Updated White Paper: Team Targets or Individual Targets for Super7 Operations

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

New White Paper: optimal team size

Lean and Super7 Operations work with small, autonomous teams. Exactly how small should our small autonomous teams be?

This is the question the manager of the central back-office of a large Dutch retail bank asked me, when I proposed the idea of autonomous team to him. At the time, I was working on a project to introduce customer focus and to realise same-day processing in his organisation. I came up with an innovative organisation design, in which small teams are responsible for their work for that day, i.e. all customer request of a certain type that the bank had received that day. After successful pilots, the organisation wanted to introduce this way of working for all (ca. 400) employees. That’s when this question came up…
 
From experience, I knew that the teams shouldn’t be too big: the pilots were done with teams of 5 – 7 persons. However, factual substantiation was needed. A quick search showed me that a lot of research had been done on Agile / Scrum teams, so that’s where I started. And this article is the result: a literature search on the optimal team size for autonomous teams.

My conclusion is: Organisational design isn’t an exact science. As an engineer, I would have loved to have found statistically sound measurements on the effectiveness of teams of different sizes – but in truth, I think that team size isn’t the main driver for team effectiveness. However, if your customer, the type of work your customer asks you to do, requires your organisation to work in small teams, I would suggest – as I did to the manager of the banking back office: small teams consist of 5 to 9 persons. Or, If the flexibility of your workforce allows this, as it did in the case of the banking back office: flexible team size, ranging from 5 on slow days to 9 on a busy day.

At the moment of writing, the banking back office has implemented the new way of working, and has asked me to do a ‘check-up’ on effectiveness of the new organisation. I can’t wait to start: Ï wonder what I will find, but I bet that it will be inspiration for several articles on CoOperationalExcellence.nl!
 

White Paper: Optimal Team Size

Team targets or individual targets? Does in matter for Operational Excellence?

Team targets are essential for making Lean, Lean Six Sigma and Super7 Operations work.

Despite the increasing popularity of Six Sigma as an effective improvement methodology, many Six Sigma projects fail to deliver expected savings. The topmost reason why Six Sigma projects fall short of expectations is a lack of management engagement at the right level of the organization.

While a lack of commitment and sponsorship is the leading cause of project short falls, there are several other important reasons for project short falls, including:

  • Lack of team cohesion and leadership
  • Lack of effective project monitoring mechanism such as setting of targets and monitoring
  • Difficulty leading distributed teams
  • Improper motivation to associates
  • Differences between employees
  • Non cooperation in both horizontal and vertical due to individual targets

To overcome above mentioned problems and to achieve six sigma targets and benefits top management has to set up group targets and incentives accordingly with the help of HR team, yearly appraisals, bonuses and individual key performance indicators (KPI’s) metrics also should have reflection of team achievements. Hence all major organizations are setting group targets and group incentive plans to achieve six sigma goals and targets.

Cooperational Excellence: what’s in a name?

Cooperational Excellence: People working toghether in small teams to create excellence in your operation. This may be nothing new under the sun for manufacturing and assembly plants: mini-factories, autonomous teams, u-cell manufacturing, quality circles etc. have become the standard in the last decenia. Especially in automotive, where off course Toyota still sets the standards (Toyota Production System).

In creating Service Excellence, these methCooods and organisational principles haven’t been applied so widely. Recently, I have implemented autonomous teams in a back-office of a large financial service provider, with even for me unexpected success: costs are down, queues and ‘inventory’ have almost completely dissapeared – which means waiting times for the customer times have also – and employees and management are enthousiastic about esponsiblitly on the ‘shop floor’ instead  top-down management control.

I have named this, the application of manufacturing-style teamwork in administration and service, cooperational excellence: working toghether in small teams in close cooperation, to achieve operational excellence.

If you want to know more, contact me, or just check regularly for new posts on this website!