When most manufacturers are trying to impact productivity, they are focused on improving the number of units produced per labor hour. If a manufacturer can get more units out for the same or less labor put into the units, they will have improved their labor productivity.
The problem with this metric is that it only serves the people in the offices. “Increase your labor productivity” is a hard message to sell to the front line employee, because the message doesn't feel very actionable to the front line employee.
A front line employee might ask:
- What part of the process should I focus on?
- How will I know if I have improved this metric?
- Do I have to wait a month until next month's productivity numbers are calculated?
- Can I measure my progress on this task daily or even hourly?
Distilled messages from top leadership get misunderstood by front line workers.
Most middle manufacturing managers are constantly trying to translate the initiatives from upper management into actionable and meaningful information for the front line workers. Then the middle managers are trying to motivate the front line workers to act on those initiatives, when they are often going against incentives for the front line workers.
As an example, I was the manager of the manufacturing production line which made over 400 units per minute. I knew that we were on track to hit a changeover late in the shift, and I wanted us to perform the changeover at standard time. When I went out to the line near the end of the shift, I discovered that the team had slowed down the line to 300 units per minute so that the changeover would occur on the next shift.
The team was measured by units out per shift, so they were not incentivized to keep the line running quickly and perform the changeover on their shift. Since we were so focused on labor productivity, we had taught the shift team that units were more important than any other task, including a changeover which was the only way we could switch to produce other types of units.
From this small example, I began to understand that the messages that we share to the shift team have a huge impact on how they make day to day decisions in their jobs.
We preached that units out the door were the only activities worth rewarding, because we had our eye on improving our productivity. Objectively, there is nothing wrong with this message, but it was backfiring when teams were only interested in performing unit producing activities.
A better way to communicate the productivity focused goals
In reality, the productivity message can be simplified for the operator on the front lines. "Perform everything at or better than standard time." When you focus on just executing per the standard, you are now able to see that every individual task has an expected standard, and each team can measure themselves against that standard.
Teams that want to check in with their performance during the workday can easily see how many standard hours they have completed versus the total labor time of their shift. Labor productivity is now an easy calculation, and they are incentivized to maximize it.
When you measure every activity performed against its standard time, you will quickly learn which activities are taking longer than standard time and which ones are easier to beat the standard time. Now you can focus your efforts on improving the activities that are taking longer than planned.
Sounds simple, right? Most manufacturing teams don't have this level of activity performance monitoring because it is difficult to execute on a broad scale.
A framework for performance management at the operator level
First you have to collect information from the operator either in a paper based or excel based input system. I have seen other input systems, but most teams go with the familiar paper handouts to every operator. Operators are supposed to record their activities on these sheets as they work throughout the day, but mostly operators will try to fill it in at the end of their shift.
Filling the information in at the end of the shift is problematic because humans are terrible at remembering details. What did I do? How long did that task take me? What happened to prevent me from hitting the standard time on that task? How long was that interruption? You can see how it is hard to remember this information after the fact.
Secondly, you then have to collect that information and put it into a tracking system. If you never do anything with the paper based sheets, your team will stop recording them. The adage "inspect what you expect" is coming to mind in this example, you must inspect the sheets that you expect the teams to do. And while you are inspecting the sheets, you might as well log it into a spreadsheet so that you can pull trends and metrics from the data.
Lastly, you have to return the information back to the teams in order to close the learning loop. If you stop at ‘trending the data’, but you never share the data back with the front line workforce, they will be less likely to keep doing it with high quality and integrity. But instead, if you share the results of the performance data collected, you will get compounding effects.
If you share the top performers and their top activities, you will have people who are competitive and want to lift their performance to be in the top performing group. Other people will go and ask the top performers "how did you do it?" and seek to replicate their success.
If you share the activity performance, you will see outliers in who can perform what task better than others. You can use this information to reorganize your team so that everyone plays to their strongest area. You could also find the top performer and have them document a new standard way for that activity and teach their peers.
Labor productivity becomes labor performance to standard
Performance management focused on the right activities will always lead to better labor productivity. But labor productivity can get mismanaged without a component of performance management. As manufacturing leaders, we must understand that our teams will listen to our priorities and help us improve the metrics on which we focus. If we focus too much on the unit producing metrics only, we will incentivize them to make decisions that are not in the best interests of the business. By pushing them to track individual performance, we can have a focus on labor performance to standard, no matter what activity is on the plan for today.