The drive for teamwork in business organizations that started in (or before) the 1980’s was based in the recognition that people are more productive and do better quality work when they feel like part of a team with shared over-arching goals.  Teamwork relies on a sense of trust.   Unfortunately, many people are not trusting by nature, and, even more unfortunately, some of them are managers.I am now working in a place where the office area is on surveillance camera all the time, with the company security officer watching via large plasma screens on his office wall.  When the cameras were first installed one of my colleagues waved to one of them, and within seconds the phone rang on the desk of the person he was conversing with.  She answered it and turned to my colleague to say “Bob (the security officer) says ‘Hi Joe.’”  Perhaps Bob was doing that as a joke, or perhaps to underline the fact that he is watching us, and that we are being recorded on video all the time, but the word got around, and the effect was chilling in a subtle way.  We now occasionally joke about it, and wonder whether we are also being monitored and recorded by hidden microphones, though we haven’t been able to identify any.  I keep daydreaming of ways I would obstruct the view of the camera that watches me so many hours of the day.

Needless to say, this situation gives us a strong sense that we aren’t trusted, not a feeling that promotes teamwork, commitment, and high quality work.  I am sure that some manager somewhere feels that the company is better off, or will impress customers with its high security, but … we’re not a bunch of children or convicted criminals, and we’re not handling gold bars or loose diamonds.

The effects (loss to the organization) of having this surveillance system would be nearly impossible to quantify, but intuitively must be significant.  Productivity is extremely important to every business, everywhere, and every element of the business environment, systems, relationships, and culture has direct impact.  As a manager, would you want to promote anything that would decrease productivity by even one percent?  It would be easy to implement a variety of measures that would each detract from the average worker’s effectiveness.  Business is more competitive than ever in the 21st century.  Can you afford for your people to be even 5% less efficient than your competition?  Are you savvy enough to consider such things?  If you are, then you may have an automatic advantage over clueless competitors.

The manager with the better understanding of human nature and psychology always has an invisible advantage, and will tend to get more and better quality work from their people.  This knowledge doesn’t work well when used against people, however, as I have seen in some places.  It works when used to build a team of trusted individuals who can identify with their work, their colleagues, and their employer, and who take personal ownership of every aspect of personal and organizational development and success.  I have worked in situations where people enjoyed their work and pursuing the goals of the company so much that they raced to see who could be the first to open the door in the morning and had to be chased out of the building at the end of the day.  That culture would not have developed if they all felt spied upon.  It just makes sense: you will have difficulty building or maintaining a high performing team when they know you are watching their every move.

As always, I welcome your comments.  – Tim

Total Quality Management, or TQM, was prevalent in business thinking in the 1980s, and improved the work lives and productivity of many people as well as the fortunes of some major corporations in that era.  I won’t try to describe how to implement Total Quality Management here, as there are a great many publications on the topic. I will instead describe the most important and fundamental elements I believe an organization needs to achieve the full benefits of TQM, and discuss why I think it fell into disuse.

TQM is much more than just a tool set, which is an important part of why it works. TQM isn’t just a set of statistical tools and practices, though it includes them. It works best when its philosophical base is understood and supported, and when that understanding and support come from the top of the organization. The philosophical platform on which TQM is built and which produces the best results includes a general attitude of optimism and trust in people, a sense of respect for people, and a good perspective on human nature. Unfortunately, these qualities aren’t shared by many people, at least in American business culture, and bureaucracies naturally tend to work against such understanding, to the point where many people have never experienced a positive work environment or a respectful and collaborative management style.

Understanding human nature is fundamental to lasting business success. The basic fact is that everyone (who isn’t mentally ill) wants to make a positive difference in their job, as it is a part of creating and maintaining a positive self image. Unfortunately a variety of factors can subvert or block behavior based on this fundamental fact and make us lose sight of it. Many of those factors are endemic to bureaucracies, which naturally arise as organizations grow, but especially if top management is not savvy enough to understand and manage the process.

Positive opinions about human nature can be conditioned or “beaten” out of people. Unfortunately, bureaucracies naturally tend to create conditions which discourage people, making productive work needlessly difficult. Unless it is implemented with a fundamental understanding of human nature and the positive side of a healthy human’s psyche, and a justified expectation that people will do the right thing when given a choice, TQM becomes little more than a set of tools, and results are likely to be only modest.

W. Edwards Deming was perhaps the most prominent guru of TQM. One of the greatest proponents of TQM was W. Edwards Deming. His work led him from statistics to fundamental truths about both business and human nature over a period of decades. He taught us that “Quality is what satisfies the customer”, and “Quality can be no better than the intent at the top.” among many other things. His definition of quality became increasingly holistic, and included not only product durability and reliability, but the concept that a product or service should satisfy the needs, wants, and expectations of the customer as well as be profitable for the provider. This greatly expanded the thinking of many about what their business actually was, and those companies (and entire business cultures, such as the post-WWII Japanese) that internalized TQM tended to become leaders in their industries. Deming’s recognition that a company that involves the employees in making their jobs and products better will succeed far more readily than one in which employees are directed as to what to do, and where their input is not solicited or ignored, was striking and fundamental, and created big improvements in those firms who took it to heart.

Most organizations in the U.S. didn’t understand or implement TQM very well. The United States business community was already successful in the decades after World War II, and many saw no need to listen to experts like Deming. As a result the U.S. lagged in adopting the concepts of TQM, and did not accept them across the culture, but rather only in certain industries and firms. A general understanding of the sources of success in those industries and firms never developed in the culture, either. The long-extant focus on short term financial performance and the failure of most business schools to either accept or effectively teach TQM added up to a poor implementation in American business culture. With natural management turnover and continued pressure towards short term performance rather than lasting success, TQM was forgotten in many industries by the 1990’s. Some of the tools and techniques of TQM were retained and periodically revived in systems such as “Six Sigma”, from which certain authors and academics profited significantly, but, as Professor Deming, Stephen Covey, and others had taught us, techniques are not enough, and only an understanding and internalization of the fundamentals can lead to true success.

The fundamental principles of TQM still hold. I hope that the fundamental knowledge of TQM will be revived and further developed to produce a more positive and successful business culture in the future, but I understand that there are many forces that will impede such a change. Resistance to change and “if it ain’t broke, don’t fix it” thinking are natural human factors. Huge and entrenched bureaucracies are almost impossible to change in any fundamental sense, which explains why smaller, more aggressive firms frequently arise to join (or depose) the giants. The opportunity to implement TQM is still there, however, and I have hopes that the successful, fundamental philosophy and practices of TQM will return to prominence and bring a new era of high quality products and services, and leading edge companies and industries, to the American and world business cultures.

