically
Use a comprehensive and systematic master plan that addresses all parts of lean-manufacturing implementation.
Provide Adequate Resources
Provide adequate technical and administrative resources to allow employees breathing room. Perform cost/benefit analyses so that you know how much the entire implementation will cost and identify results that will be achieved.
Train, Train, Train
Provide adequate training for employees, including upper and middle management.
- Traditional pay systems are structured through periodic reviews. The criteria for each employee are loosely defined, often generic. Rewards for taking additional responsibilities are not defined, nor for mastery of skills. Employees lack incentive for learning additional skills or for cross-training, a must in lean manufacturing. The challenge: Devise a pay system where contribution and pay for each employee grows parallel over time.
- Traditional performance reward systems are, for the most part, subjective. This exposes the workforce to evaluation by opinions, popularity or politics, creating the foundation for unfairness in judging a worker’s performance and individual contribution to achieving the organization’s goals. These reward systems frequently work in opposition to lean. Traditional companies measure manufacturing by monthly output (hours) and utilization. There is an old adage in manufacturing: You get what you measure. If a plant manager is measured on output, then that manager will strive to maximize the hours, building products that are not needed. The same holds true for equipment utilization.
- Traditional organization structures are stifling, often impeding open communication and focusing on the job function, rather than the individual and what the individual can contribute to the organization. Organizations should be conducive to velocity and innovation—on the shop floor and in the office. To make this happen, emphasize the tasks that need to be performed and the skills required to perform them.
- Most managers fail to include and lead a change process, leaving subordinates with mixed agendas to carry the banner of transition to lean. Many fail to recognize that any significant change process requires a long-term structured approach that is consistent in direction and leadership. And, many fail to develop, communicate and implement tactical plans to guide and monitor the change to lean manufacturing.
Motivation the Key to Lean
Characteristics of Skill-Based Pay Plans
By not addressing the preceding elements, lean-manufacturing implementation can suffer through lack of worker interest and buy-in to company initiatives. Therefore, organizational development is the missing link in transformation to lean.
Organizational development applies behavioral-science knowledge and practices to help organizations become more effective, including improving quality of work life and productivity. Included in the realm of organizational development are organization culture, values and norms; employee personality and behavior; motivation, group interactions, performance measurement, education and learning, skills, pay systems, reward systems and change management.
Implementing lean manufacturing without finding a means to motivate workers bogs down the initiative.
But how do you motivate workers to accept and practice the principles of a new manufacturing strategy? Critical to creating that motivation and moving the organization forward at the shop-floor level are six key elements:
Characteristics of Group-Based Pay Plans
1) Lean organization cultures;
2) Lean pay systems;
3) Lean performance reward systems;
4) Lean performance measurement systems;
5) Lean workforce organization; and
6) Lean change-management processes.
1) Lean Organization Cultures
Typical Lean Performance Metrics
A lean culture focuses on sustaining change through leadership, empowerment and communication. Here, the dominant principle of organization has shifted, from management in order to control an enterprise to leadership in order to bring out the best in people and to respond quickly to change. A lean culture contains the following elements:
- Shared vision among all the employees;
- Participative leadership style;
- Open two- vertical and horizontal communication;
- Highly skilled workers;
- Empowered workers; and
- Shared gains.
This type of style includes employees in the decision-making process. Knowledgeable and skillful employees become part of the team and allow a manager to make better decisions.
2) Lean Pay Systems
When transitioning the organization to a lean-manufacturing environment, the workforce requires new skills. Defining those job skills and associated performance standards becomes the starting point for an acceptable pay system. Combining these leads to the foundation for a lean pay system. Knowledge/skills-based pay and group-based performance pay comprise the accepted forms of lean workforce pay.
With knowledge/skill-based pay, if you want employees to learn more skills and become more flexible in the jobs they perform, pay them to do so. Skill-based pay supports teamwork and fosters learning. Individuals progress in pay according to the breadth and depth of their skills. Workers are paid for the skills they are capable of using, not for the job they perform at a point in time.
