I wish I had shared this story when the video was still available (not sure why the TV station pulled it down) — in this link: “Freeman cheers staff ideas to improve hospital.”
Freeman Health System, in Missouri, saved more than $6 million from staff ideas and their “Bright Ideas” program. Not sure if that was $6 million in 2011 (I'd assume so).
The IT department alone had 378 ideas and one employee alone had 56.
The CEO stated (as we believe in the Kaizen philosophy) that it's not just “the bosses” who have ideas for improvement.
An example of improvement:
Tech officials say it can be as simple as switching software or combining data storage. Central supply switched from reprocessing lazer fiber to prepackaged disposable ones, saving $12,000 and employee time.
As is common in programs like this, the incentive seems to be the pride in improving your own work, as the improvement celebration offered free ice cream. Successful idea and Kaizen programs don't have to “bribe” employees to improve (as Dr. Deming or Alfie Kahn might say). Intrinsic motivation is a powerful thing. What is your organization doing to encourage more improvement?
If you're interested in this topic, please check out my upcoming book Healthcare Kaizen and my startup KaiNexus (come back this afternoon for a preview video of our initial iPhone app that works with our full system).
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Must…fight…urge. Shouldn’t….talk…about…incentives….
But can’t resist. Do you consider it “bribery” to pay an employee to show up for work?
(By the way, feel free to ignore this comment, Mark. Just stirring the pot on our old conversation about incentives.)
No, a paycheck isn’t “bribery.” Why have a complicated structure where I pay extra for every little thing that should be part of your job?
Research and experience shows incentives are dysfunctional or harmful. They stifle creativity, cause suboptimization, and harm teamwork.
When we have a good culture and intrinsic motivation, we don’t have to pay people to participate in Kaizen.
I take it from your comments that you do not believe in tipping?
By the way, I don’t advocate complicated systems, and I certainly don’t think employers should pay extra for things that are part of a job.
But lets say we have a do have a great culture where we let people’s intrinsic motivation shine. What if an employee finds it fun to tinker around in the garage over the weekend and she comes up with a design idea that saves millions? Certainly above and beyond, and definitely not a little thing. Do you think she should not get anything extra for the effort and that the company would be wrong for offering a bonus because it would stifle creativity in the future? I disagree. Intrinsic motivation and getting paid are not mutually exclusive.
As far as the evidence I have seen about incentives, it focuses on paying for piecework. I agree that does not work. You can’t pay someone to outplay their skills on a regular basis. But I’ve also seen research that that shows job satisfaction is linked to performance in jobs requiring thinking (i.e. all jobs in Lean companies), and compensation and recognition play a role in job satisfaction. You can give incentives for people to go out and develop their talent. That is similar to what Deming advocates about not setting arbitrary numerical goals without changing the capability of the process. And psychological theories like conditioned response also support the concept of incentive programs.
I think people give up on incentives way too easily, in much the same way as companies give up on Lean too easily when they can’t figure out how to make it work.
Jeff – of course I tip. That is part of a server’s expected compensation since they are paid less than minimum wage.
always at exactly 15%?
Jeff – I will be with a client today, so I will respond more later. But since you asked, I generally tip 20% unless service is outrageously good or outrageously bad. I don’t generally think of my tip as an incentive system (especially since tips are shared in many establishments to create a team dynamic).
Sounds good–looking forward to the discussion. Good luck with the client.
I am curious, though, if you don’t see the generous tip as a reward, why do it? And do you think servers learn which behaviors get the biggest tips, and adjust what they do?
Jeff – I’ll leave it to you to make the case that incentives work and that it’s worth the effort to create incentives that are most effective and least dysfunctional.
As JM commented, I’d rather put the effort into eliminating barriers and frustrations that would otherwise drain the intrinsic motivation that’s there in people I hired.
In your case of somebody having a multi-million dollar idea, OK sure, give some sort of bonus for that. Those don’t happen very often. To give a bonus that’s unexpected is less dysfunctional than what Dan Pink calls an “if-then” bonus.
I don’t tell a server at the beginning of a meal, “if you provide great service, I’ll give you a 30% tip” because A) that’s tacky and B) that creates dysfunctions where that server might not help their colleagues because they’re too focused on me. Or if I’m known as a 30% tipper (or more) and they don’t share tips, then servers tend to fight for the customer or they might be tempted to steal from the owner by comping drinks/food or other things to try to solicit bigger tips in a quid pro quo way (this happens a lot on the show Bar Rescue that I’ve been watching a lot of)… so that’s an argument for pooling tips. It’s less dysfunctional that not pooling the tips and if you have somebody who only works for that individual reward, then you probably don’t want that employee anyway.
