This is a short introduction to how performance management can support the implementation and succes with lean manufacturing. The 5th principle of the 5 lean principles, is the concept of continuous improvements. But how do we handle this in a structured and controlled manner? One of the most important tools to drive continous improvements is performance management. In many organizations, working with performance management is natural, while this can be very difficult, and even scary for others. When working with goals in a lean organization it is essential to involve the employees in the proces. Also visualization of goals should be given attention together with a process for frequent meetings and follow up on goals.

But how do you define goals, that are effective and drive improvements?

First of all we need to define what we want to measure, but more importantly take into consideration on what level in the organization the goal shall be implemented.On the executive level, goals should be related to the strategy of the company, but when we move down in the organization we needto diversify the goals to achieve ownership. For example net operating margin, can be a relevant goal on executive level, while it doesn’t make much sense on the shop floor.So we need to define goals that will support the top-level goals, but can be influenced and are relevant by teams elsewhere in the organization. When implementing performance management in a lean organization we often need to define goals that are very close to the primarycore processes of the company. In general we can use the SMART model when defining goals. So what makes a goal SMART? S = Specific M = Measurable A = Accepted R = Realistic T = Time Specific, means that the goal must be defined accurately and simple enough to make sure that everyone understands what we measure.

Measurable, means that we need to define goals that can be quantified and expressed in a simple number Accepted, means that you need to build acceptance of the relevancy of the goal in the team Realistic, means that the target should be set at a reasonable level, while still stretched to drive improvement Time, means that it must be clear, and part of the definition of the goal, when we expect the target to be reached.

If you use the SMART check-list when defining goals you should be in pretty good shape.

When you start the process of using goals in the daily management process on the shop floor, management must be prepared to work closely with the team to ensure that goals are measured and that corrective and preventive actions are defined and implemented. This process is best driven by stand up meetings, preferably every day.When implemented correctly, performance management can be an extremly effective way to get ahead of your competition.