Use Incentives to Reduce Waste

Waste is seen in many different forms in manufacturing, and much of these wastes can be reduced or eliminated through incentives.

It is no mystery that money talks, especially when trying to motivate a change in culture. You can provoke change by just making new policy and enforcing it with effectiveness. While fear can be a great motivator, I think incentives are a far more effective approach. There is reward for good behavior instead of punishment for bad behavior. Now I am not about to tell you to make a reward for everything or that this is the best method, but it can be very effective, especially in establishing a culture of waste reduction. Awards and other incentives can be a positive boost, but money always seems to be the most effective, particularly in a tough economy.

After leaving the U.S. Navy, I was employed at a ductile iron foundry as a maintenance supervisor. I was accustomed to a culture that rewarded good work with medals and certificates. This did motivate people to do a good job, and for the most part, it was an individual basis. The foundry used monetary bonuses to create and maintain a culture, and it worked to great success.

The two bonuses I will talk about dealt with safety and scrap. Both of these bonuses were received by everyone plant-wide, so it was definitely a cultural motivator. The bonuses were based on staying below a certain threshold. The lower the company was below the threshold, the more it paid in bonuses.

Now the bonuses were not the only tools used to keep the levels down, but they were definitely a motivator to attain that goal. Everyone had a vested interest in performance, and they were not afraid to point out deficiencies that needed to be corrected, even with management. This was not an atmosphere where employees went and told on others. Instead, they would stop and deal with the problem directly because there was an incentive to correct the deficiencies. The results were an incredibly low safety-incident rate compared to industry standards and a very low scrap rate.

I am not suggesting that every company should go out and put these bonuses in place. What I am telling you is to be creative on how to reduce waste. Find incentives that motivate the culture in the direction you want to go. This kind of approach can also be effective in specific departments or operations.