Set the standards
Over the last two years, Yan dug deep into every aspect of the company. Step by step, area by area, team by team, he looked for aspects of the business that were measurable. Once he found these measurable aspects, he analyzed historic data to develop benchmarks for each area of TCP’s operations.
“If you want to get a company highly efficient running or operating, you must have a very good system in place,” he says. “Then, people will be measured under those systems. Then, you have to be religious in executing those systems.”
When Yan analyzed each step of TCP’s operations system, there were a few things he was looking for. For a system to be effective, its goals need to reflect the company’s goals. It should measure what the company needs to deliver and over what period of time the delivery needs to occur. The goals must be reasonable and achievable, as well.
Yan has two keys to setting reasonable benchmarks for his employees. First, he looks to the past. Yan analyzes the last several years of historical data on the company’s performance on both the operations and the sales sides.
The second is properly motivating his employees to work more efficiently. That is a difficult skill to master, because Yan says a properly motivated employee’s output can be huge. Tempering those expectations with reality can be tough.
Yan says motivated employees should outperform themselves by between 10 to 15 percent. But it’s a delicate balance, because your employees need to have faith that they can reach the milestones you’ve set for them.
“You don’t want to overpressure people,” Yan says. “When you overpressure people, they just look at you with this funny face. I see that funny face quite often. I’m kind of backing up a bit when I see that face. I learn from my mistakes and from the past.”
Once you’ve determined an achievable baseline for employee performance, you need to drive the message down to each department so each person completely understands that from that point on, his or her work and performance is going to be measured every day, every week and every month.
“People have to believe in what the company is doing,” he says. “Because when you have a system in place, you pretty much put people into a box. You put your company’s demands and you put what they have to perform into their box. Pretty much, you make their lives a little bit harder, not easy. People have to buy in to that and willingly say, ‘You know what, I’m going to work a little bit harder. I understand what we’re doing here; I understand the reason for what we’re doing here.’ If people don’t buy in to this concept, then no matter what kind o
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system you put together, it’s not going to work.”
Show them what’s in it for them
There are many ways to motivate employees to hit their respective benchmarks, but Yan says the most effective way is to tie their money to the company’s goals.
The profit-sharing system Yan has implemented at TCP is an example of how this interconnection is done. For instance, if the daily work order came in 25 percent higher than the normal average number, two different scenarios could happen.
In scenario No. 1, the floor managers could ask for temps to help them process the extra work. In scenario No. 2, the floor managers convince their co-workers to work a little bit harder that day. By increasing their own performance without adding temporary employees to the payroll, Yan’s employees have saved the company a considerable amount of money.
By informing them that their performance and increased efficiency have a direct impact to the profit-sharing program, Yan is able to create a working environment in which employees equate helping the company with helping themselves.
“You just connect everybody together,” he says. “That to me is very important, because each person in this building feels like they’re part of this. That means from me, my performance leading the company, all the way down to the people in manufacturing on the warehouse floor.”
Providing incentives to excel is one thing, but you also need to show your employees that there will be consequences if they do not meet their target benchmarks. You can’t be afraid to let someone go if that person is consistently underperforming.
“You have to convince people — ‘You know what, I’m not just talking here. Starting from tomorrow, we’re going to measure, we’re going to push, everything has consequences,’” Yan says. “You have to religiously execute. No ifs, ands or buts.”
And if you’re going to measure, you have to operate your company in complete transparency. One of the other benefits of the profit-sharing system is that it provides an easily understood example of how high performance and low cost helps the company grow. If your employees understand the system, they will be more willing to work hard.
“When you set up the system, it is going to deliver two things,” Yan says. “Either the person made it or the person didn’t make it. You have to set up the consequences for that.
“It’s not like I just measure you and that’s it. There is something to follow up on that. That’s why the reward system has to be in place, because when people work hard, they expect something in return. You outline very clearly to them, ‘This is your reward. You deliver, you achieve, that’s what you’re going to get.’”
To ensure the discipline instilled by the creation of a performance system continues to work, you need to do two things. First, you need to religiously watch the numbers being measured on a daily basis. Second, you need to reinforce your message to the top management team members on a weekly basis, and they need to communicate it down through the company. If you repeatedly hammer the efficiency message into your employees, you will be rewarded.
“Eventually, it reforms their thinking process,” Yan says. “They think more effectively. They think more about results. When I do this, what’s my result? That’s what I want happening. But the end result of that is two things: The top number and the bottom number. That’s what the discipline will deliver.”
The end result to all of the changes Yan has implemented is a culture that thinks differently than it did in the past.
“We have put a tremendous amount of discipline into our actions now,” he says. “In the old days, ‘Wow, this is cool. Let’s do it. Nothing will go wrong.’ Now we say, ‘This is cool, but let’s step back. Let’s do a study, let’s make sure, let’s look at the money investment, let’s look at the results, let’s look at every possible hiccup.’”
How to reach: TCP Inc., (800) www.tcpi.com or 324-1496
