Performance Measurement in Production Departments
Whether the employees work in the same department or a different one, what matters is whether their performance is measured scientifically. This is far more challenging. The second challenge is whether you measure what deserves to be measured. A few important costs for the production department are:
- Production cost
- Work In Process cost
- Inspection cost
- Quality cost
Salary increments should be linked to the management of these costs. For a salary increment, you can set various performance slabs. Based on the score of the individual, he/she should receive the increment.
Nevertheless, as stated above, measuring the above costs scientifically is not that easy. Mere checking whether the production target is met or not, the percentage of non-compliance, etc., are superfluous measures. If the increments are not based on the above costs, then possibly the employees in the production department may get a salary increment, but your organization could lose. This is a pernicious trend.
I have written the above post based on the understanding of general production. However, your production department might have additional costs as well. Therefore, unless the end-to-end production process is studied, no further comments can be given.
Thanks,
Dinesh Divekar