Setting the Direction of the Business

In order for all employees to contribute to their maximum ability, the direction of the company must be clearly defined, communicated, and accepted by all.

Jim Collins in his book, Good to Great, described a useful concept to make sure the organization stays focused on what is important. In this concept key employees are assembled and asked to brainstorm, discuss, and reach agreement on three questions.

The facilitator starts the event by drawing a circle on a flip chart or white board with “What are you passionate about?” written in the middle. The group then brainstorms their thoughts about what they are passionate about in their work and in the organization. The facilitator records these thoughts around the perimeter of the circle. When the ideas are exhausted, the facilitator leads the group to summarize their thoughts into one succinct phrase and records it in the middle of t he circle. It is important that discussion is continued until true consensus is reached. The final version should not be dictated nor should it be a meaningless compromise.

This activity is repeated with the question, “What can you be the best in the world at?” in the center of a new circle. Here it is necessary to define what is your world; what is the world in which you compete. It can be defined in terms of geography, market, application, etc.; in other words your niche. This is important because usually there is only room for two companies to make money and one to eke by in any market so one must focus on being number one in your niche. Not to be overlooked is that with continuing improvement and innovation in transportation and communication, geographical niche boundaries are constantly expanding.

The activity is repeated for the third time with the question, “What drives your economic engine, or where do you make money that supports the organization”. Some people are uncomfortable talking about making money as a factor in determining the direction of the business but its importance is a fact of life! Obviously if you don’t make money, you won’t be in business long.

The facilitator now leads the discussion of what direction of the company satisfies all three questions. If the employees are passionate about the direction of the company, they can be the best in their niche at it, and they make money from it, success is on the horizon.

Listen for Total Communication

Shortly after one of the “big-box retailers” opened near my home, I asked one of the cashiers how she liked working for the company. She responded, “I love it!” I asked her why and she told me that management respects her. I then asked if her previous management, at a large competitor, did not respect her. She said, “They did not even know I existed.”

What a shame. How could this employee, or others like her, put their heart and soul into helping to make her company successful if they do not feel respected and important. It cost so little to respect people and the returns are so high.

I suspect one of the ways employees feel respected is if management shares information, asks for feedback, and listens to what the employees are saying. Many employees’ suggestions are very useful; every employee has a brain and they are closest to the work. For other ideas that cannot be utilized, it is important to provide to the individual feedback reasons why their idea cannot be implemented. The worst thing that you can do is to ignore the input.

It is key to make time to have honest dialogue with employees. This can take the form of one-on-one discussions by visiting the workplace on a regular basis or it can be with group meetings. In either case, we need to remember that communication has two equal parts, sending and receiving. This means spending at least half of the time listening.

In order to send the right information, you have to trust the employees. Trust them in order to share where the aim and direction of the organization is, the vision of what the desired state of the company will become in a few years, and the strategy involved in getting there. Just sharing the financial results of the last month or quarter is not likely to excite the employees, it is like looking at where you are going by looking in the rear-view mirror. Instead share progress being made on achieving the strategies and closing the gap from current state to desired state.

Listening and receiving input is a learned skill. You should practice active listening, ask open-ended questions, which will draw out ideas from the employees. Give them time to think through your questions and formulate responses. Absorb their answers, think about why they came to their conclusions, and engage in two-way dialogue. As we said above, provide feedback and show respect for their thoughts. Above all, don’t kill the messenger. Word will quickly spread throughout the organization if it is dangerous to speak openly to management.

Top management does not have a lock on brainpower in the organization. Work today is becoming so complex that we need to tap into each and every brain in the organization. It is rewarding to see what we can learn with good, honest dialogue.

Quality Pays Big Dividends

The quality improvement movement started in the United States during World War II as we converted manufacturing from civilian goods to war goods. Stanford University utilized the statistical leaders of the time to set up training on improving work processes by removing waste, rework, and redundancy. This movement moved to Japan in 1951 as they wanted to learn what they considered was our secret weapon that allowed us to produce tanks, ships, airplanes, and arms with the efficiency and effectiveness at the rate we did. They invited the American leader of the movement, Dr. W. Edwards Deming to come and teach them these statistical tools to improve work processes. They followed his teachings and their quality steadily improved. Meanwhile, we became complacent as the production capacity of the rest of the world was pretty much destroyed, we had little competition, and we put our emphasis on quantity over quality. We did not really wake up until 1980 when NBC aired a white paper titled, “If Japan Can, Why Can’t We?” It was about what Deming had accomplished in Japan and was now leading the effort in the US.

The revival of this quality improvement movement is now over thirty years old and the obvious question is, “Is this really worth the effort?” About fifteen years ago I did a study of literature search for results and I think it bears repeating.

Advantage Minnesota

·      ZYTEC-Tripled earnings between 1991 and 1995, increased revenues 62%, reduced manufacturing cycle time 64%

·      ADVANCED CIRCUITS-reduced product defects 505, reduced product returns 75%

·      BI PERFORMANCE SERVICES-Increased sales 15%, increased customer retention to 92%

·      CUSTOM RESEARCH-Doubled its business volume, increased productivity 20%

·      HONEYWELL SOLID STATE ELECTRONICS CENTER-Increased revenue per employee from $63K to $100K

·      HUTCHINSON TECHNOLOGY-Increased earnings 40%, increased revenues 12%

Minneapolis Star-Tribune, Harvey Mackay’s column, April 6, 1995

·      MOTOROLA-They spend millions on quality training, but it costs them nothing because of the savings they enjoy on returns, retooling, rebates, lawsuits, and customer satisfaction.

United States General Accounting Office report, May 1991, “Management Practices, U.S. Companies Improve Performance Through Quality Efforts”-GAO review of the 20 companies that scored highest of 1998 and 1989 applicants for Malcolm Baldrige Award indicated nearly all achieved:

·      Better employee relations

·      Higher productivity

·      Greater customer satisfaction

·      Increased market share

·      Improved profitability

The details of the study are interesting. Financial performance was detailed in that 15 companies reported a total of 40 observations as measured by several ratios widely used in financial analysis. The ultimate impact of quality management practices is improved profitability.

·      34 improved

·      6 declined

American Quality Foundation and Ernst & Young, Joint study, 1992.

·      Higher performing organizations have 25% of their workforce performing in teams compared to 5% for poorer performing organizations.

·      Higher performing organizations had nearly 100% of their workforce formally trained in problem solving compared to less than 20% in poorer performing organizations

Business Week, October 18, 1993

·      The three publicly traded, whole company Baldrige winners outperformed the Standard & Poor’s 500 from the time of their winning through September 20, 1993 by 8.6 to 1.

·      The ten Award winners that analyze productivity enhancement as annual increase in revenue/employee, a median average annual compounded growth rate of 9.4% and a mean of 9.25% have been achieved.

Does Quality really get results? The answer is a resounding YES!