I use to work for a well know retail store as an Efficiency Expert on the distribution side. The distribution center operated an employee incentive program called the Productivity Evaluation Program (PEP) to motivate employees to work harder and faster. The PEP system was designed to award employees a financial bonus to work above and beyond normal industry standards. The company had this term called “turn” which means the amount of turnaround time merchandise entered the distribution center from manufactures, processed and released to the department stores. The industry standard for “turn” was 2-day turn schedule and my company’s turn was operating on an 8-day turn schedule, which was completely unacceptable. However, the PEP system was paying bonuses at an all-time high for unproductive work. I was handed the task of reducing the turn schedule from 8-day turn schedule to an industry standard of a 2-day turn schedule coupled with aligning the pay incentive to those standards.
My very first task was too review the time and motion studies conducted for the pay incentive program for each recorded task. The scope of this project was very large because of the time and human resource requirements. Furthermore, I needed to review how the productivity was being recorded for each employee to determine eligibility for bonus pay. After a 5-month study it was my recommendation to suspend the incentive program until new standards and procedures could be put into place.
It was determined that the time and motion studies conducted by the previous Efficiency Expert were invalid for a number of reasons. To effectively conduct a time and motion study of employees, multiple studies has to be conducted using a large sample of employees and a variety or study methods such as video surveillances as well as in person studies both formally and informally. The previous study only used live studies and the sample was too small. The problem with live studies is that the employees become nervous and they do not work to their full potential or purposely work at a slower pace to relax production standards. Also studying a small amount of employees does not effectively measure the capabilities of all employees. By using a small sample size of employees to study coupled with a small frequency will skew the production standards in favor of the employee. With in a 12-month period I was able to put the distribution on a 2-day turn inline with the pay incentive program.