by Jeff Thill

The path to manufacturing improvement relies heavily on the ability of each individual in the organization to understand how his or her actions impact the company’s overall goals. It also hinges on the employee’s ability to make the right decisions to achieve those goals.

Performance management is a dynamic process that puts manufacturers directly on the improvement path. As a progressive planning approach, performance management lets companies target their most strategically significant activities, while giving employees clear direction, useful information, and a deeper understanding of expectations.

This successful methodology promises increased profitability, predictability, and productivity. In fact, performance management generates productivity gains across two critical spectrums: increased capacity or availability, and increased employee engagement.

Operational benefits to bank on

There is no one right way to measure productivity, and perhaps that’s why performance management offers such a unique advantage. It lets companies identify the critical success factors that matter most to them and, subsequently, establish correlated performance measures.

As key data is collected, analyzed, and shared in a timely manner, companies are able to make swift adjustments and foster efficiencies. The benefits of such relevant and real-time information are further revealed as manufacturers apply their strategic understanding to create flexibility in the manufacturing schedule, produce more units with the same conversion costs, and reduce the need for capital expenditures or additional space. All these benefits support a company’s profitable growth.

The benefits of engaged employees

The performance management process provides an organization with a clear sense of direction and gives employees an unmistakable rallying point. With a common understanding of the overall direction and how they contribute to success, employees are able to converge their individual efforts toward shared goals. The productivity result is that everyone pulls in the same direction.

Manufacturers also get what they measure, and metrics that are visible in real time can influence operational behaviors and decisions. Through performance management, employees receive good information and are able to make sound decisions based on that info. They receive good information thanks to performance measures. And because of such measures, employees will perform at higher levels knowing the score and expectations.

Additional productivity advantages include the creation of workplace accountability and the growth of empowerment. Employees are encouraged to make decisions that support the overall company direction or operating unit. They therefore spend less time on “noise” – efforts that have little impact on the achievement of those goals.

Such increased employee engagement results in increased retention rates, which lead to a reduction in hiring and training costs. Retention also means that a company benefits from experienced employees who can offer ongoing and insightful productivity ideas. 

Finally, as teamwork is boosted through performance management efforts, so are productivity gains. Fluid and pertinent information is freely shared and barriers between functions are broken down and even prevented. From engineering, to sales, to human resources, there’s simply little opportunity for silo building in a performance management environment.

With all the benefits performance management generates, manufacturers can increase their competitiveness and profitability through significant productivity gains. 

Jeff Thill is a Wipfli partner who serves manufacturing, wholesale, and retail clients ranging in size from large widely owned companies to smaller family-owned businesses.  Please contact Jeff at our St. Paul office at (651) 766-2862 or e-mail him at jthill@wipfli.com.