The effect of performance management reviews on Lean manufacturing
Performance management reviews may have mixed results with people, but they can have a very positive effect when trying to apply Lean principles to an organization.
Employees can sometimes be discouraged after receiving a performance review, especially and when they are told of areas they need to improve in.
Most employees put their hearts and souls into their work and being rated "average" or "less than average" leaves them feeling deflated and hurt. Sometimes it can led them into looking for another job, one in which they feel they would be "appreciated."
Since the majority of traditional performance management systems utilize a variation of the bell curve ranking system, it leaves 80 - 90% of people being told they are average or need improvement. What impact does this have on their motivation and engagement? The intent of reviews and their actual impact is vastly different. This conflict can be wasteful of employee engagement and can impact turnover.
However, when it comes to applying Lean principles to an organization, performance management reviews are often the last areas to be considered in terms of their impact on the team. Rarely do managers consider how it does or does not drive an improvement-based culture. This can be surprising since it is an area that affects the motivation and mindset of all employees, which in turn impacts the effectiveness of lean initiatives.
Three key steps to realign a performance management system
There are three key steps to take when considering making revisions to a performance management mystem, and how it aligns with improvement efforts.
1. Evaluate the system against lean principles.
As with all forms of improvement, evaluation should be the first course of action. This step is often done better as a team. Here are a few examples to consider:
- What should be the key elements of a culture: root cause problem solving, team work, customer focus, business skills, etc.?
- Does it inspire employees to do more? Should engagement be expanded in the business?
- Does the system help reinforce key ideas or does it send conflicting messages?
- If lean principles encourage an open/no-blame environment where employees are free to bring up issues without fear of retribution, does the performance management system recognize errors as an opportunity or an area for judgment on the individual?
Include feedback from team members (voice of the customer). In order to facilitate change, there needs to be a foundation that confirms that change is needed. Survey the workforce to get their opinions on the current system and solicit ideas for improvement.
2. Create discussion and consider options.
Reach out to benchmark other organizations for best practices. Seek out written articles and books written on the topic of performance management. Dr. Deming is an example of a resource for material for one end of the spectrum. There are many others that have differing viewpoints such as forced ranking. Having conversations help people think deeply about the impact of performance management and potential, unintended consequences of some approaches.
Based on areas of agreement, brainstorm ways to make improvements such as increasing the amount and quality feedback. If this information is presented to others, make suggestions on what would be an improvement, and why it will drive better results. Make sure that the argument is one that offers a solution and doesn't just identify a problem.
3. Take change in steps and consider the timing of changes.
Similar to other aspects of improvement, experiments can help to see what difference new approaches make on employee morale and motivation. Since the performance management system is woven into the fabric of the organization, it can take time to make a change. It might be beneficial to consider timing.
Review systems are best changed well before they are in effect. As the end of this calendar year approaches, it's not too late to change the approach for 2018 and potentially impact 2017. By aligning these areas of the organization to work together instead of against each other, a lean culture will continue to grow and thrive.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey