Full Team Ahead
By Glenn Parker, Jerry McAdams and David Zielinski
Effective teamwork requires a solid program to back it up.
Companies can enhance productivity by encouraging teamwork, but senior managers must do much more than simply repeat a few slogans if they expect the spirit of cooperation to take hold in the workplace. Inspiring rank-and-file employees to work effectively in teams requires the right initiatives and consistent follow-through by management. The most successful approaches use project team incentives and organizational unit incentives.
Team Incentives
Project teams are usually formed by management to tackle specific projects or challenges within a defined time frame. These teams are typically charged with missions such as reviewing processes for efficiency or launching a new product. In other cases, project teams form around specific issues or as part of continuous improvement initiatives such as team-based suggestion systems.
Team incentives should include an award schedule tied to achieving certain measures. The plan must include pre-announced goals with a guaranteed award for teams that achieve those stated objectives. The incentive usually varies with the value of the project.
Project incentive plans can help teams stay focused, accomplish goals, and feel rewarded for their hard work. These rewards do have one drawback: they may be viewed as exclusionary because not everyone can be on a project team. One way to address this downside is to reward core team members with incentives for reaching team goals and then recognize peripheral players who supported the team by offering advice, sharing resources, or covering for project team members back at their regular jobs.
One example of a successful team incentive plan is that implemented by UtiliCorp United, Inc., an international electric and gas company based in Kansas City, Missouri. In 1995, the company launched a project team suggestion system, dubbed Think Big. It was designed with a short life span to draw employee attention and create maximum impact. Over a three-month period, employees were asked to form suggestion teams of up to five members--on their own--and develop ideas that might in some way reduce UtiliCorp's costs or increase revenues.
Think Big was heavily promoted across the organization with a video featuring the CEO's endorsement of the program, posters, articles in the company newsletter, and kick-off meetings held at UtiliCorp sites around the country. Rewards came in the form of "UtiliBucks," which were deposited into team member accounts for use toward a catalog of merchandise. For approved cost savings or net revenue ideas with an impact of about $500 to $1,000 over twelve months, for example, each team member earned 15 UtiliBucks. For ideas with a much bigger impact--ranging from about $5,000 to $10,000--each member received 150 UtiliBucks.
More than 85 percent of UtiliCorp's four thousand employees joined some type of suggestion team during Think Big, which translated into 650 teams that generated about 1,600 cost-saving or revenue-building ideas in the three-month span. Interest ran high in part because Think Big had high incentives. Teams that had ideas approved for $1 million or more in cost savings or additional revenue, for instance, received the equivalent of up to $20,000, after tax, per team member, and several ideas paid out at that award level.
Ideas ran the gamut from the innovative to the commonsensical. One team suggested a new way to refinance debt UtiliCorp had incurred as part of a foreign acquisition with a total savings of approximately $4 million in taxes. Another team came up with ways to use sources other than coal to fuel UtiliCorp's boilers at lower cost. By the time the program ended, some $16 million in ideas had been approved in three months. Team members earned $2.97 million in Think Big awards. Although Think Big exceeded management's expectations, the plan's condensed time frame and frenetic nature created administrative headaches. Project teams put in plenty of time beyond normal work hours to research and develop ideas, and the one hundred evaluation committees charged with giving thumbs up or down on ideas often found themselves swamped.
As management looked back on Think Big, it decided a slower tempo was needed. The executive team decided to move to a suggestion system that retained the best qualities of project teamwork but was a long-term program. Management also wanted suggestion teams to be more accountable for helping to implement their ideas.
The revised program, named Suggest One, is a less structured initiative with no defined time frame. Teams now submit ideas more as an extension of their day-to-day business than as part of a one-time program.
The slower pace hasn't stemmed the tide of quality ideas, however. The first idea implemented under Suggest One came from Minnesota employee Randy Carlson, who invented a way to help customers more efficiently and safely locate underground gas lines in their yards before starting a digging or excavation project. The tool helps locate plastic natural gas lines. Carlson's invention is roughly the size of a roll of quarters and costs around $70. This cost is compared to the $8,000 machines that were used for this purpose. Price isn't the main advantage of the innovation, however. It's also extremely accurate, outperforming pricey electronic equipment. It's also faster.
For their ingenuity and hard work, Carlson and six members of his implementation team each had $600 in UtiliBucks deposited in their merchandise accounts--with the possibility of earning more later if the idea exceeds its anticipated $87,000 value.
