How to Use Catalytic Mechanisms to Increase Productivity
author: Lee Buttolph
It started with a need to increase the output of my truck drivers. While most worked hard for me there were little things that some of them did that I knew we could improve upon.
Example: I had a driver that went to the Ryder gas station to fill up his truck and do a thorough cleaning of it almost everyday. While I like a driver that keeps his truck clean these trucks can go 3-5 days without needing fuel. This means I was paying out extra hours of overtime during the busy summer hours for unnecessary work. In a world of slim commodity margins, every hour counted. The yelling and screaming about it was not working to solve the problem (and anyway the yelling and screaming was breaking my first rule of process improvement) so I needed to come up with a solution.
I eventually sat down with my Office Manager and General Manager to talk about the problem. We came up with a list of four things that we cared most about in a driver:
1. Hard Work - In the summer we needed drivers that wanted to work 60+ hours every week.
2. Efficient Driving - I needed drivers that worked efficiently during the day. With 4-8 deliveries every day they had to be able to get in and out of locations as quickly as possible.
3. Safety - We needed drivers that were safe on the road and in other lumber yards.
4. Customer Satisfaction - We sold the same customers over and over again and we couldn’t afford to lose a customer because a driver was a jerk.
*** What about teamwork? Everyone LOVES teamwork? I didn’t care about teamwork. My drivers barely saw each other during the day and they didn’t really they need to share their ideas of how to drive better. Driving well comes down to who was willing to work hardest. Attached is our Monthly Driver Evaluation checklist where we talk about the four things and ONLY the four things that we care about. We could have added 20+ things to the list but it was important for the drivers to know exactly what our main priorities were so they could perform to a high standard.
I decided to model my new pay plan based on the Jim Collins’ Catalytic Mechanism concept. In this concept Collins hypothesizes that you can create a high flying organization WITHOUT all the bureaucracy that normally comes with a larger organization through the use of culture. He suggest hiring people that already fit your culture and then let them do what they already enjoy doing. No need for the bureaucracy that checks and double checks everyone’s work (in triplicate) because the people you hire already love doing what you want them to do.
To build the right culture management must build a system to reward and highlight the right behavior. In most cases this comes from a pay plan but it doesn’t have to. I recommend reading the Harvard Business Article linked above for examples or read through Chapter 6 - Cult Like Cultures of Jerry Porras & Jim Collins’ book Built to Last. To know if you have implemented the right Catalytic Mechanism he provides a five part test:
1. A Catalytic Mechanism produces desired results in unpredictable ways.
2. A catalytic mechanism distributes power for the benefit of the overall system, often to the great discomfort of those who traditionally hold power.
3. A catalytic mechanism has teeth.
4. A catalytic mechanism ejects viruses.
5. A catalytic mechanism produces an ongoing effect.
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Here is the bonus plan I built for my drivers to get them to work harder, in a more efficient manner, with safety and customer satisfaction in mind. I created a pay/bonus plan for my drivers that would increase their pay if they could increase their output. After showing it to you I will explain how it meets the five part test.
Step 1: Define the Variables
As stated above I cared about drivers that wanted to work long, summer hours. They also needed to quickly get through all their stops in an efficient manner. Finally, they had to be safety and customer service conscious.
Step 2: Turn it into a Competition
My driver situation was unique enough that I could turn my bonus plan into a competition between the drivers. For one, they rarely interacted amongst each other since they were on the road most of the time. They were day drivers so they came back to home base at the end of every day. And finally, we built the system so the competition was really against themselves and not the other drivers. If the individual driver worked hard they would make good money over the course of a year.
The competition was based on a weekly scoring system. This allowed us to rank each driver from 1st to last on a weekly basis. See Step 5 for the benefits of winning the week.
Step 3: Track the Variables
We created a one page sheet that the drivers would fill out daily (attached to their time card). This sheet tracked the numbers that made up the four variables. Here are all the numbers we tracked:
Total Hours (Hard Work): How many hours did a driver work in a day. This would come from their time card.
Yard Hours: These are the non-driving hours that a driver would have. An example would be when they would come in early to help unload a truck. Most days this would be zero hours.
Truck Hours: These are the hours that drivers are actually out on the road. They DO INCLUDE the time drivers were in and out of the lumber yards.
