Assessing Hourly Performance Management Systems

A huge part of a distribution center's cost is labor. This drives a tremendous amount of effort in optimizing processes and tools. But it's important to remember that in most cases people are actually doing the work. Having solid processes in place to manage that performance is not as exciting as robots, but just as important to the customer experience and business results.

A Performance Standard Management System is the management control system or process layer between setting performance standards (think: safety, productivity, and quality expectations) and administering them to an hourly team. It's important that this program be consistent, reliable, fair, achievable, and support the right outcomes.

In distribution and warehousing, too often sites or companies have part of a system in place and mistake it for the whole thing. For example, they may have set standards, but don't consistently administer them. This means that they're getting much less from the teams than is needed to help the business succeed, and the teams aren't getting the support from the management team that they need. This is frustrating to everyone!

Here are some questions to help assess your operation's Performance Standard Management System.

High Impact:

Is transaction data integrated with timekeeping data by workcenter for reporting true rates and efficiencies?
What reports do your teams use to gauge performance? Do those reports give the consistent data outputs by individual to the shift and department level?
Do the supervisors or Ops managers have to manually manipulate those reports to arrive at their employees’ rates? Are they manually manipulated the same way across all shifts and departments?
Are the rates engineered, or are they benchmarked? Are the rates segmented by major productivity paths or factors?
Are correctives given consistently for not making the rate? Is recognition given consistently for exceeding rates?
Does the performance reporting include individual-level efficiency and quality/accuracy rates?
Is there a regular cadence (meetings or other communication) for reviewing performance at an individual level?
Do hourly employees know the target rates, and their own performance yesterday, and last week?

Lower Impact:

What’s the learning curve for new hire rate expectations? Where is the learning curve documented for supervisors to refer to?
When was the last time you reviewed and adjusted your target rates? When is the next time they'll be adjusted?
Do your Ops managers and Sr Ops or department managers know how many of their employees are on Final Written Warnings (or equivalent) for productivity, or quality/accuracy? Is there documentation on why anyone achieving below-rate expectations, who is not on a corrective, is not on a corrective?
What’s the time expectation or Service-Level Allowable (SLA) for Supervisor delivery of the correctives? Do you have a way to check that?

Gaps in these areas lead to problems administering the system, which in turn means that you’re not getting all the “bang for your buck” out of your team’s performance. If the current system doesn’t measure quality and performance consistently, or it’s unclear whether the supervisors are actually delivering the correctives on time, or the hourly Associates don’t receive regular feedback, or any of the other answers show a gap, then there is opportunity to improve the business.

For Quality & Productivity Performance writing expanding on the above subject, which will add consistency and rigor to your management processes while saving you money, check out my book on hourly performance management. Then help your supervisors make it happen with Practical Floor Supervision.