From Dr. W. Edwards Deming’s 14 Points: Drive out fear, so that everyone may work effectively for the company.
By definition, in order to improve something, a change has to occur. I have benchmarked several companies and it seems that those that do the best with their improvement efforts have a workforce that embraces change. If, on the other hand, there is a culture of fear and the workers are terrified to try something different, nothing will improve.
A company leader once told me, “Fear is good. Every employee should be fearful for their job every day.” Let that sink in for a moment. Imagine muddling through the work day, afraid to take any risk and hoping you didn’t do something that would get you fired. In this type of environment, the fear of change can be significant, which means there is little chance for lean and Six Sigma (or any other improvement effort) to take hold.
Another leader said, “Fear is a good motivator, especially fear of the competition.”
It is good to keep an eye on the competition and to have a desire to do better than them, but to fear them? Can you picture a coach motivating a sports team with this speech? “Ok folks. I am afraid of the team we are playing tonight, and they will probably wipe the floor with us. Just do your best and try not to get hurt.” Not a very inspiring speech.
Several years ago, after coming back from a benchmarking trip to Japan, an improvement leader at GE once shared with me how he had asked a Japanese CEO all types of questions, and the CEO answered every one of them. Finally, the GE improvement leader asked, “Why are you being so open with me? We actually compete with you in certain product lines.” The CEO said, “We don’t fear you. You see, we have been improving our processes for a while now, and you are just getting started. By the time you get to our level of productivity, we will be far better that we are now. So your company will never catch up with us.”
Confidence seems to be a better motivator than fear.
Dr. Deming spoke often about the role fear plays in damaging a company’s effort to improve. The example that follows may help shed some light on why this point may be hampering your improvement efforts.
By all accounts, Doug was having a bad day. He had been yelled at by his boss, had a grievance written against him and had a cup of ice water thrown in his face. All of this was a result of a simple change he made to the manufacturing plant layout. Doug was in charge of installing a new piece of equipment, and in order to clear out some space, he had the maintenance guys move a work station 10 feet the previous night.
“What was the big deal?” thought Doug as he reflected on what happened that morning. Well, apparently it was a big deal for Mary. She had been working at that station for over 15 years, doing the same task, the same way, over and over. When Mary arrived that morning and noticed that the station had been moved, she had a meltdown. Doug was immediately called out to the shop floor to talk to Mary and try and calm her down. As he approached Mary’s work station, she threw a glass of water in his face and stormed off to find her union representative.
“What was that all about?” said Doug to Mary’s supervisor.
“Some jerk moved Mary’s work station last night. She had no idea what was going on when she clocked in this morning. It really hit her hard.”
“Nothing was changed but the location. Why do you think she is so upset?”
“Well, look at the new location,” said the supervisor. “She talks to her co-workers throughout the day. Now, she would have to yell to get their attention. She is completely isolated in this new spot. I wonder what the person was thinking that put it here.”
THE START OF DOUG’S PROBLEMS
That was just the beginning of Doug’s problems. Once it became known that he was the jerk the supervisor was referring to, the union quickly hit him with a grievance, and the plant manager yelled at him for causing so much disruption. It was made clear that one more screw-up, and he would be looking for employment elsewhere.
Later that day, Doug shared what had happened with Lucy, another manufacturing engineer. “You need to go talk to her,” said Lucy.
“Talk to Mary?” asked Doug. “She almost assaulted me this morning!”
“Actually, you need to pull the entire work group together and let them help you figure out a better place to put Mary’s station. Who knows? Maybe they can offer suggestions on how to make the overall project go smoother.”
“Get input from the workers? That is rarely done in this plant,” said Doug. “How would I get started?”
“I am sure you can figure that out,” said Lucy. “Remember, most workers want to help if only someone would take the time to listen to what they have to say.”
The next day, Doug asked the supervisor to invite Mary and her co-workers together to discuss what happened. After many failed attempts by Doug to engage the employees, Mary stood up and said, “Why should we help you? After what happened yesterday, you have some nerve asking us for our help.”
“Yeah, I need to apologize for what happened,” Doug said sheepishly. “I had no idea that moving your workstation would cause so many issues. I guess I should have gotten your input before we started making changes.”
“Well, that is a first,” said Carl, one of Mary’s co-workers. “I have never heard an engineer apologize before. “
“I am not sure he is sincere or can be trusted,” said Mary. “You have a lot to prove before I will accept your apology.”
“Alright,” said Doug. “I am ready to prove myself. I would like your help and am ready to listen to your ideas.”
The meeting really took off once the ice was broken and Doug ended up with several pages of ideas. He worked closely with the employees over the next several weeks and discovered after implementing the ideas that not only had they freed up the space he needed, but they were also able to improve the capacity of the line by 20%. Doug was proud of this new team and its accomplishments. He set up a presentation with the company executives to share the good news.
“You and your team did a great job,” said the plant manager after Doug’s presentation. “I am encouraged by the improvements that were made. How much money did these improvements save the company?”
“We freed up some plant space and increased capacity by 20%. So, we can produce 20% more product without adding any additional people,” said Doug.
“Yes, that is true,” said the plant finance manager. “But none of that will hit the bottom line unless we increase demand and I don’t see that happening for a while. So, why don’t we cut the workforce on that line by 20%? That would be five people, which will save the company over $250,000. Now that is real savings that will hit the bottom line.”