Miles Driven: These are the miles that were driven during the day taken right from their Department of Transportation (DOT) logbook.
Miles / Driving Hour (Efficient Driving): This is a calculation of Miles Driven / Truck Hours. It tells how fast a driver could get through the day… stops to unload included.
Good of the Company Run: If a driver doesn’t get the run they want because the office overruled their choice they get extra points for the day.
Customer Complaints (Customer Satisfaction): It was assumed that drivers would be good to our customer so we only deducted points if we got complaints.
Run Out of Fuel on Road: This was somewhat tongue in cheek that a driver would be fired for this. But it was meant to show that trucks need fuel and we didn’t want a driver pushing the limits of not getting fuel to increase his efficiency score.
Safety Violations (Safety): Same as Customer Complaints. We assumed drivers were safe and only deducted points when they got a ticket or complaint.
The four variable weren’t stand alone variables. They played off of each other. The hard work variable tracked how many hours a driver worked in a day. If this was all we cared about a driver could sit in a Walmart parking lot all day and rack up a nice number. We used the efficiency metric to counterbalance it. If a driver didn’t get in and out of a location quickly it would hurt his efficiency score. And if the driver couldn’t be safe and courteous (thinking they would be faster on the road) they would get hit with a loss of points that would put them at the bottom of the standings.
If you want to learn more about opposing metrics check out this blog posts.
Step 4: Add up the Scores
At the end of the week we would add up the Total Hours column and figure out the final Miles / Driven Hour for the week. If a driver came in 1st place they got 6 points, last they got 1 point. The best score was 12, the worst was 2 points. If they had any customer complaints or safety violations they would lose points.
A driver worksheet filled out with actual numbers.
Step 5: What the Winner Gets
The winner at the end of the week got two things. He got first choice of runs for the next week and secondly a bigger bonus. If that driver wanted to stay at the top of the list they had to pick long, hard runs and do them as efficiently as possible.
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How did this pay/bonus plan fit the Jim Collins Catalytic Mechanism’s test?
1. A Catalytic Mechanism produces desired results in unpredictable ways.
Drivers were now looking at the way they worked. They were trying to shave off minutes from their day. One driver set a goal for himself to shave four minutes from every stop. While he was getting off loaded he would start going through his paperwork for the next stop. He wanted to remind himself who was the point of contact. Where was the lumber located on the truck. Where would be the best place to park the truck so the forklift had easy access to the lumber.
Another driver would have the yard foremans rearrange his truck if they put items in spots that would make it harder for it to be offloaded. Others worked to be friendlier to the people at the local lumber yards that would be offloading them. This would often get them bumped up in line to get offloaded on a busy day. In general most just hustled that little bit more to save precious time during the day.
2. A catalytic mechanism distributes power for the benefit of the overall system, often to the great discomfort of those who traditionally hold power.
Normally the General Manager and Scheduling Coordinator set the daily schedule for all drivers. It was at their whim who got to go where. In this plan the scheduling function got moved to the drivers. The drivers, based on their performance the week before got to pick their schedule.
3. A catalytic mechanism has teeth.
If a driver could increase their output there was a nice bonus and more hours in it for him. This wasn’t an atta boy type bonus but was real money. If they couldn’t improve their output then they would make considerably less money.
4. A catalytic mechanism ejects viruses.
What happens to those that couldn’t figure out how to increase their output? Those that keep going to get fuel every night when it isn’t needed end up not doing well. This is the beauty of this plan. I, the owner, no longer sweat the small things. I let my drivers work how they want to work and if they couldn’t figure out how to work harder, the theory is that they would self eject (quit) from the company. So even if I hired the wrong person they should quickly realize we weren’t the right company for them and move on.
5. A catalytic mechanism produces an ongoing effect.
Many bonus/pay plans are useless a month after implementation. The first one I introduced had lost its teeth about a month after I introduced it. It was based on a percentage of profit calculation that was done a month after the work was completed. It is no wonder that the drivers lost interest in it. They never “saw” it or “felt” it.
This bonus plan was different. It was tightly integrated into the way the drivers worked. They “saw” it and “felt” it every day they went to work. If they slacked off they got immediate feedback from the system.
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A plan based on a catalytic mechanism can be an awesome thing but it takes work and out of the box thinking to come up with the right one. If would like help developing one for your company please give me a call and let's see what we can do together.