As always, I welcome your comments. – Tim

An interesting blog item (and WSJ article) on a zealous recruiter gave me pause to think about some of the ways our business community regards the individual. Here’s an excerpt from the item:

You can run but you can’t hide when Perry’s on the prowl.

According to Sarah Needleman of The Wall Street Journal, David Perry is a rogue recruiter.
I can’t see why. Just last week, I spoke to Jennifer McClure, a Cincinatti recruiter who insists that she only approaches potential candidates via members of their trusted networks. But if your network isn’t all powerful and you want to find someone special, you have to do some detective work and make a direct approach.

The thing about David Perry is that he’s so ballsy — and wily, too.

The first time I met him he told me that he had once rented a coffee truck and sold donuts at an industrial park until he got the name of a target who worked inside.

The “rogue recruiter” illuminates a frequently occurring flaw in Western business thinking. Reading how David Perry operates, I have to think there’s an ethical (and possibly legal) line there somewhere, and it sounds like David Perry may be crossing it at times. That’s not good, but his business is also evidence of the mistaken idea that some people are so superior to others that they are worth expensive and extreme efforts to recruit.

Is the “Star Player” a business myth? Certainly people have different abilities, personalities, etc., but to over-emphasize that point and ignore the impact of environment, corporate culture, business and market conditions, etc. on the individual is a mistake. Quite often the star performer achieves that status in a setting conducive to their particular attributes, before they are were identified as a “star”. Being regarded as a “star” may actually impede them from repeating previous successes. For instance, they may acquire an overblown ego, stress problems, or an oversensitivity borne of overly high expectations, with an attendant risk of frustration and depression.  Worse yet, once they are labeled as a star they can be promoted to a level or position they are not prepared for much more quickly. This kind of fast-tracking has produced mixed results in business, at best, from my observations.

There’s much more behind individual performance than the traits of the individual. In my experience the performance of any individual is as greatly affected by their work environment, the corporate culture, the expectations they perceive, and how they are treated by their superiors and everyone else around them, as by their personal skills, experience, and motivation. People who excel are often in the right place at the right time with the right stuff, a combination that may not exist elsewhere. Recruiters and others can lose sight of this and put people on a pedestal they don’t deserve, or in a new place that isn’t as conducive to that person’s success, with the kind of results we see in business all the time: the rising star winds up part of a business debacle of one sort or another.

Every recruiter has an incentive to behave as their client expects and bring back the best prospects, but that’s no excuse for compromising good principles. The best businesspeople achieve prolonged success because they stick to common principles of constructive, collaborative behavior and respect for others. Compromising good ethical and moral principles may achieve a short term result, but will create a bad image (self image as well as public) that will work against one in the future, and decrease the probability of repeat business and future successes.

The rogue recruiter may make money from clueless managers, but they may not be among his most successful clients. I don’t see David Perry as having any incentive to think about the understanding or motivation of his clients, and fully expect that some of the people hiring him are pretty clueless. As an experienced manager I believe it is far more important to concentrate on giving people the right environment, incentives, resources, training, and expectations. The results of doing this are usually far better than spending big money having people like David Perry run down a “star” who may not, in the end, perform as well as expected (or as well as a well chosen and groomed team). Most people have the ability to be stars when put in the right position and managed properly, pivotal skills for any manager.

Be wary of the “star performer” label, as it introduces problems into an organization. An organization that “fast-tracks” or otherwise glorifies what it sees as star performers risks demoralizing the rest of the workforce, which can cost far more than any gains to be produced by the “star”, though the losses may be difficult to measure. Fast-tracking often moves a prospective manager far too quickly through different parts of the organization, resulting in a person who knows too little about a lot of areas and may have serious misconceptions about important aspects of the business, often based on hearing too much of the top management view and not enough “in the trenches”. In general, a candidate for promotion is often evaluated solely on past performance instead of suitability for the job they could be promoted to – a major management mistake.

Where does the “star performer” concept come from in our culture? The concept of the “star performer” is an aspect of the American/Western “gunslinger” fallacy. While gunslingers existed in the American West of the 19th century, and were glorified in popular culture through literature and cinema, they were never the as important as our culture would have us believe.  When you look back in history the big successes in the Old West were produced by communities, not gunslingers, and that lesson carries through to modern day business.

The recruiter can’t be faulted for being part of a system that may ultimately harm a company. Given that the recruiter may be only following simple orders, they may not be able to see what is behind their mission, and thus have no responsibility for the result and only an incentive to score their commission. If they work for the company, however, they have a greater ability to understand the dynamics of the situation and a responsibility to at least suggest more appropriate recruiting to their superiors and constituents.

I expect that recruiters like David Perry are a small minority, and that’s a good thing. Recruiting is far too important a function to be taken lightly. The long term view of business success focuses on building high performing teams from well-chosen individuals who will stick around and sustain the company in the long term, even as they advance their careers. The fast movers and highly visible star performers are not often the best people to achieve lasting success for a company. At first I was thinking that David Perry is an anachronism, but more likely his tactics will always be present in some form. In the end it could be said that he profits from clueless managers who gamble with their company’s future, probably based on a misunderstanding of some past success.

As always, I welcome your comments. – Tim

The hummingbird identifies and harvests food sources with great but regulated energy, while the shrew forages furiously in a constant battle for survival. For purposes of discussion I will consider only the grass-roots startup company, not spin-offs or startups sponsored by existing companies.  Companies, like the people they are made of, exist on a continuum. Nobody is at the extreme or exactly in the middle of any range, but I will address relative extremes here to illustrate my point that well-planned and disciplined operations work best for the startup as well as the established company. The hummingbird illustrates the company that maintains and evolves a plan, and works to make the plan happen, while the shrew illustrates the company that operates on inspiration and enthusiasm, and often seems to be always late and scrambling, or operating as if in an emergency.  How does the startup company’s style of operation affect its prospects for successful growth and future prosperity?

A good business plan and process for evolving it, along with the discipline to follow it, permits a startup company to operate more like a hummingbird. Some startups operate like a hummingbird, busy but planned, while others operate like a shrew, foraging for opportunities that can be attacked and consumed in a frantic fight for survival that can risk burning out the participants. A good business plan, and the discipline to stick to it and evolve it on a regular basis, can provide a regulated, long term path to success for the company and all involved.

The hummingbird company, with a good plan to grow its business, can think and act with the long term in mind. Since the hummingbird, at least in the temperate region where I live, must migrate south for the winter, it must go through ordered phases of finding food sources, nest building, finding a mate, raising a family, and building up its energy reserves before the annual migration. Nature has evolved it to do these things in a timely way, and provides it the abilities it needs to not only do them but to adapt to changes in its environment. A surprisingly large proportion of its time is spent resting, which permits it to expend large amounts of energy in its daily forays to find food, though less than 15% of its time is typically spent in this activity. An intelligently run, hummingbird-like startup company similarly operates with realistic expectations as to the use of time, with substantial time spent on planning, recruiting, and other important support activities that enable the creative processes and “forays” to find and secure the customers it needs to survive. All activities are carried out in the context of intermediate and long term goals, which are typically established in a business plan of five or more years.

