How to Make Labor Management Systems Work

Aug 17, 2011 9:04 PM  By

The atmosphere around labor-intense business operations—distribution, manufacturing, customer care, field service and the like—has changed thanks to new labor management systems. But while this type of software offers enticing benefits for your workforce challenges, it’s not without its pitfalls.

Operating executives cannot rely on systems, automation, or diligence of a few outstanding employees to deliver all the results their companies need to remain competitive, profitable, and an appealing place to work.

There are five common problems companies often encounter when implementing labor management systems, or LMS.

1. The staff doesn’t feel your commitment.
You work hard to attract and retain talented and dedicated staff. Your company brand, operating conditions, wages and benefits, coworkers, interpersonal relationships with supervisors, and the nature of the work itself all contribute to an overall perceived value for associates.

As they dedicate their hard work to the task, over time employees build more and more internal commitment. But, most incentive programs are only partially aligned with that self identity and end up undermining their commitment.

Too often we see incentive programs haphazardly thrown together with policies, rules and concepts that can frustrate employees and conflict with their social identity to their work group.

2. The staff knows how the system works—and they work it.
There is real-time computing happening every day in your operations—and it is not what you think. It is not your business systems trying to optimize inventory. Rather, your associates are evaluating their sense of investment and effort with their reward; and then comparing it with that of their coworkers.

We witnessed this in a large direct-to-consumer operation that had just rolled out a team incentive. While the payouts were lucrative (some groups overachieved and banked incentive pay far into the future), the overall perception was dismal. In fact, a staff survey found that due to several structural issues and poor supervisor accountability, the team incentive was the least liked feature of employment at that company.

3. Managers try to lead from the office.
This may surprise you—unless you have tried it. LMS vendors often tout the features of their systems to automatically sense and respond to real-time conditions in your workforce. Why not take advantage of the discrete tracking and real-time radio frequency communications available in a distribution center call center or on the road?

For example, a lift truck driver is taking longer than the LMS predicts it should take her to complete a transaction. When this happens, an alert is sent, usually to the supervisor alerting him of the infraction.

Neat. Now you will not miss appointments or volume projections for the day right?

While in theory that is the intent, in reality, there are two problems: First, real-time reporting gives managers the false sense of empowerment to run operations remotely. Control with a mouse click. Why be on the floor coaching associates when the system can do for me the important task of constructive feedback?

Second, real-time reporting consumes system processing capacity—a precious resource in high-transaction environments.

4. Workers feel the road ahead is blocked.
Why do some people seem to flow in their jobs, getting stuff done and feeling good about it? How can that be when their jobs seem less than inspiring? What is going on here? Why do I feel frustrated?

How does this relate to your incentive program? A comprehensive labor management program, with incentives, should be the basis for clearing obstacles and achieving ever better performance. Working faster is not the key. Creating the conditions to work unobstructed unleashes a fulfilling experience.

5. The LMS is perceived as just another ‘flavor of the month’?
What employees hate most is not having certainty. Sure, creating a performance-focused work environment is a journey. But it shouldn’t be done by trial and error.

Installing the LMS is not a plan. Developing engineered labor standards is not a plan. Piloting incentives on a few departments is not a plan.
Instead, these are timid steps management often takes to avoid making a commitment they can’t back out of. But, these schemes are perceived as just that; ad hoc initiatives that will wither once management’s attention gets pulled to the next urgent matter.

Remember, incentive programs are optional—and therein lies their biggest risk. Creating a fair and well-structured program with a clear long-term vision, engaged management, and a commitment to make everyone successful can be the foundation for a program they love; and one that delivers those enticing financial benefits year after year.

So how do you avoid these problems in your operation? You will need three equally important weapons: credibility, objectivity and expertise.

Companies who journey down the incentive program path alone are challenged internally in both the perception and reality of the program. Nothing is more sacred to associates than their compensation and job security, and often there is an “us vs. them” mentality between different levels within a company, which greatly complicates matters. Employees need to know and feel that their best interests are truly being looked after. Otherwise, the ramifications of implementing a poorly perceived program are far greater than the potential benefits.

Objectivity from an outside source, whether it is an outside firm or someone outside the division of the company, can help create and foster the collaborative environment necessary during the design process. Cross-functional teams tend to design the best programs; however, creating the necessary cohesiveness can be elusive. Internal stakeholders should avoid facilitating the executive meetings for fear of creating an improper illusion that the resulting program belongs to or came from a single person or single perspective.

Focusing on credibility and objectivity is not enough: Without expertise, the resulting policies and procedures of the program can be fraught with holes and unforeseen pitfalls that will derail the long-term success of the program.

Companies will be much more confident in executing the program if they have experienced a structured, thoughtful, deliberate and collaborative design process.

Jeff Boudreau is a managing partner in supply chain consultancy XCD Performance Consulting.