Are your performance metrics contributing to silos?

by | Apr 1, 2018 | Communication & Connection | 2 comments

I visited a friend’s work recently to meet for lunch. As I toured his plant, there were performance metrics awards all along the wall. “Best Market – On-Time Service”, “Best Market – Stops Per Hour”, “Best Market – Done Right Quality”. All of the awards had one thing in common – they were the “Best Market” compared to other markets in the same company.

So essentially, winning the award was defined by “beating” the other markets (colleagues in the same company). You could be the best of bad performance and still be the best market. Or you could be the lowest ranked market but still provide tremendous value. It’s all relative – and it’s all an internal competition.

Okay – so if you are driven by competition – don’t throw things at me.

I’m not suggesting that organizations can’t have a little fun. Or can’t create learning opportunities between markets. But I am saying that leading with Lean requires us to redefine winning.

Our goal is to create more value for customers, and to do that we need to optimize the whole value stream – not individual parts or individual markets. When internal departments are competing with each other – whether for awards, accolades, to stay off the bad list, to get credit, to get promoted, or just for attention – it lessens their collaboration to optimize the whole.

My Embarrassing History with Rank and Spank

Yep – that’s what we called it in the field: Rank and Spank. Because every store or plant was stack-ranked on a few performance metrics and managers in the 4th quartile were spanked (punished) – with dreadful Quarterly Business Reviews that didn’t actually help anyone improve or with disciplinary action or with sheer dismissal of ever being considered “good”.

And if you ended up on the 4th quartile list, it was almost like senior managers were out looking for things to confirm your sucky status – the confirmation bias in action.

As a manager early in my career, I “grew up” on stack rankings and knew how to use them to my advantage. It was how I got accolades, incentives, and promotions. As we began practicing Lean, we removed stack rankings because we saw the damage the internal competition was causing among our team.

The problem was that this culture was so engrained in my belief system – and the belief system of our plant managers – that it was difficult to change.

In fact, right after we removed stack rankings, I noticed that plants were rerouting a lot of their volume to other plants. What really irritated me was that work was being rerouted to plants in a different Region. I vividly remember getting on a conference call with my plant managers and in no uncertain terms dictating that they would, collectively, figure out how they would keep that volume in our West region.

Why would I say such a thing?

Not because it had some negative impact on our customers or increased shipping costs for the company. It was because losing that volume decreased my region’s metrics while improving the metrics of my peers’ regions. The crazy thing is that there was no reason for me to care about this. We weren’t stack ranking anymore. It wasn’t important to my leader. It was all just remnants of my past experience rearing their ugly heads. That old definition of “winning” was sticking around even though I didn’t want it to.

This experience really hit home and I worked hard to change my dialogue with the team. I started by apologizing for the way I had led them in the past. After two months of changing the dialogue, we were on a team conference call. At the end of the call, one of the plant managers yelled out “West is Best” (we were the West Region).

Before, it would have been music to my ears. But this time, it was like a knife through my heart.

After two months, I clearly had not done enough to redefine winning. I continued to work on this and over time, we made it happen. We broke down the silos and aligned everyone to the goal of creating more value for customers.

Design the Performance Metrics Scoreboard to Encourage Collaboration and Value-Creation

It’s human nature to look at the scoreboard to know if we are winning or not. And that’s why it’s important that we put the right things on the scoreboard.

Put the Right Performance Metrics on Your Scoreboard

One organization I partnered with had four primary departments (they were organized horizontally – a topic for a different post) in the value stream. The thing is, the goals for each department weren’t aligned for the common goal of creating more value for customers. In fact, two of the departments had conflicting goals. So everything Department A was doing to increase their score on the scoreboard was negatively impacting Department B and vice versa.

That’s how your scoreboard could contribute to silos or conflict or misalignment throughout the organization.

By simply redesigning the scoreboard to show metrics that were aligned with the organization’s goals and strategies, collaboration and decision-making improved. All departments were focused on value creation – on optimizing the whole.

Redefining winning is one shift needed to transform from traditional management to effective leadership.

Take Action to Transform to Effective Lean Leadership

Spend some time this week answering these questions:

• How is “winning” defined in your organization?
• How do you know? What’s on your scoreboard?
• Are the metrics silo-based or value-based?
• Does one department’s goals conflict with another department’s goals?
• Are shift-by-shift metrics causing good decision-making or bad decision-making?
• Are there any unintended consequences with how you measure and recognize performance?
• What changes do you need to make?

Once you redefine winning, you will be amazed at how many small things you will notice – your comments, behaviors, and decisions – that completely encourage your old definition rather than your new. And that awareness will help drive your own leadership behavior change.

How do you define winning? Leave a comment I’d love to hear your stories.

And don’t forget to download a FREE PDF to assess and track your improvement in fifteen Process + Results Lean Leadership areas!

Meet Jamie

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I’m a recovering Command-and-Control Manager who’s now on a mission to make the world of work more human. With a soft spot in my heart for Ops Managers, this Lean blog gives you the straight talk combining Lean, Leadership, and the real challenges of operations management.