By September 28, 2006 0 Comments Read More →

Incentives for On-Time, But What About Quality?

Rotorhub: The Information Hub of the Helicopter Industry

Here’s an article about some military helicopter part production and a “lean” system.

This jumped out at me:

At Boeing, a frank Joe LaMarca, divisional communications director, said it was true that union workers had missed a couple of incentive payments tied to guaranteed delivery schedules. ‘But that came after 20-odd successive payments,’ he said.

So if your incentives are tied to on-time delivery, that gives a really strong incentive to cut corners on quality or to look the other way if there’s a question between shipping and making sure quality is perfect.

Sure, you might say, “Wow, that’s cynical Mark. These folks are making helicopter parts, they know quality and safety matters.”

Then where are the incentives for quality? Are they there? I’ve worked at a factory (a major manufacturer who is sometimes called “lean”) where every incentive bonus for workers was tied to production quantity and efficiency, nothing about quality. The results were predictable — it was ok to ship crap.

Incentives need to be balanced. You never know who might be under financial pressure and that extra pay means everything. If incentives really worked, there wouldn’t have been any late shipments…. because people are “motivated” by incentives, right?

How about you pay people a fair wage, let them have pride in their work, and allow them to share in overall company success (which requires success in a number of balanced metrics, including quality)?

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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