Of the eight types of business waste:
the worst and most prevalent form of waste in American business is number eight: Underutilized Human Resources.
People-Our Most Underutilized Asset
It is interesting to note that the Japanese only recognize the first seven types of business waste, since fully utilizing their workforces has been a part of their culture at least since the end of World War II, when the belief "none of us have anything so let's all work together to get something" was prevalent. Others might add that "company" unions and a homogeneous population add to their ability to form teams and have everyone pulling in the same direction.
For American business, we would propose that the other seven forms of waste exist in huge amounts because of #8. The rest of this chapter explains how this can possibly be true.
We Say We Want Teamwork, But . . .
When the top management person in a company, the CEO, President, or Plant Manager, is asked whether team work is important and required within the organization, the answer 99% of the time is yes, absolutely! This answer flows quickly and easily from these managers. The follow-up questions for the 99% are these: Does that mean that all the members of your workforce, from machine operator in the plant (or the window teller in a bank) to the staff level managers have a copy of the company's playbook (business plan or budget)? Does every associate in your operation know what they must do hourly/daily/weekly to achieve the plan and keep the company successful now and in the future?
The reaction to these questions is in three parts. First, there is a question mark look; second, stunned silence and some embarrassment at the recognition of the issue; third, admission that all of their associates do not know what the plan is and do not have a copy of the playbook. Then, there is discussion on how to move forward in this area.
Why are managers saying they want organizational team work, yet there is no ongoing activity or plan to achieve it? Several reasons:
- Many top managers today were raised/ trained/developed when "teaming" was not important. Now that teams are essential to competing, these managers can "talk it" but they can't "walk it" organizationally.
- Or the worst case, these same managers see the "team" as themselves and the 6 or 7 people that report to them - with "the company wouldn't exist without us," attitude and "why doesn't everyone appreciate us for that?"
- Or the second worst case, the top managers see the team as the management group only. Hourly associates, whether they are non-union or union, are not considered part of the team even though 90% of all value-adding processes, (activities the customer is willing to pay for and where profits are created) are completed by this group.
In a recent visit to a small company, it was suggested to the CEO that it was appropriate to get the company's associates' opinion on a particular WCE issue. This CEO then proceeded to schedule a meeting with his 22 managers, almost as if the people out in the factory didn't exist. It was disappointing.
Human Nature and Change
People have a natural human reaction to change which is shown in Figure 2-1. Good two-way communication about the change, which must include how it will affect the company's customers, the company, and the individual associate, can cause interest to begin in the change (bypassing rumors, fear, resistance and resentment). Left under communicated with no scheduled and direct follow-up communication, change can cause rumors, fear, resistance, and resentment. These organizational cancers can be very costly, in both financial and human terms, to an organization.
People can embrace change in terms of interest, enthusiasm, and excitement only if there are high levels of two-way communication in the organization. Two-way communication can drive fear out of organizations. While a sense of urgency is essential, fear can be paralyzing.
When the WCE implementation change is announced, it must be followed immediately by (and in this order of importance):
Follow-up meetings to discuss questions. The real issue is that not all the questions will come out during the change announcement meeting. People need time to think about it. Family members will have questions that require answers. Left unanswered, all these questions will be given answers in the "rumor mill." The rumor mill, which never seems to create favorable answers, supports answers which heighten fear, resistance, and resentment. The key is to provide enough timely communication to put the rumor mill out of business. This has the effect of bypassing the confusion (rumors), fear, resistance, and resentment parts of the change continuum. People go from change announcement to interest in the change.
Communicate, communicate, communicate. Communication is empowering. Communication eliminates wasteful human mental activity: rumors, fear, resistance, resentment, and substitutes the value-added mental activities of understanding, knowledge, focus, and motivation.
Unfortunately, most managers don't understand the power of communication and its role in teamwork, and therefore, they under communicate. In most organizations, this under communication is not by 40, 50, or 75%, but by magnitudes of 500 or 1000%.
Communication, Teamwork, & Productivity
There are four elements that must be in place for teamwork to occur in an organization. These elements, in order, are:
1. High levels of two-way communication throughout the organization. Communication can dramatically increase productivity by keeping everyone aware of the mission, vision, goals, and strategy of the organization. In World Class companies, top managers spend as much as 40% of their time communicating this vital information to their organization.
2. Team members with diverse backgrounds. Diversity helps teams approach problems from a variety of angles, thus ensuring an effective, robust solution. Diversity also means hourly and salary associates can be on the same team.
3. Common purpose, motivated by mission. A strongly developed vision and mission for the organization helps all team members make the right decisions and saves time in the decision-making process. One has only to ask "Does this decision support the goals of the organization?"
4. Common goals, common measurements. Teamwork is enhanced when all team members understand the goals of the team and the organization. Common measurements, understood by everyone, are used to assess the progress made.
Several universities have done studies on what factors in the workplace produce the highest levels of productivity. These studies discovered that only two factors were required to produce the highest levels of workplace productivity. When high levels of job satisfaction and high levels of two-way communication existed, productivity was at it peak. A chart, showing the results of these studies is shown in Figure 2-2.
How do we define these factors? High levels of two-way communication in the studies agrees with the definition above. It means that everyone knows what's going on in the organization, and they feel comfortable and confident with their organizational knowledge. Rumors about the company are eliminated or at least minimized.
Factors Affecting Workplace Productivity
High levels of "job satisfaction" means that the associate or associates are in their "dream" job. If they could pick any job, it would be the one they have.
Here's the rub. Other studies of the American workforce found that only 17% of American workers are in their "dream job." This means that the highest levels of workplace productivity can be achieved with only 17% of the workforce. So what do we do for the other 83% of our workforce?
Most managers get this part wrong. When given the choice of picking what level of factors determine the second highest level of productivity (affecting 83% of the workforce), managers generally pick low levels of two-way communication and high levels of job satisfaction, which is actually the third level of productivity. Why does this occur? Primarily because managers find it easy to blame the people: "They applied for a job they really didn't like, how were we supposed to know?", instead of understanding that 98% of the problems in business are related to the management created "systems," and look at the systems first (the system of communication, in this example).
High levels of two-way communication help create teamwork and improve company productivity with no capital equipment investment. Who said we needed new equipment and a new IT system to be competitive?
Next issue: Lack of Communication (Part II of III) - The Power of Communication - A Real life Example