Switch the Focus to Performance

Posted on Monday, October 01, 2018

Employee performance objectives are sometimes based on output, but that can be the wrong reward system. It encourages quantity over quality and fosters a mindset of letting the little defects slide. That, in turn, can result in increasing customer rejections rates, which can hurt your company's reputation and send customers elsewhere.

A Stellar Success

In five years, one manufacturer slashed its annual customer rejection rates from a range of 250-500 parts per million to just three. The company attributes a big part of this stellar improvement to an incentive program that shifted from rewarding quantity to rewarding quality and customer satisfaction.

After the plant adopted Six Sigma data-driven process controls, employees found that set-up was often the source of defects. They analyzed the process and arrived at a solution. Now, set-up on one line is double-checked by an employee from another line who signs off on it.

The rejection rate is a far better measure for evaluating performance. Bringing it down can motivate everyone to concentrate on customer satisfaction.

Here are five basic steps for reducing rejection rates and driving up sales:

1. Measure rejection. To make improvements, you must know what you are dealing with. So track your company's rejection rates carefully. Which customers are rejecting? What are they rejecting? Why and how often?

2. Set goals. Start with a long-range goal; say a 25 percent reduction in one year. The goal should be challenging, yet attainable. Then, break it down into monthly and weekly increments. Over time, it may become apparent that goals need to be adjusted. Of course, productivity remains important, but emphasize that output is not more important than quality.

3. Reward success. Vary and increase goals to sustain motivation. For example, meeting a weekly goal might be rewarded with pizza, while meeting a six month goal might result in a day off. Reaching a one-year goal is significant and you might reward employees with cash bonuses.

4. Provide resources. Perhaps it's time to do training, upgrade equipment or add another quality control person. Consider setting up or updating a quality management program, such as Total Quality Management (TQM) or Six Sigma.

5. Chart progress. Post a colorful bar graph to show weekly goals and results, as well as progress toward the one-year target.

Making a commitment to reducing customer rejection rates requires a new way of thinking about work and the role of employees. Once teams buy in, they examine their own behavior and production processes to put into effect methods that improve quality, maintain output and lower rejection rates.

Posted in Manufacturing/Distribution

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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