Employees with a broader view of the production process and organization are better positioned to participate in decision-making and offer constructive suggestions for improving productivity and quality.
3) Lean Performance-Reward Systems
Group and organizational-based pay plans, more than individual pay plans, encourage cooperation among workers. In a manufacturing plant, it is generally to everyone’s advantage to work well together because all share in the financial rewards of high performance.
Gain sharing is a form of group-based performance pay. Gain-sharing plans pay bonuses based upon improvements in an organization’s operating results. These plans, when designed correctly, can contribute to employee motivation and involvement, and tie worker goals to organization goals. Typical results include enhanced coordination and teamwork, cost savings, acceptance of new methods, reductions in overtime and greater employee satisfaction.
Best Practices in Managing Lean Change
• Create a sense of urgency and communicate it to the whole organization
• Develop and communicate a vision and master plan for the new lean factory and organization that everyone can relate to
• Create a lean steering committee to oversee the lean initiative
• Assign a program director and local champion, with the sole responsibility to implement the lean initiative
• Analyze the company’s readiness for change
• Develop and communicate a vision and master plan for the new lean factory that everyone can relate to
• Educate and train managers, staff and workers
• Develop and implement lean performance metrics
• Get everyone highly involved in determining how it can be accomplished to gain authorship, ownership, and buy-in
• Develop a detailed lean-implementation plan
• Provide adequate resources to accomplish the vision
• Align the culture, performance-reward systems, pay system, performance-measurement systems and workforce organization with the lean vision
• Empower action and remove obstacles to success
• Develop a pilot and make it a success
• Celebrate and broadcast the success
• Extend a series of lean successes across the plant until all is accomplished
• Don’t back-off
• Be relentless—embed the changes in formal policies, procedures, processes, work standards, job descriptions and skill classifications
4) Lean Performance-Measurement Systems
Companies should align performance metrics with team-based and individual reward systems. Performance metrics define expectations, and for a team-based performance pay system to work effectively, numerical measurements must be used and visible to everyone on a visual team board. Since the workforce is organized in teams, similar team performance standards should be prepared. Develop performance metrics (see Typical Lean Performance Metrics box) uniformly across all teams, and align them with plant goals. Plot trends over time and involve everyone on the team in the measurement.
The team-performance scorecard should include one very important aspect: the lean transformation task list, and it should be displayed. And the team performance standard should focus on building the team via frequent feedback.
Just as the team-performance scorecard is tied to the operational score card, the individual (team member) scorecard must be tied to the team’s scorecard. Important points include defining what is expected from a world-class employee. The performance standard must focus on what the individual can directly affect, must provide that employee with frequent feedback and it must drive accountability.
5) Lean Workforce Organizations
Increasing operators’ skills by enabling them to perform multiple functions within a group of pieces of equipment (cells) has improved performance and worker satisfaction. This is why teams are one of the basic building blocks of lean manufacturing.
Flexibility adds another dimension to a company’s workforce capabilities. Not only can workers perform on different pieces of equipment, but also across departments and plants. This provides resource flexibility to managers, and enables them to manage operations more smoothly.
In a lean-manufacturing culture, decisions previously made by foremen and supervisors are driven down in the organization to the workforce. Workers are held accountable for their own performance, and have the privilege of determining how to make improvements.
Employees feel responsible not just for doing a job, but also for making the whole organization function better. The lean worker is an active problem solver who helps plan how to get things done and then does them. Secondly, teams work together to continually improve performance, achieving higher levels of productivity.
An empowered workplace is one where teams of people work together, collaborating to get the job done. This is quite different from the traditional competitive workplace, where each individual employee is engaged in a race with others to get things done.
6) Lean Change-Management Processes
The most important asset of any company are its human resources. Change does not successfully occur if the people who are to be affected by change are not involved. MF
Information for this article was supplied by Rockford Consulting Group, Rockford, IL. Tel. 815/229-2900; www.rockfordconsulting.com.
See also: Rockford Consulting Group Ltd.