Teams now receive UtiliBuck awards based on an idea's implementation, not just its approval. Another key change with Suggest One is that teams have a chance to reevaluate the impact of their ideas at the idea's annual anniversary date. They are rewarded with a bonus if their ideas yield additional savings or revenue over and above the amount approved at implementation.
Think Big only accepted ideas with a clear or immediate financial benefit, but Suggest One opens the door to ideas that target operational improvement, including suggestions to improve process efficiency or customer service. Although usually more difficult to assign a dollar value to, these types of improvements are valuable to the organization.
UNIT INCENTIVES
Organizational unit incentive plans cover a defined group--usually an organizational unit, a division, a department, or a work group. These types of plans focus on the company's business objectives and can use performance measures most appropriate for the participating organizational unit.
The benefit of the unit incentive plan is that it engages all or most of the employee base. Typically a plan is set up to payout only when the improvement occurs. It is based on results, rather than on activities. Consequently, its effectiveness is easy to measure.
In the Northeastern Division of RR Donnelley & Sons, a large commercial printer, the company implemented a unit incentive plan that has proved successful. The plan is based on "small games," meaning an initiative focused on immediate improvement in a given work area, unit, or work team. (A plan based on an entire department would be a large game.)
Each game has a starting point, a set of rules, a goal, and a team reward for those who win. The rewards typically include items such as $50 gift certificates, catered lunches, or days off with pay. The more enduring reward for game players is to have met the challenge of setting a goal and finding a way to achieve it, while learning more about teamwork and business management along the way.
For the company, returns from sponsoring games come in the form of gains in productivity, cost reductions, or profits that result directly from the program. It also gets the intangible benefit of a more engaged and educated work force.
One game created by Donnelley employees called NASCAR '98 illustrates the company's small game program. Rather than being developed and handed down by management, the game was devised by a Donnelley press operator in collaboration with his frontline peers, all stock car racing fans.
For the game, a "racing crew" consists of the eighteen- to twenty-person team working on an offset press. The game's purpose: to reduce materials waste. Game goals for the first half of 1998 were set as improvements on year-end 1997 performance; goals for the second half were tied to improving on first-half 1998 performance. The overarching goal was to give press crews a better understanding of how their efforts to cut waste in the four identified areas contributed to the overall financial performance of the business. "Pit crews," consisting of one machinist and an electrician, are assigned to individual presses to ensure that the machines are running in top condition. Pit crews share in any payout the team receives at the game's end.
Each press crew chooses a real NASCAR driver and a Matchbox car to represent it on a large racetrack scoreboard posted on the wall in the press area. Velcro on the cars attaches them to the Velcro track. Cars are positioned on the track based on how the press they represent is doing that month against its own waste-reduction goals. Self-competition is a guiding principle, because Donnelley wants to guard against pitting employees against one another.
Crews can gain or lose laps based on their press's performance for the month. Laps might be taken away for documented customer complaints, because one of the guidelines is to maintain a high level of service to customers through the course of the game. Conversely, if there is a documented cost saving, the crew would advance an additional lap.
A pace car on the scoreboard represents how the department as a whole is doing against its goals. For any month when the four departmental waste reduction and speed goals are all met, the whole group is treated to a celebratory catered meal or dinner out.
There is a winner each month--the press that performs best against its own goals determined by number of laps run. Each winner receives an authentic NASCAR checkered flag, which many proud press operators hang from the front of their presses, and the winning team is featured in the Gallery of Winners photo display next to the scoreboard for the entire year. These monthly winners also receive $40 individual gift certificates that each team member can use at a local shopping mall. If other press crews beat all of their goals in a given month, but aren't the overall department winner, each crew member receives a $20 gift certificate to the mall.
Playing the games has taught the work force about Donnelley's business in ways classroom training never could. Not only do the games increase awareness of strategic business goals, but they're also much more fun and engaging than classroom training.
As is often the case with incentive programs, the games at Donnelley are more about communication and the value of teamwork than about the size of rewards. These programs show that managers can bring out the best in employees by encouraging collaboration. And the rewards will benefit both the employees and the company alike.
Glenn Parker is a consultant who specializes in implementing teams. Jerry McAdams is the national practice leader of the rewards and recognition system for Watson Wyatt Worldwide. David Zielinski is a business journalist specializing in management issues. This article is excerpted from their book Rewarding Teams: Lessons from the Trenches, published by Jossey-Bass of San Francisco, California. The book is available from the Jossey-Bass Web site or by calling 800-956-7339.
This article appeared in the November 2000 issue of Security
Management. More information about this publication is available at http://www.securitymanagement.com/