Super7 Operations is based of small teams, working on a common goal. What does that mean for their team targets and incentives?
A lot has been said about bonuses and target related incentives, the past few years. Do they lead to irresponsible behaviour and risk taking within financial institutions? Should managers from state-owned companies, or companies relying on state support, get a bonus if they meet their targets? Interesting questions; however, that’s not what this blog is about. How bonuses and incentives influence the way teams work together, especially in Lean organisations, now that’s something I’m very passionate about.
In my experience as a Lean consultant, I have often found that organisations struggle to maintain the initial rate of improvement: when autonomous production teams, lean quality circles or TPM-teams are first formed, the performance improves spectacular. 20%-50% increase in productivity or machine output is achieved almost every time. In some exceptional situations, I even encountered productivity increase of over 100%. Enough to exceed my clients’ expectations, but my goal was always to get to a state of ‘continuous improvement’. This is when the production teams continue to improve: relentlessly reducing waste, again and again improving their standards.
I strongly believe that financial team incentives can play an important role in making the final step towards continuous improvement. That is why I did this literature search: to find out if my believe is supported by reliable research.
My conclusion: Several publications, especially on effectiveness of ‘Operational Excellence teams’ (e.g. TPM teams, autonomous teams, six sigma project teams, etc.), confirm that team incentives are more effective than individual targets. However, I had to adjust my strong believe on two points:
- Also individual targets have their merits, and a combination of team and individual targets may well be worth considering
- Targets and incentives aren’t the only driver, nor the main driver, for success of Operational Excellence teams, and they should be part of an integral approach