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Increasing Productivity - A Case Study in Human Value



No technology was mentioned.

This outline for success was deeply seated in senior management's visible commitment to its personnel.

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Getting completely ahead of the story presented in the seminar, our strongest take-away from listening to FoodPRO's success was that the best ideas that bear the most fruit do so because – when stripped down to their bare bones – they take into account our basic human desire for recognition.

"Through management that communicates the value it places on its individual contributors, FoodPRO's business is thriving."
FoodPRO, a 70-year-old foodservice distributor, operating with 120 employees just outside of the metropolitan area of the nation's capital in Frederick, MD, faced some problems that its management wished to correct. Equating customer satisfaction with the number of perfect invoices, FoodPRO's performance measure of percentage of "unclean" invoices was too high for management's liking.

Through a compensation program first targeted to "fix" what was deemed to be night crew mishaps and then expanded to its transportation and day crews, FoodPRO dramatically increased its "perfect order" performance and experienced an exciting growth spurt in its business. It all but eliminated night crew turnover and as its Vice President of Sales Kevin McAteer described it, FoodPRO created a corporate culture of healthy competition and motivated individuals.

Now for the "story"…increased business? Lowered turnover? Less fires to put out due to getting the order right and as a result happy customers? How did this happen?

LOOKING FOR THE CULPRIT McAteer took us back five years ago when FoodPRO originally thought its ills could be pegged to its night crew. The organization had a yearly night crew turnover rate of 200%. It was experiencing unacceptable levels of "unclean" invoices, i.e. orders that reflected errors including substitutions, shorts and returns. The night crew was paid an hourly rate with an incentive program that tied picking speed to monetary reward. The night crew scorecard showed pick error rates of one per 500 cases picked.

It appeared to management that the key performance measure should be pick accuracy. The logic and therefore expectation at the onset was that tying the night crew's incentive program to pick accuracy would translate into clean orders, that simple.

With a lot of elbow grease and a highly thought-out communication plan, a program was put into place for the night crew. The plan did not increase the cost of labor. It placed opportunity in the hands of its employees. At its center of the program was performance recognition through monetary payoff, performance visibility, and celebration.

After six months, communication was way up; the night crew had management's ear. The night crew selectors were making more money, there was an increase in pieces pulled, turn over was very minimal, two individuals left and were not replaced due to the crew's productivity, and errors – the key performance measure – were slightly down. On one level it appeared that the program was working; on another level it was not fulfilling management's expectation and animosity was creeping in between the day and night crews.

The day crew was a bit green-eyed regarding all the fuss being made over the night crew. The night crew selectors conveyed misgivings about their ability to achieve zero errors and attributed some of their mistakes to the day crew's slotting errors.

CAN'T MANAGE WHAT YOU CAN'T MEASURE FoodPRO determined it could not manage what it could not measure and initiated an undertaking to document "the truth." All records were carefully coded and analyzed. Charts and graphs were posted "everywhere." Seeing what errors were made assisted company management to gain insight regarding their next steps and the magnitude of their perfect invoice objective. It was not as simple as attributing the problem to night crew error, but the cumulative successes of the night crew program i.e. reduced head count, more pieces being pulled and a reduction in errors sparked a willingness to expand the program and communicate even more aggressively.

A wall of fame/shame was created to spotlight individual's earned bonuses and excellent performance. The wall posted each person's weekly record of the number of pieces picked, number of cases pulled, number of errors made and error rate per 1,000 cases. Posting individual records sped up the reduction in errors. Healthy competition between night crew selectors took hold. Personnel took pride in their posted successes and egged each other on.

Those that picked 50,000 pieces and then 100,000 pieces with no errors were not only rewarded in their pay – they were treated as heroes – with the company throwing a party on their behalf and providing a personalized letter jacket for them to wear marking their achievement. Management visibly supported the feat by catering to the food whims of the individual being honored and by attending the celebration to present the coveted jacket. Those who achieved this status had their picture taken at the celebration with the president and exhibited to publicly recognize their accomplishment.

Armed with documentation on every aspect of where mishaps were occurring, management expanded the initial night crew undertaking and developed a similar program for transportation. The key performance measure in this program spotlighted the number of cases delivered by individual drivers without an error.

A another wall of fame/shame was created for the transportation personnel. Just like the night crew, healthy competition became the norm. Looking at the board to measure individual achievement had a positive impact on delivery performance. Pride in non-error deliveries took hold as well as a strong interest in what was the cause of error.

A hundred thousand pieces delivered without error prompted a celebration equal to the night crew's celebration. The honoree selected the main course, which all transportation personnel enjoyed, the president presented the hard-earned jacket during the event and the individual's picture was posted for public admiration in the company's achievement recognition case.

As McAteer described it, the day crew had all that it could stand with a huge fuss being made over the night crew. They were openly envious of the night crew's achievements being posted for all to see, with the night crew making more money, being rewarded with lobster dinners and letterman jackets. They wanted the same opportunity to be able to achieve some of this recognition for their effort.

SATISFYING ALL DEPARTMENTS' AMBITIONS Management got to work. A program was developed for the day crew that documented the number of cases put away each day, the number of slotting errors and warehouse cleanliness. A day crew wall of fame/shame was created and FoodPRO immediately experienced a boost in employee moral, individual pride in their work and a healthy, jovial competitive chatter among their day crew. Like the night crew and transportation personnel, individual day crew achievement was celebrated, shared and publicly recognized.

What FoodPRO realized, according to McAteer, that the real motivational ingredient powering the success of its program was not monetary compensation, it was personal pride achieved through company-wide recognition of good work.

The company focus never veered from its objective of measuring success against incidences of the perfect order. It found that creating a culture that publicly spoke to the importance of individual contribution and recognition facilitated its ability to getting closer to its goal.

FoodPRO now experienced a night crew error rate of 1 in 2,000 to 2,600 pieces as opposed to the baseline of 1 in 500 pieces selected. All of its selectors made more money and at the same time the company experienced a reduction in cost of labor per piece. Turnover became a non-issue.

McAteer emphasized in his closing comments, the lesson enjoyed by his organization was – personal recognition made the difference. He shared many statistics throughout the seminar to prove this point. Their people thrived when their individual work objectives were clearly presented, when they were able to take pride in their measured contribution and when the company supported them by publicly recognizing their efforts.

Through management that communicates the value it places on its individual contributors, FoodPRO's business is thriving.

For a related story on distributor productivity and quality-assurance programs see "Cat Quality Keeps Customers Satisfied" in the Feb. 3 edition of ID Report.

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