The shrew company, often without thinking, tries to substitute intensity for good planning. The shrew does not migrate, and seems more reactive in the way it lives. The shrew also lacks the mobility of the hummingbird, so it must find food in a smaller area, and it must find and often kill its food to survive. Both creatures have large daily energy requirements – each typically must consume 80-90% of its own weight each day to survive – but the hummingbird is better able to pace itself, map out and revisit its income sources, and survive in a more orderly way. The shrew company may come from a base of great inspiration and prospects, but often operates in a more haphazard, event-driven way that provides significantly less potential for long term success.

Failing to allow sufficient time for recruiting and interviewing can impede growth in a number of ways. A good long range plan, well-followed and including resources and time for the acquisition and training of new employees, can minimize thrashing and grow the company in an orderly way. Frequently a startup company’s operations are focused on landing those first customers or finishing the development of an initial product offering under significant time pressure, and activities such as staffing are not planned out. When the organization is responding to needs for more people in a reactive way, the process of interviewing and bringing new people in can be an extra and unplanned burden for people already fully absorbed in generating revenues or a first product. The result can be overwork and burnout for those responsible for new customers and/or products, with the result that those customer relationships or products may suffer from poor quality or omissions in their designs. Worse yet, the new employees selected may not be the best candidates, as their selection was rushed, or may have trouble quickly adapting and becoming productive as the existing employees don’t have time to bring them up to speed.

Maintaining a reasonable work week enables more effective performance over the long term. It is easy and natural, in the enthusiasm and big challenges of a startup environment, to work long hours and over-commit to the enterprise. It is an exciting thing to pursue new ideas and the promise of great success, and can stimulate high levels of adrenalin and other hormones, making one oblivious to the passage of time. People operate best, however, when they have had proper rest and are not struggling to manage their personal lives on top of their work. Working at high intensity and for long hours over too long a period can lead to burnout, with greatly reduced effectiveness on the job, and increased probability of personal crises that can take one away from the work entirely.

Startups that maintain realistic plans and reasonable expectations for their employees have better prospects in the long run. The 40 hour work week allows a planned and well-managed life, and provides the energy and distraction-free time to focus on the work and produce superior results. Sufficient sleep is essential to effective learning and good memory function, as well as the stamina needed to work with intensity throughout the day. The 50 hour or more work week can “stretch people thin”, leaving them sacrificing personal matters or their rest to keep up with the job, “contaminating” their work hours with excessive personal matters, or working at lower performance levels due to lack of rest or high stress. Travel times to many jobs effectively extend work hours, and highway travel in particular is stressful and exhausting. Many people in North America live an hour from their work, meaning that a 5 day, 40 hour work week is actually a 50 hour week, and overtime extends that even further. The hours in which they can maintain their homes and families and get adequate rest are compromised when overtime becomes the norm.

The thrashing and dashing operations of the “shrew” startup can extend to its later business phases. I have worked for companies of a hundred employees or more where, at least in some parts of the firm, shrew-like operations had persisted well past the startup phase. Sales departments, for example, may keep that hyper-intensity and “forage and kill” behavior pattern, burning out salespeople and resulting in a high turnover and lackluster results. Engineers and designers may work six and seven day weeks for months or years, leading to increased dissatisfaction, demoralization, mediocre performance, and high turnover, with negative impact on product quality and customer satisfaction.

A good business plan enables a better product and higher probability of long term success. A planned pattern of market expansion and sales growth integrated with a strategically managed product development effort can be much easier on the participants and much more productive. A realistic approach and good planning allow new customers and employees to be identified, contacted, groomed, and integrated in a much less stressful way, and product development to proceed in a way that minimizes cost and yields optimal quality. A staff operating under realistic expectations can be motivated and involved in the company’s success instead of driven to perform and overstressed by an environment of anxiety and demand, and can draw on their reserves when needed.

The startup that plans well and follows the hummingbird model will always do better than the model that thrashes reactively in a shrew-like way. Startup companies have differences from later stage organizations, including higher levels of intensity and demand on employees, but the hummingbird model allows the intensity to produce optimal results, and to be summoned when needed over the long term. Appropriate attention to planning and discipline, along with realistic expectations, will inevitably outperform pure inspiration and enthusiasm in the intermediate to long term, and short term performance doesn’t help if it doesn’t add up to long term success.

As always, I welcome your comments.  – Tim

Recent experience reviewing job listings shows most have room for improvement. Having been laid off from my automotive industry assignment of the past ten years in mid-July, I have been spending a lot of time perusing the job listings at places like monster.com, indeed.com, careerbuilder.com, the state of Michigan’s Michigan Talent Bank website, and many other similar places. The first thing I noticed about a lot of what companies posted was the frequent mistakes in grammar, word usage, and just plain poor writing. That’s not bad, just careless and (sadly) commensurate with the increasing prevalence of poor English skills in the United States. Then I also noticed that there was often evidence of a certain clueless-ness about how to attract the best candidates and “sell” a position. Needless to say, looking clueless is not a good thing, so how can you avoid it?

Humor can be good, even in job listings, but not when it is unintended. As usual, it was an item that made me laugh out loud because it was so ludicrous that got me thinking. Note: making people laugh out loud frequently DOES have them thinking more about what you said afterward, if for no other reason than they remember it because they enjoyed it, and it gained a good association for them, both with the speaker/writer and the matter being described or explained. Still, in a serious matter like advertising for a skilled employee for your firm, unplanned humor may not make the best first impression.

Listings with unrealistic expectations are unlikely to find the desired candidate. The item in question was from what appeared to be a small company in a nearby town, possibly only a few years from startup (but that’s not truly meaningful as I’ve seen listings from multinational corporations that were, sadly, no better). This particular listing advertised that they were looking for a quality systems manager who would interact with their production department and help them certify for ISO9001 and an alphabet soup of other, similar quality standards, about half of which I recognized (I spent years in that arena), over the next year. Then they described the requirements for the position: a high school diploma and 5 years of experience. <thud> I couldn’t help myself – I burst out laughing. My first thought was that I would be surprised if they could find a high school graduate who could understand what they were reading in most of the standards they listed. Then I realized what they were really after: a world class expert who would work for ten bucks an hour.

Poorly thought out job listings can have unplanned costs. My next thought was that (A) they would have a tough time certifying for just one of those standards in a year even with truly expert assistance, and (B) if they did find someone who would work for the kind of money their requirements suggested, they would be advertising for the same position again within two or three months, essentially having lost those months except for learning more about what they really needed. Sometimes lost months equal lost market windows and other hard-to-quantify but very significant costs.

