Want to improve your warehouse’s operational performance? Consider an employee incentive program.
But before you can offer incentives for better performance, you’ll need to take some basic measurements of your current performance so that you have a starting place from which to measure improvement. Some of the things you might want to measure include:
–Orders per hour (in your pack area)
–Lines per hour for pickers (usually correlates better to labor than units)
–Errors per day (individual lines or orders that are incorrect)
–Facility cost per line and per order
Measurement can be done manually or though the use of software. You can measure both individual performance and group performance. Initially, it is probably easiest to measure a group, such as a picking or packing shift. Just letting folks know that you are paying attention is often enough to have a noticeable effect on production rates.
Never focus on just a single performance metric. You must balance both quality and speed, so that you don’t have people working fast and making mistakes, or producing lower quality work. For example, if time is the only parameter measured in your packing area, packers may rush through the job and create an undesirable finished presentation.
Once you have measured your warehouse’s performance, you can set goals for how much you want each metric to improve. Then you can put incentives in place to motivate employees to reach those goals. Incentive programs can range from permanent cash-based programs to one-time bonuses (or prizes).
The incentive program you select depends a lot upon your particular labor situation and your long-term goals. Any longer-term, structured incentive program requires a substantial amount of attention and will dramatically impact your supervisor’s job. You may want to start out with a less structured program that limits the focus to a busy period of the year, or a monthly achievement award for a group.
Remember that recognition is a powerful motivator. You can recognize associate accomplishments in a group meeting, or by posting high performer scores. You can also add a bonus, such as movie tickets, sports tickets, or some other prize to the “thank you.”
Be sure to offer a variety of choices for these bonuses, so that your associates can pick the things that suit them best. You can reward individuals or teams, based on your understanding of the working dynamics of your people.
Sam Flanders is president of Durham, NH-based Warehouse Management Consultants (www.2wmc.com).