How Compensation Systems Can Kill a Lean Transformation

If your Lean transformation feels like it's stuck, your compensation system might be part of the problem. In this episode, Mark tackles a question from Finland about how incentives influence behavior, often in ways that completely undercut Lean principles.

He shares how traditional pay structures and metrics, especially those tied to cost and output, often reward the wrong actions. You'll hear examples from the shop floor to the C-suite, including a mining company that saved money on parts but paid the price in lost production.

Mark draws on his experience leading the Danaher Business System to explain why companies need to rethink how they measure success. He breaks down what a healthy compensation structure looks like in a Lean environment, how to align cross-functional teams around shared goals, and why hitting 75 percent of a breakthrough can be a win worth celebrating.

This episode speaks to anyone who’s trying to make Lean work while fighting against legacy incentive systems. Mark offers a grounded look at how misaligned rewards can quietly unravel even the best improvement efforts, and what it takes to turn that around.