There are some basic pitfalls in the job listing part of the hiring process. My next revelation was that many of the ads I was looking at were doing the same thing, but not as blatantly. Many had apparently approached the hiring process from the standpoint of identifying their needs and wants first – a logical thing to do – and then figuring out what their ideal candidate would need as far as knowledge, skill, and experience to do the job effectively. There are pitfalls in this process unless it is managed correctly.

Pitfall number 1: Unclear or unrealistic expectations. Many of the job listing writers got carried away in the process and “blue-skied” the job description almost to the point of suggesting “able to walk on water, move mountains before lunch, and turn water into wine”. This has the effect of diluting the job description and skewing it away from what could realistically be expected. It also will make what they are looking for a lot less clear to the prospective candidate and cause them to receive applications from many who aren’t what they are looking for and wouldn’t have applied if the description was more accurate. More savvy job seekers will read the listing and recognize that either the company doesn’t know what they need, which doesn’t say much for their management team, or they don’t understand how to hire very well. That may further suggest that, if one got a position with that company, one might be surrounded by others who were less than the best at their jobs because of the company’s poor hiring processes. I don’t think, when you are looking for skilled help, that you want to make everyone think you are a poor quality organization, unclear about your needs, or at least not good at hiring, as it could dissuade the very best and most savvy candidates from applying.

Pitfall number 2: Focusing on cost rather than value. While it is natural for any manager to want to get the best people possible for the least cost, suggesting extremely low requirements for a position to try to avoid having to pay too much (whatever “too much” means) is not good. Like pitfall number one, it suggests the hiring company is unclear about the current pay structure for the job in question, what they need as far as candidate capabilities, or the nature of the job itself. Looking deeper, it suggests the hiring company are skinflints who will not pay market rates for a good employee and that, should one find employment with them, one might be surrounded by poorly chosen workers who are unhappy about their pay and possibly other conditions at that firm.

The best candidates may infer a lot from a job listing. While I would agree that a lot of candidates won’t think that deeply into what they read, the more experienced and savvy ones – the best people that company might find – are most likely to do so. Just as a job applicant’s appearance and demeanor are the first impression they make on a prospective employer, the job listing may be the first impression a company makes on a prospective employee. As a hiring manager, you owe it to yourself and your company to think about these things and check how your jobs are described and advertised.

Pitfall number 3: Getting carried away with the company description. The description of the hiring firm should not be too long or overstated. I’ve seen many listings where the description of the hiring company went on for a half a page or more, made up more than half of the listing, or read like glowing marketing hype. I’m sure the writers in some cases were trying to impress the prospective candidates with what a great company they represented, but if I got bored with it and started skipping down, I might just skip the whole listing altogether, especially since it was probably the three hundredth one I had read that day and my eyestrain was getting pretty bad.

First, the job description should be realistic and focused, like the applicants you want to attract. If you aren’t sure exactly what the job will involve you need to do more homework, lest your listing bring a flood of applications that are far off the mark and bury within the pile the applications of the candidates you really want to attract. With the on-line job search now an established standard, you can expect to receive large numbers of applications, especially in economic downturns, and anything you can do to reduce the deluge and narrow the field is a good thing, both for you and your human resource department.

Second, be realistic about the requirements of the job and what you can expect to pay for varying levels of experience and skill. Don’t lowball the requirements in an effort to keep your costs down, or you will get what you ask for: unqualified applicants who are desperate for a job rather than workers with appropriate skills and expectations. Describe the range of qualifications and experience you would consider and, if you need a real hotshot for the position, don’t let anyone think it’s an entry level position. If paying for the services of an experienced professional who can make that job really perform seems like too much, then you need to rethink the job itself and consider redefining it. In some situations there are no substitutes for high levels of skill and experience, and you should be realistic about the cost of such help. Also keep in mind that the real hotshots not only spread their expertise to those around them, but probably have knowledge and experience that will help other parts of the company as well.

Third, describe your company in succinct and realistic terms, and avoid cutting and pasting the marketing hype. Make sure the prospect knows what the company does, what the employing division or department does, and where the job would be located, for example. Many listings leave me unclear about these simple details, and don’t attract me to the possibility of a job with that company. Making the critical details clear to the prospective applicant will make you look good, and save time and money for both you and the applicant. If the marketing hype is pretty solid and straightforward, you might include some of it, but in most cases it will need to be toned down at least a little.

Good job listings save you time and money, and bring you the best candidates. To summarize, if you recognize the importance of writing good job listings and take the time to do them well you will receive higher percentages of good applicants, reduce the overwhelming flood of applications that are so common today, and get those top notch applicants in for an interview more quickly (hopefully before the competition does). The last thing you want is for prospective candidates to burst out laughing when they read your job listing.

As always, I welcome your comments, and thanks for them in advance. – Tim

It occurred to me that, with decades of study of good (and bad) management behind me, I want to assemble a list of characteristics of really good managers I’ve known, worked for, or otherwise encountered. I don’t intend to discuss skills, experience, or education in particular, but rather the less tangible personal behaviors and traits that I believe are less well understood, but possibly of highest importance to good management. Many of these probably fall under the heading of “emotional intelligence”, but many also stem from introspection, self-awareness, and empathy for others. These managers blended the roles of manager and leader as needed to get great results and raise the performance of everyone associated with them. I will revise and refine the list over time, and welcome your suggestions for additions or changes. Please read further, and leave me a comment or otherwise contact me with your additions, ideas, questions, etc. Thanks in advance. The list follows. – Tim

Jessica Hart, a doctoral candidate in consulting psychology who is writing her dissertation on leadership performance, contacted me after reading this entry. She pointed out that emotional intelligence is a key element of the best leadership behaviors, and such elements include “having a high level of self- knowledge and awareness, knowing one’s shortcomings, understanding that people’s feelings are important, being empathetic, and staying balanced and cool-headed.” She also said “I truly believe this is one of the most important set of skills leaders and managers need in order to be effective.” Jessica also sent me several excellent articles on situational leadership, the term for a line of academic study of leadership that has been developed for decades and relates very closely to my own understanding, but formalizes it nicely. I will list the articles and link to them where possible at the end of this item.

