Over this last year I’ve been experimenting with a variety of incentives and workflows in our warehouse to get us to a 24 hour lead time for shipping, receiving, and returns. One of the first major changes I made when I started working on this was to create departments with dedicated employees for each of these tasks. This seemed like a pretty logical thing to me so I posted names and departments on the wall and informed everyone of their new responsibilities. Initially this worked great. Since everything was clearly defined I was able to hold each person accountable for a specific set of of tasks and as a result productivity went up. A few months later I also introduced a set of bonuses at the end of the week depending on what your tasks were. I always wanted some component of the pay to be performance based, but before I had a baseline on what should be expected I would just give the top performer of each team a bonus each week. I figured some healthy competition would keep everyone motivated.
Over time though I noticed that the camaraderie in the warehouse was slowly disintegrating. The various departments, pickers, shippers, receiving drivers, unloaders, sorters, etc. all started to feud and mess with each other. As if that wasn’t bad enough, the top performers of the teams were typically alienated from the team because they were constantly winning the bonuses. When we’d need to shift everyone to ship for Cyber Monday or to receive during a busy week people would protest and constantly talk about how it’s not their job. This was no longer a productive competitive culture but instead was becoming an inhospitable workplace. To be clear that wasn’t any physical fighting or anything like that, but the trash talking was going too far.
I wasn’t really sure how to handle it but I happened to be reading Influence: The Psychology of Persuasion and such an environment was described in the book. In what seems obvious in retrospect the book suggested that you align all goals and incentives across all departments to encourage working together to achieve the major goals. So this is what I’m trying.
What I’ve done as an experiment is changed the departments so that everyone is in shipping in the morning until that is done, then everyone is in receiving until the end of the day. There are a set of goals across both departments that must be met and when they are met everyone gets a bonus. If they are not met no one does. Returns is still separate because that’s a very small department that would not benefit from more manpower. I started describing this concept to the employees a few weeks before deploying it so that they could take the time to heal any divisions they had developed with other guys they’d soon be working closely with. We just launched this experiment last week and so far the results look promising. On the positive side it seems as though the productivity is compounded when everyone in the warehouse is working on the same thing. It gets done faster which sets a faster pace and builds momentum. On the other hand I’ve found that some people have been trying to get away with working less since there is now a bigger team involved in the effort. Also some people are still stubbornly refusing to help “the other side” so they will likely need to be replaced. Overall though I think it’s going to be a keeper.
The other benefit to this setup is that I can guarantee the 24 hour lead time even on a Monday. Normally we would fall short on Mondays due to the weekend backup, but now with the full force of the warehouse shipping on a Monday, we can easily ship upwards of 3500 orders in a day. We still list the lead time as 3 days right now but if this method sticks I’ll be able to reduce it to 24 hours, which is huge!
So it still remains to be seen if the productivity and alignment will hold up over the long haul, but you might want to heed my warning about creating too many divisions across a warehouse.
Any readers out there have any experience with this sort of thing? I’m truly in uncharted territory here in my own experience!