December 5, 2018
To build a highly productive company, all that is required is a humble, yet inspirational leader who attracts and cultivates a diverse group of effective managers who agree on, model, train, and consistently monitor best practices to grow and perpetuate a culture that, at once, encourages employee flexibility and innovation while delivering the highest quality in the shortest lead time at the lowest operating cost. That is the secret connection between leadership and productivity, but the editor requires that articles exceed 64 words, so I must elaborate.
Honestly, if all of this description were required to be in place on a daily basis, most of us would be out of business. What is required is an environment where people know that we are genuinely becoming a company that is always learning and improving. To show the path to productivity, I will draw from practical sources. Jack Stack built a thriving group of companies from the ashes of an International Harvester site. Jim Collins researches the commonalities of companies that outperformed the market by a factor of three or more. Gene Marks tracks political, economic, and technological trends that affect our companies; he recently spoke to AICC members about hiring and retaining great employees. Lastly, I will draw on my own experience in shaping cultures through leading, training, and coaching leadership and process improvement.
In Good to Great, and later in How the Mighty Fall, Collins defined the common traits of great company leaders. He described the characteristics common to “Level Five” leaders: humility, will, ferocious resolve, and the tendency to give credit to others while assigning blame to themselves. His research concludes that those who strive for this style of leadership find it easier to get the right people on board and to develop consistency in delivery of goods and services. It is a worthy goal; as he said, “Our own lives and all that we touch will be the better for making the effort.” I spoke with Gene Marks, who described one such leader. This CEO left his corner office to do his work in the cubicles of customer service, accounting, shipping, and other departments. This required the discipline to abstain from micromanagement by not allowing himself to get sucked into the interactions around him. Proximity allowed him to keep a finger on the actual systems in place and the resultant culture.
When young Jack Stack and his co-workers were about to lose their jobs due to a factory closing, they cobbled together a 10 percent down payment and purchased the business. They developed a system of employee education and clear productivity measurement that encouraged people to act like—and eventually to become—owners. The results include a number of thriving businesses known as SRC Remanufacturing, a system we know as open-book management, and a book titled The Great Game of Business. I have had the privilege of witnessing the company’s midweek huddle, in which everyone gathers and team members close to the process report the productivity numbers including parts produced, material spend, and labor cost. This is so practical and motivating to the employees that we developed an AICC course to explore the principles involved. In Management by Numbers, we study SRC and Southern Missouri Container (SMC), where the principles have been applied to a packaging company. The gist of the system is that regardless of the scope of responsibility (e.g., this machine, this company) the process can be gamified.
To play well, we must:
- understand the rules of the game;
- simplify keeping score;
- reward winning outcomes; and
- improve strategy and deployment.
Understand the Rules of the Game
For the leader, understanding the rules includes those that are published by management as well as the tribal knowledge that has been developed over time. The cubicle-hopping boss described above was a good example of that. We say that we want employees who act like owners. Stack says that informed, involved, and engaged employees are educated as to how the business works and what’s critical to its success. In many privately held companies, this involves education on the methods of performing, measuring, and improving the job at hand. It should also include the benefits to the individual and the company when this is done well. In an open-book company, this includes all the aspects of the company financials (though wages are reported as variances). You don’t have to understand all of the rules to enjoy watching baseball, but if you are going to play well, you need to learn the infield fly rule. This will require a deeper commitment to training—in-house training at the process and department level, and ongoing training as processes change and technologies advance. Many resources for packaging education, process improvement, and people skills are a free resource at AICC’s Packaging School.
To develop a habit of winning, every department or team must continually improve its processes and procedures.
Simplify Scorekeeping
Vince Lombardi is credited with saying, “If you are not keeping score, you are just practicing.” Stack teaches people to understand and follow the numbers to keep score and to drive improvement. It has been my habit to ask people everywhere in the business, “How do you know how you’re doing?” I believe every process can and should be measured and improved. The result is a scorecard that states clearly how we are doing against our standards for meeting customer requirements. For example, a customer service scorecard might include accuracy and timeliness of data to production, or lead time to production handoff. The effective scorecard is displayed to the customer (production), as well as being used within the department.
Also involved in keeping score is the measurement of employee performance. Gene Marks reports that millennials now comprise more than half of the workforce. He suggests that we move beyond measuring by hours alone, and keep score based on achievement of objectives. He cites the employees’ most valued benefit as health care, and millennials’ No. 1 attractant as paid time off. They seek flexibility and work-life balance. I would add that given the amount of screen time experience by age 25, they put in the hours by being available and responsive at all hours. In my experience, they get the work done. While goal achievement is a more difficult metric to capture than work hours, for this workforce, it may be more effective.
Reward Winning Outcomes
Rewards come in many forms, from a simple thank-you to a stake in the company. Stack’s point is that employees who “directly participate in strengthening the company likely do so because they have some form of a stake in the outcome. They come to work to win, because they know their work will result in significant reward, recognition, and ownership in the outcome.” A company may recognize and praise innovation and other ownership behavior, they may develop a gainsharing plan tied to productivity, or they may become an employee-owned company like SMC or Bay Cities. The point is that people have a stake in the outcome and see the connection between ownership behavior and getting more of what they value from their employment.
Improve Strategy and Deployment
To develop a habit of winning, every department or team must continually improve its processes and procedures. Stack says, “Ultimately, The Game makes companies more agile and better equipped to overcome challenges and champion opportunities in the marketplace.” Gene Marks agrees that improvement is essential. He says, “You have got to put your money where your mouth is by investing in technology, education, innovative incentives, and even creature comforts.” He cites companies that set aside time for education in technology and collaborative skills, and that invest in building improvements that make it an easier place to work. One company has gone beyond tuition reimbursement for ongoing training and makes yearly contributions to reducing student loan debt. All of these factors help attract and retain employees who improve the business.
Productive companies do not solve the same problems repeatedly; they practice root cause analysis and prevention.
Our scorecards, noncompliance reports, and customer feedback all fuel improvement efforts. Productive companies do not solve the same problems repeatedly; they practice root cause analysis and prevention. They intentionally learn from their wins and losses to improve the way they play the game.
When employees are involved in analysis of a quality problem that reached the customer—when we are asking why it happened rather than who did it—involvement in continuous improvement projects teaches people to think like owners. When we celebrate a win and then talk though what happened that led to our scores, people learn how to replicate that behavior. In the process, they learn to use judgment. They stop accepting simple solutions and ask why until they can find and eliminate a problem’s root cause. They may even start acting like they own the place.
Simply Helpful
I am relieved that charisma is not a leadership requirement. If you have the will and the drive for your goals, then life will teach ongoing lessons in humility. I can practice recognition and praise in pursuit of Level Five leader status. To work on the business and to engage and equip others to improve productivity simplifies things if you see it as a game. That’s the job: making it simple, making it easy to do things well. I will close with a reward I received recently. A rising star in our industry attended my Benchmarking and Buy-In course. During a break, he said that the tools we were discussing were simple, but really helpful. When he saw my reaction, he thought I had taken offense, but the opposite was true. I thanked him for the high complement and added, “You have no idea how much work went into making it simple.”
Scott Ellis, Ed.D., provides the brutal facts with a kind and actionable delivery when a leader, a team, or a company needs an objective, data-based assessment of the current state of operations and culture. Training, coaching, and resources develop the ability to eliminate obstacles and sustain more effective and profitable results. Working Well exists to get you unstuck and accelerate effective work. He can be reached at 425-985-8508 or scott@workingwell.bz.