Characteristics of the Excellent Manager

1. A philosophical and strategic leader, provides guidance for tactical actions but is not averse to being directly involved in or carrying out tactical actions personally

2. Committed, willing to do whatever it takes to make the organization successful, even if it means cleaning the toilets

3. Highly principled, uncompromising in those principles, but otherwise very flexible

4. Keeps options open when possible, understands when and how firmly decisions need to be made, and is unafraid to make them, accept reasonable risk, and take the consequences

5. Collaborative and open to suggestion, works together with others whenever possible to achieve better plans and actions

6. Has high level of self-knowledge and is unafraid to ask for help when it is needed; brings together people with complimentary skills and experience

7. Uses positive interactions with others to create powerful teams

8. Enables subordinates and others around them to do their best work; promotes people, products, the organization, and humanity in general

9. Holistically understands the big picture and how the details and smaller pictures fit into it

10. Understands what can and can’t be changed in any situation, and doesn’t waste effort on the unchangeable

11. Thinks long term and short term at the same time, and understands how the latter creates the former

12. Knows people are the most important thing in business, and that people want to do well and contribute positively

13. Knows that people’s feelings are important, and people who feel positive about themselves, their jobs, their organization, and those around them will always perform better.

14. Knows that quality is what satisfies the customer, and repeat customers are the essence of business success

15. Never discounts serendipity – knows, for example, that the custodian could ask a “dumb” question that would suggest or illuminate the “next big thing”

16. Always gives credit where it is due, never tries to take it or hoard it, and understands intellectual property rights

17. Thinks positively, finds the bright side to any situation, “makes lemons into lemonade”

18. Generally cheerful and kind, respectful of all people

19. Genuine and uncomplicated, yet worldly, sophisticated, and refined

20. Honest to a fault

21. Empathetic but understands reasonable limits to what can be done for others

22. Highly creative, understands that tomorrows great idea usually sound crazy today and that failure incites far higher levels of creativity than success

23. Understands that people learn far more from failure than from success, and that minimizing the pain of failure permits learning that can spawn many future successes

24. Encourages creative and constructive dissonance, yet quickly and decisively acts to stop destructive conflict

25. Understands systems theory and the dynamics of organizations

26. Has a good understanding of human nature and how people respond to perceived expectations

27. Understands how measurement affects people’s behavior and process results, and the differences between public and private results, and between measuring oneself and being measured by others

28. Understands Maslow’s Hierarchy of Needs (link) and works to elevate everyone around them including employees, peers, superiors, customers, and suppliers

29. Knows who the stakeholders are in any endeavour and how they differ from participants, understands that, ultimately, all life forms on the planet are stakeholders at some level

30. Understands that risks are always present, and is adept at perceiving and managing them

31. Stays balanced and cool-headed: doesn’t get overwhelmed by tough times, and doesn’t let good times lull them or the organization into complacency or carelessness

32. Always eager to learn, and never stops learning, from everyone and anyone, at every opportunity

33. Understands that the good of all supersedes the good of the one or the few, including their own good

34. A visionary and skilled planner, also expert at communicating visions and plans

35. Good at explaining complex matters to people who don’t have the background to readily understand them

36. Gives assignments that challenge, but ensures that the assignments are possible, that the right people are chosen for the challenge, and that all involved including the manager collaborate to provide the highest possible probability of success

Recommended Reading on Situational Leadership:
“Situational Leadership”, May 2008, Ken Blanchard, Executive Excellence Publishing
“Situational leadership: a model for leading telecommuters”, 2005, Leigh Ann Farmer, Journal of Nursing Management, 483-489
“Situational Leadership Style as a Predictor of Success and Productivity Among Taiwanese Business Organizations”, 2001, Colin Silverthorne and Ting-Hsin Wang, The Journal of Psychology, 135(4), 399-412
“The Role of the Situation in Leadership”, January 2007, Victor H. Vroom and Arthur G. Jago, American Psychologist, vol. 62, No. 1, 17-24
“Special Issue on Leadership Falls Behind”, September 2007, Richard M. Wielkiewicz and Stephen P. Stelzner, American Psychologist, 605-606

Other interesting reading:
Situational Leadership Theory, wikipedia
Maslow’s Heirarchy of Needs, wikipedia
Managing Up and Down, April 14, 2007, The Legal Soapbox (blog)
Of All the Bard’s Men, May 9, 2008, “Reunny” (blog)

Bad corporate culture arises naturally from human nature, lack of management savvy, and bad or clueless management behavior. Corporate culture is built from the combined experiences of the members of the organization, the quality of their interactions with each other and outsiders, the results of the organization’s efforts, and the psychological tone set by top management and every level of management beneath it. All of these factors are expressed in, and some are caused by, management behavior, and poor management behavior will always affect the culture negatively. The good news is that you can work to correct and improve the culture at your own level.

Understanding the fundamentals of human nature and the psychological origins of poor management behavior is key to being a truly “savvy” manager. One key factor working against being a good manager is the natural difficulty of keeping one’s perspective in a sustained group. While the classical groupthink phenomenon is one possible outcome, another is loss of personal perspective, often acquired through bad experiences. This problem comes from bad experiences with others, especially those we perceive to have power over us (managers).

Pain can make a person lose their perspective. Once one has been abused or injured, psychologically or otherwise, by another person, the remembered pain makes the incident loom large in one’s memory, and restoring proper perspective takes understanding and introspection. The perspective that is lost that most negatively affects managers is the knowledge that, at the most basic levels of motivation, everyone wants to feel good about themselves and wants to feel they are making a positive difference in their job. Keeping this fact foremost in our thinking is key to being an effective manager and getting the most from one’s subordinates. It also helps one delegate more effectively and manage one’s time more efficiently.

Psychological pain can come from common sources. All it takes, for example, is one boss treating you like you don’t know anything, making you do meaningless work, responding to their own insecurities by giving you punitive assignments because they feel threatened by something you said, or actually taking out their own past bad experiences and psychological issues on you, and the pain (frustration, feeling of being devalued, etc.) you experience will amplify the memory of the experience in your mind. It is human nature to recall much more vividly our painful past experiences, as it is a natural survival trait that helps us avoid recurrences, but it can also cause us to lose the perspective that the good experiences outweigh the bad by a huge proportion.

Painful experiences make people wary long after the original incidents. Once abused, most people will tend to be overly watchful for similar circumstances, even after the original incident is forgotten. They can become conditioned to expect similar treatment from other bosses even though they only experienced the abuse from one of many, and, worse yet, they may wind up emulating the bad behavior (forcing, for example) because it is their most memorable reference to how bosses act. In essence, they lose perspective and begin overgeneralizing (another aspect of human nature) and thinking that most or all bosses act badly, or that this is the way to manage others. It can happen to almost anyone, but the knowledge that it doesn’t have to is the starting point for being a better manager.