Back to the million-dollar idea scenario… instead of individual bonuses tied mainly to individual performance, I prefer team-based incentives or company-wide profit sharing. That encourages teamwork and everybody wins and loses together. If somebody has an idea that saves the company millions, then everybody wins.
In an “if-then” incentive system that pays an explicit promised % to any idea, those systems lead to a lot of fighting over who stole whose idea (or didn’t share credit) and management has an incentive to downplay the value of an idea. Alan Robinson has a lot of research about how paying a % of an idea’s value makes sense on the surface, but breaks down in practice.
Robinson also has data that suggests that BIGGER incentives lead to fewer suggestions, as the fighting and dysfunction drives people to quit participating. I saw a system like that get VERY dysfunctional back in my GM days (they had a classic old-school suggestion system).
I hope you’ll read our upcoming Healthcare Kaizen book. My co-author’s organization is getting about 2 implemented kaizen ideas per person each year (and that’s only with about 50% of staff participating right now). They give just a few bucks per idea. It’s the intrinsic motivation to make one’s work easier and to improve patient care that’s motivating, not huge financial rewards.
Would bigger financial rewards encourage some to participate? Probably. But, net net, I’m not sure the benefits of that outweigh the dysfunctions. It’s better to let people NOT participate in Kaizen and then be more careful to screen/hire people who will naturally want to participate when it comes time to replace those who leave or retire.
Thanks for commenting and spurring the discussion.
Always love mixing it up…Hard to find much other than incentives that I don’t agree with you on. But….
I think the issue is that most incentive programs are not effective, not because incentives are inherently bad, but because the program does not have a healthy dose of PDCA applied. It could be coined “I.A.M.E” (incentives as misguidedly executed). It would be like dismissing Lean as a philosophy because many people do it poorly.
I also have to say I don’t advocate incentives instead of cultivating intrinsic motivation, but rather in addition to it. It is not an either/or proposition.
As far as the wait staff, regardless of how the tips are split, the servers know that certain behaviors are more likely to generate bigger tips. Some do those behaviors because of pride of workmanship, but some go the extra mile because of the extra reward, regardless of whether the incentive is group or individual. And some do it for both reasons.
The problem with individual incentives is execution, not fundamental flaws. Going to the Dan Pink talk on motivation, the issue I have is that the incentive was wrong. If he had done the experiment comparing one group who had been offered an incentive to complete a creative problem solving class, and one group that had not, I suspect the ones paid to get more skills would have performed better. Plus, to the issue of morale, I can’t believe that people who chose not to take the class and didn’t get paid for it would have bad feelings for those who did. You don’t give individual incentives for group results or for individual results that are detrimental to the group. You give incentives to promote behaviors beneficial to the group that people would not otherwise do on their own.
Mark, I would add to your statement that sometimes incentives are simply “ignored” besides being “dysfunctional or harmful.”
In my world of warehousing, the conventional method is to employ engineered labor standards and provide an incentive if a worker peforms above the standard. Some companies have slight to moderate success with this, but in many cases, they have little success, even after spending hundreds of thousands of dollars for consultants and labor management software.
There is so much energy expended to figure out to motivate people to work faster, rather than focusing on the process and eliminating all the obstacles that prevent a worker from being efficient. Even then, those efforts seem to only involve the managers and engineers. If they simply spent some time on the floor and asked the front-line employees, “Hey, what do you think?”, they would discover a treasure trove of ideas (and strong opinions!).
To be fair, I have seen some cases where incentives are paid to employees when the employess produce ideas that save the company money and that dollar figure can be quantified.
Comment on Twitter from Paula Baker, the Freeman CEO:
LINK
Thanks for the mention, @MarkGraban. We’re very proud of our employees and we appreciate their invaluable ideas!
Here is a video, if you didn’t see it, with Paul Akers talking about his experiences and lessons learned with incentives for Kaizen (which was the topic of this post):
https://www.leanblog.org/2012/02/paul-akers-qa-on-incentives-rewards-for-kaizen/
Was this incentive system just badly designed?
http://seattletimes.nwsource.com/html/seahawks/2017681991_nfl07.html
It’s great to see IT employees implementing so many kaizens. When I present to IT audiences what our team has done, they get pretty excited. Thanks for sharing this Mark.