“Wait… what!” exclaimed Doug. “Are you seriously thinking of firing the very people who helped make the improvement? We will never get anyone in this company to help with another improvement effort.”
“Sure they will help,” said the plant manager. “We will make it part of their job requirements. Then they will have to help us improve or face being fired.”
“There has to be a better way,” said Doug.
And the tentacles of fear dig deeper into the culture. This is one of the toughest challenges an improvement leader faces, how to show the company executives that the improvements that were made actually will show up on the financial statements and justify their efforts.
THE ‘HARD SAVINGS’ EMBRACE
The problem is that there are a limited number of “hard” savings that the financial community will embrace. Material costs and labor reductions are the easiest to track and verify. However, the problem with labor savings is that it has to be a reduction of headcount before most leaders will give credit. After a team implemented several improvements that increased the capacity of a production line by 50% (and there was demand for this extra capacity), a CFO actually told me that we should have hired the people required to staff the line at this higher production rate and then fired them. That way, the employees would have been taken off of the payroll, and he could count the workers as they left the building.
Why would anyone help make improvements if they thought there was a chance that their job (or someone else’s job) might be eliminated? This fear can be difficult to overcome. For example, one company’s employees resisted any effort to improve the quality of their product because they were afraid that the people doing the rework would be let go if there were fewer defects for them to fix. The fear of change can have many underlining reasons.
So, what can be done to help drive out fear? It starts with the executive team. The team needs to understand and embrace the benefits of a culture that is built on trust and teamwork. It needs to support the benefits of focusing on the customer and building an infrastructure that supports process improvement. This would include a commitment to the workforce that no one would leave the company as a result of an improvement project.
There are several ways to use freed-up labor. Some examples include insourcing work that is currently done by a supplier or temporarily assigning people to improvement teams until positions open up in other parts of the plant. The home run scenario would be to grow the business and use the extra labor to help grow capacity, if possible, to meet future demand (See “Understanding the Demand/Capacity Curve”).
Next, the executive leaders need to build a strategic vision that spans several years and look at their improvement efforts as a long term investment. If you look at GE’s early efforts with Six Sigma, for example, in the first year of implementation, they spent more money on training and resources than they were able to save.
There will be some “quick wins,” of course, and many examples of “soft” savings. It is important to take the time to work with the people in finance to help them understand the importance of these soft savings. For example, how do you put a dollar benefit to improving on-time delivery? There might be a reduction in late penalties or an improvement in customer demand. Or it might be the only way to continue to sell your product if the competition already has superior delivery performance.
But how do you turn these benefits into hard dollars that someone can guarantee will hit the bottom line? An exercise I recommend is to take a simple manufacturing problem (such as a machine breaking down) and brainstorm all of the different types of costs associated with that problem. It will be a long list. Then, ask the finance people in the room how many of the different types of costs could be accurately determined. This will help highlight the challenge of trying to put a dollar amount to the improvement savings. It also is useful to have someone from the financial community be on each of the improvement teams. This resource can help the team validate the costs and savings, as well as help them prioritize their opportunities.
Finally, fear can be reduced by learning to celebrate when problems are identified. The first step to making an improvement is to admit that there is a problem (Alcoholics Anonymous made this famous). The old saying, “Don’t shoot the messenger” highlights how easy it is to fear exposing problems. When problems are highlighted, everyone will watch the company leaders closely to see how they react. If the messenger gets shot, then problems will be swept under the rug and improvement will end.
So, an alternate ending to Doug’s story might look something like this:
“You and your team did a great job,” said the plant manager after Doug’s presentation. “I am encouraged by the improvements that were made. How will these improvements help the company?”
“We freed up some plant space and increased capacity by 20%. So, we can produce 20% more product without adding any additional people,” said Doug.
“Hmm,” said the leader of the sales team. “We have been thinking about launching a new promotion but we were concerned that manufacturing would not be able to handle the extra demand. The labor cost per unit will drop so we will be able to reduce our price and keep the impact to profitability to a minimum.”
“Also, the freed up plant space could be used to expand the production line for our new product,” said the manufacturing engineering leader. “We were going to wait to launch all of the product offerings but now we can accelerate sales by having all of the options available from the beginning.”
“This is all great stuff,” said the plant manager. “And, it sounds like we have only scratched the surface. We could apply some of these same improvement ideas to other parts of our company. I would like to personally thank each of the team members and sit in on your next team meeting to show my support.”
It can take years to drive out fear and build trust. As an employee, feel fortunate if you are able to find a company to work for that has a culture that embraces teamwork and collaboration. The good news is that many of today’s leaders have years of experience with lean and Six Sigma initiatives and know that in order to compete in today’s markets, their company must have superior quality and delivery. And the best way to achieve these levels of performance is to promote a culture that is not afraid of improvement.
Previously published in Industry Week. Used with permission of author.
Bio:
John Dyer is president of the JD&A – Process Innovation Co. and has 28 years of experience in the field of improving processes. He started his career with General Electric and then worked for Ingersoll-Rand before starting his own consulting company. Dyer can be reached at (704)658-0049 and John_dyer@mi-connection.com. Linked In Profile: http://www.linkedin.com/pub/john-dyer/0/646/75a/