Common bad management behaviors reveal the prevalence of loss of perspective and an all-too-common poor understanding of human nature. The forceful, “Do it because I said so” management style is a good example. While management research has repeatedly shown that “forcing” and “command-and-control” style management are only appropriate in relatively rare circumstances, many people retain the mistaken opinion that it makes up a large part of the management function. Even the U.S. Army has found that command-style management is only of value in certain circumstances, as when one is leading a squad of inexperienced 18-year-olds into enemy fire, and is much less effective in other circumstances. The savvy commander knows a squad is far more effective with every member contributing their knowledge, perception, and creativity, among other assets, to accomplishing the mission. They also know that they need to engage their subordinates in a positive way to get the benefit of those assets. They often achieve this by maintaining a culture of teamwork, collaboration, and mutual respect in their organization.

A savvy manager understands that conditioning, a form of unconscious learning, can happen to anyone including them, and can be countered. It is easy to become conditioned to expect abuse or just poor quality management behavior from one’s superiors, and, in the absence of better knowledge and understanding, it is easy to model such behaviors in one’s management of others. I believe this accounts for the seemingly large number of bad experiences most of us acquire working in large bureaucracies. We can, however, counter our conditioning once we understand what is happening to us, and consciously replace it with real knowledge.

Changing or countering one’s conditioning is possible. Some of the best managers have undoubtedly taken the time and exercised the introspection to think through their beliefs about management, trace them back to past experiences and learning, and establish better ways of thinking, in effect reconditioning themselves to be better managers. A person may do this once in their life, or many times, but it is always an extremely productive (though not necessarily easy) undertaking.

Culture originates in the behavior of individuals. Organizational culture is built on the behaviors of the members of the culture, and poor management behavior at any level naturally affects the levels subordinate to it – “crap rolls down hill”, as they say. An abusive or clueless top or middle manager can create a culture of negativism and poor performance that extends beneath them all the way to the bottom of the organizational pyramid, and even to supplier organizations. Anyone who has worked in more than a couple of bureaucracies has most likely experienced or witnessed this syndrome.

Culture can be changed for the better. A savvy, positive thinking manager can create a constructive culture of productivity, creativity, and even fun among their subordinates, and achieve superior results, even amidst an otherwise negative culture. It is far easier, however, if the overall culture is at least tolerant, if not actually supportive, or if the manager setting the cultural tone and making the change is isolated from the rest of the organization in significant ways.

Changing culture in a positive direction is rarely easy. As W. Edwards Deming said, however, “quality can be no better than the intent at the top.” A good manager can move the culture of the organization beneath her or him in positive and more productive directions, but if a negative cultural tone is persistently coming from above, he or she will have to fight constantly to maintain that more positive cultural beneath them, and may be criticized and even undermined by their less savvy peers, who may feel threatened by their improved results. For this reason, an organizational culture will rarely be better overall than is determined by the behavior of the topmost management. Middle managers who buck a strongly negative culture often eventually burn out and leave the organization, are unrecognized and fail to be promoted, or give up their management role. While they “stick to their guns”, however, their results will tend to be superior, their employees happier and more productive, and their jobs more satisfying.

Bad corporate culture happens, but it can be corrected. In summary, while it is natural for bad organizational culture to develop, this tendency can be countered and a more positive and productive organizational culture can be produced, though it requires savvy and introspective management. It is within the power of each of us to do the introspective work and be more savvy, as managers or rank and file employees, and I highly recommend it. I also recommend, as you do this important work, to record your thoughts and experiences in a journal for later review. In doing so you will improve yourself, and give yourself increased capacity to influence your organizational culture in in more positive directions.

Personal note – My wife wanted me to include more of the personal anecdotes that have led me to these conclusions (which are by no means comprehensive), but I don’t want to write an entire book here. (perhaps at a later time – I’ve many times considered pursuing a Ph.D. in Organizational Behavior …)

As always, I welcome your comments and questions, as I always learn from them.

]]> http://oneffectivemanagement.wordpress.com/2008/08/19/where-does-bad-corporate-culture-come-from-and-can-it-be-corrected/feed/ 6 Tim Prosser, Mandolin Maniac http://oneffectivemanagement.wordpress.com/2008/07/29/after-cost-of-quality-cost-of-culture/ http://oneffectivemanagement.wordpress.com/2008/07/29/after-cost-of-quality-cost-of-culture/#comments Tue, 29 Jul 2008 15:59:28 +0000 timprosser http://oneffectivemanagement.wordpress.com/?p=24 ]]>

The “cost of quality” concept advanced management science, but what’s next? As the science of business management has progressed, cost measurement has long been a key endeavor, as it provides a lot of the information needed to know how the business is doing and to make decisions, solve problems, and make improvements. In the past few decades, areas of cost measurement such as cost of sales and cost of quality have provided helpful insights for management teams, and improved the competitiveness of companies that understood them. Famous business gurus have weighed in on cost measurement with great positive effect. W. Edwards Deming once said “The greatest costs in business are unknown and unknowable.” Finding ways to measure those unknown costs has produced significant gains in the understanding and effectiveness of business processes, and significant progress has been made in assessing increasingly tougher areas of business, but one area has always escaped effective measurement, though it has perhaps the biggest impact on business performance of any: the culture of the organization.

Measuring cost of quality was initially a conceptual challenge. At first, as I remember it, a lot of companies saw measuring cost of quality as difficult and costly, and it took years for the practice to be adopted. Many companies still do not embrace a holistic approach to product and service quality, and have only a rudimentary understanding of how their quality affects their costs. With time and effort, however, many companies came to understand that not only can cost of quality be measured in production processes, but customer perceptions of quality can be measured using surveys, warranty and customer complaint databases, and appropriate statistical techniques. In the 1980’s W. Edwards Deming taught us that giving the average worker the training and tools to measure defects and waste, and then involving them in the improvement process, can yield major benefits to a company. While many companies used concepts such as cost of quality and total quality management in the 1970’s and 1980’s with marked success, many dropped them later due mostly to top management turnover (my perception). Since then measuring and using the cost of quality has held on in some U.S. companies, though most made it the province of accountants and analysts, and not many kept the employee involvement part of the philosophy (to their detriment).

Among types of systemic issues, the cultural issues are most difficult to address, and possibly the most damaging in the long run. In the multiple industries in which I have spent my career I and my colleagues have often commiserated over our daily problems, and spent considerable time discussing the causes of less than optimal performance around us. When I look at the scale and scope of the things that went wrong, the worst were caused, not by an engineer’s mistake or even a marketing or senior manager’s mistake, but by what I frequently call SNAFUs. SNAFUs, in my mind, are those things that go wrong not through the fault of an individual, but because systems, standards, and expectations conflict or drive suboptimal decisions and actions. SNAFUs are often extremely hard to correct, and deserve considerable analysis on their own. The worst of the SNAFUs, however, are due to cultural factors such as shared beliefs, for example, that are outdated, incorrect, or based on values that drive dysfunctional behavior and decision making on the part of senior managers and executives. Culture exists in every organization, and it is driven as much by the attitudes at the top as by any other factor including the prevalent social culture in which it operates.

Defining cultural factors and determining how they influence company success and potential is tough but possible. Measuring culture is a big challenge as it needs first to be defined by experts who are not typically employed by most companies. Culture covers an enormous variety of aspects of the company and the environment in which it does business. Defining a company’s culture will require a detailed understanding of company history, even down to the personalities involved, a similarly exhaustive history of the industry, and of the social, political, and economic environment in which the company operates, to yield meaningful results. While such knowledge is not often assembled by companies in my experience, some excellent basic knowledge is available in a collection of papers by Abraham Maslow (the “Heirarchy of Needs” originator), a seminal work titled “Maslow on Management”. This book had great impact on me, and I consider it essential reading for anyone wishing to be an effective business manager.

The study of cost of culture begins with a clear definition of organizational culture. Culture is pervasive, and expresses itself in many ways. The appropriate place to start in the study of cost of culture may be to identify the individual aspects of culture, and then see how they exist within the subject organization. Comprehensive definitions are difficult, and I will continue searching for a truly definitive one, but Debra Thorsen’s is as good as I’ve come across (link).

Aspects of culture must be linked to both internal decisions, external factors, and business outcomes. The next and even more difficult task is to tie the various aspects of culture to specific positive and negative outcomes, and to identify patterns that show some amount of consistency in the way the organization’s culture plays out in business results. This may require a lot of root cause analysis, and the fact that this may bring to light mistakes by or under the authority of individuals may make this a highly politicized undertaking that may prove nearly impossible depending on the circumstances. One place that might be good to start is in the tracking of major decisions, the analysis of their results, using post mortem reviews to assess the results downstream, and deep-dive root cause analysis of poor timing (lateness) or mistakes in the process. This must be undertaken with the understanding, originally taught to us by people like Professor Deming, that people act according to the expectations they perceive in the system, as well as based on their experience, training, and personalities. Systemic factors that relate directly to culture, such as perceived expectations and prevailing management style, contribute a great deal to decision quality, and are responsible for organization performance in ways that range from easy to extremely difficult to quantify.

Organizational behaviors must be analyzed carefully, and academic research may present the best opportunity for acquiring knowledge. For example, a business culture which “deifies” one function over another will probably display dysfunctional decision making, as I documented in a previous entry, “Dysfunctional Organizations Are Like Dysfunctional Families“. A business culture that involves fear and intimidation will suffer from poor internal communications and sub-optimization at a department level as middle managers attempt to protect their jobs. A business culture in which the incentives for managers encourage competition instead of collaboration will suffer from poor communication and coordination of efforts, among other sub-optimizing behaviors.  An organization where second-level management is not given incentives and direction to work together as a team could suffer from frequent late decisions and reversal of decisions, generating needless waste and frustration throughout the organization. Many more examples come to mind, but, essentially, each situation needs to be dissected and analyzed carefully with a focus on identifying the overarching cultural variables so they can be measured and analyzed in an “apples-to-apples” comparison. An individual who undertakes such an analysis from within an organization could be placing his or her job in jeopardy. This suggests that an external academic study may have better potential for success. Any such study will still need detailed internal information, however.

A study of corporate culture has political implications that make it a difficult “sell”. In the end, only a progressively managed company may agree to such a study and, while that could benefit the company significantly, the results of the study will be skewed by including information from only similar companies. To obtain real knowledge about cost of culture, data on multiple organizations must be obtained, and coordinated studies done to compare them and find the common points where measurements can be applied and used to create and test theories.

Cost of culture would be valuable to understand, but difficult to study. There is much ground to be broken and a great deal to be learned in the development of a good understanding of the impact of organizational culture. I expect that deep involvement of behavioral psychologists and sociologists will be needed, but the work needs to be done and may represent the next great leap forward in the science of business management.

interesting reading and resources:
The History of Quality – Overview, The American Society for Quality
Using the Cost of Quality Approach for Software, November 1998, Herb Krasner, Crosstalk – The Journal of Defense Software Engineering (includes many pertinent and informative references – TFP)
The Cost Of Quality … Is Less Than You Think, September 1996, Guelph Food Technology Centre
Ten Parameters of Good Corporate Culture, Martin Hahn, Ph. D., www.ezinearticles.com

The worst companies are the ones that fail to fail: they never do especially well, and they never do badly enough to close or be bought out. Instead they muddle along, fortunes rising and falling, hiring and laying off in waves, providing lackluster returns to their owners/shareholders and poor quality products and services to their customers. They never get their act together, and generate far more human misery than an organization that fails or succeeds outright.

The worst business ideas follow a similar pattern. Six Sigma, a business fad that attempted to repackage and repopularize successful quality methods previously developed by people like W. Edwards Deming and Joseph Juran, had a number of negative effects on companies who bought into it, even as it showed positive results on paper. It inspired companies to take their top engineers and other talent away from the work of creating and producing product, declare them “black belts”, and set them to finding and fixing individual problems. The presentations I have seen were impressive, with beautiful charts and graphs, and illustrations of the millions saved, but the unquantifiable costs were palpable to those of us in the trenches. The best of our engineers were taken away overnight, and those who remained, while competent, were, by management selection, of lesser skill and experience – a fact that could not help but flow through to and affect the product and customer. In addition, a certain amount of management’s attention had to be directed towards the reports, presentations, and general management of the special Six Sigma organization. Much ballyhoo was made of it all, and some probably saw their careers uplifted, but the net effect on the company was debatable.

Beware business fads. With the help of marketing savvy university professors (who I am sure profited significantly) Six Sigma was sold to the business community accompanied by a lot of book sales, and the lack of real business knowledge among some American businessmen allowed them to fall right into the fad. In some large corporations the Six Sigma fad continues to muddle along, keeping the best engineers dedicated to finding bad fasteners and similar problems while their ingenuity is otherwise lost to the product development effort. As long as they can show they are saving money the company will keep the system going. Six Sigma continues to muddle along.

“Muddling” occurs in many arenas. Similarly, poorly-conceived business systems – processes, databases, organizational structures – tend to take on a life of their own and resist replacement. Once in place, they develop a human constituency bolstered by the egos of the designers, sponsors, and participants. While more wasteful than alternatives, the cost to replace them combines with their cultural inertia to keep them around far past their period of even relative usefulness, in large part because the costs they impose on the organization are difficult to identify. The workers “in the trenches” can tell, though, as they struggle with clumsy procedures, redundant databases, bureaucratic systems of signoffs and approvals, and other wasteful business functions. Unfortunately, companies who look only at the most easily measured costs will fail to detect the waste, and lousy business systems can go on for decades, giving customers less than the best products, and degrading the profitability of the company in subtle and undetected ways.

There’s no accounting for management styles, skill levels, or personalities. There is no question that such factors are a powerful force behind the muddling phenomenon. My observations have been that, as W. Edwards Deming said, “The quality can be no better than the intent at the top”, by which I believe he meant that an organization is unlikely to perform better than is permitted by the savvy and skill of its top manager. Some people don’t have the personality to be a good manager, a fact which is unlikely to be acknowledged by business schools who make money from having lots of students. Some people never learn the right things to be a good manager, and some company cultures don’t support management learning and skill development. These all contribute to companies that muddle, never failing but never succeeding either, generating the maximum human misery along the way.

The solution, as almost always is the case in the corporate world, is at the top, and most people are not in a position to make a difference, or don’t recognize their potential. In such positions I tend to take the risk, speaking up constructively and with the knowledge that, if I wind up on the street looking for a new job, the new job will probably be better than where I was, and I’ve escaped the ongoing pain of “muddling”. I hope you are not working in a “muddling” organization.

As always, I welcome your comments and commiserations.

Companies can’t be faulted entirely for missing important costs.  It is human nature to measure what is easily measured, and to optimize that which is measured.  Admittedly, that’s like the drunk looking for his wallet under the street light, instead of where he actually lost it, because the light is better under the street light.  The important costs may not always be the obvious ones, however.  The savvy manager who understands human nature will look more deeply into costs and find hidden opportunities.  I will discuss the nature of costs and give some examples of hidden costs and the mishandling of cost information.

Cost measurement is generally attractive to management for good reasons.  If you measure something you can see if you improved it or if it got worse.  (Human nature dictates that if it improved it was our/my fault, but if it got worse it was because of someone/something else.)  Logically, some cost measurements will be much more meaningful and important than others, but the difference will not be intuitively obvious, and the relative ease of learning the costs will vary greatly.

Measuring the hard-to-quantify costs is, by definition, difficult, but those costs can reveal a lot of detail about the organization and a lot of opportunities for improvement.  Often the small costs that seem to affect few people may actually be quite large.  A company I worked for never looked at their process for tracking parts, as it was assumed that information in a computer was almost without cost.  They had started with a database on a mainframe computer back in the early 1970’s, with a small herd of COBOL programmers keeping the thing alive and trying to improve it.  When I got there I was told that the database had over 200 screens with which to view and modify it, but that no living person knew how to use more than two dozen of them.  I knew immediately that this was a bad sign. 

The total cost of a system is more than just hardware and immediate maintenance costs.  What they failed to analyze was the cost, not just of putting the information into the computer, but of the life cycle of a part number: all the times a person had to change that information, approve it, prepare reports about it, back it up, or just look at it.  They knew what they were paying for the mainframe and its maintenance, and for the staff to keep it running and make changes in it.  Unfortunately, nobody ever measured the real cost of a part number, and the system ran amuck for years, becoming increasingly huge and unwieldy.  Given the few costs they measured and the system’s importance to the company, it was impossible to justify the cost of replacing it.  It lived on for decades after it should have been obsolete, with many software “band-aids” applied to make it at least a little easier to use and access, and cost the company many millions in unquantified cost.  I believe it is still in use today, sometimes masked by overlying software interfaces, and the company will probably require COBOL programmers for many years to come just to keep the enterprise going.  I don’t know that the cost of training each user, and of the time each user spends struggling to move from screen to screen, managing data, preparing reports, etc., was never examined, let alone the cost of the software “band-aids”.  There is also the cost of errors that accumulate in the data, as much from the difficulty of working with it as anything else.  That could be estimated …

As we learned in the 1980’s (and many apparently forgot), the best people to measure the cost of business processes are the people closest to them.  I once found myself walking what seemed like a long way to get to the printer at a company where I worked.  I was moved to analyze the time use of engineers in the department.  There was one printer for about two dozen engineers, and it was at one end of the large room in which most of them worked.  It took, on average, about thirty seconds for an engineer to walk to the printer and back to his cube or office (I timed it), and, on average, each engineer went to the printer about 15 times per day, for a total cost of 15 minutes per day.  That doesn’t seem like a big deal, as it was only costing the company 24 x 15 = 360 minutes or 6 hours per day, or 6 x 250 days = 1500 hours per year.  If the average engineer was paid $30 per hour travel time to that printer was costing the company $45,000 per year.  A second printer at the other end of the room could cut that travel time in half, and would cost about $1600 (this was 1994) plus a few hundred for any wiring and setup that was needed.  Could anyone convince the management that a new printer was warranted?  I couldn’t.  They saw the engineer’s time as a sunk cost, saying “we’re going to be paying them anyway”.  It’s clueless and frustrating, but this is not an isolated circumstance — this sort of thing happens ALL THE TIME.

Here is another story of costs misunderstood or mishandled.  I had an assistant (Karen) who, as part of her work, had to crease and fold 11 x 17″ mechanical drawings for inclusion in ring-bound manuals.  When I took the documentation supervisor job I saw that she was not only doing this, but also punching the holes in the pages, which took even more time.  The first thing I did was order 11 x 17″ paper that was pre-punched, a standard office supply commodity that cost no more than plain paper, thus saving her a half hour a day immediately.   Then I spent a half hour researching the options and found that a simple machine existed that would fold the paper quickly and reliably.  Karen was spending about an hour a day just folding and creasing paper, or (at $15/hour), generating about 250 days/year x 1 hour x $15 = $3750 per year in total cost.  The folding machine I found would cost about $1200 and had an expected service life of at least three years.  I presented a small spreadsheet showing the cost comparison to the engineering manager and he saw a “winner” at once.  Unfortunately, the way this company was run, any expense over $1000 had to have the approval of the CEO.  The CEO happened to be coming to our plant a few weeks later, and I was standing behind the engineering manager when he presented the purchase order and my spreadsheet.  The CEO looked over the documents, looked at the engineering manager, and said “What’s Karen going to do with that extra hour a day?  Sit on her ass?  I’m not signing this.”  This was obviously a very distrusting man.  Unfortunately, he lost our respect that day, the engineering manager left within a few months, and I left some months after that.  The cost was real, and I had taken the time to measure it and come up with an effective remedy, but the opportunity was missed.

Waste can be analyzed and reduced best by the people in direct contact with it.  A savvy manager will listen to the people in the trenches, trust that everyone who is of sound mind wants to do the best work they can, and authorize and encourage the more difficult cost measurements that have the greatest potential to enable improvements in company operations.  The fact that a cost is easy to know doesn’t mean it’s the most important one.  Important costs can often be found by listening to the expressions of pain by those in the trenches.  A savvy manager understands the nature of cost, listens, and acts appropriately.

As always, I welcome your comments.