The people side of sustaining Lean
Introduction
If you do not appreciate the people aspects of sustaining Lean your organisation’s transformation will be disappointing at best. Lean is high-maintenance activity; it takes more or less the same effort to keep the improvements in place as it does to put them into operation at the outset. While the practices, tools and principles are visible, the management thinking and routines to sustain Lean are invisible. If we keep managing in the same way as we did in the pre-Lean environment the improvement gains will not stick, much less evolve into everyday improvement. Lean cannot be effectively applied in a piecemeal fashion. Your organisation will not be effective through the application of the methods and tools in isolation because the philosophy, methods and human side of Lean are tightly integrated and dependent on each other. The system must be rolled out in a holistic manner.
Using Lean as a means to reduce people is usually a fatal blow to sustained improvement. People will not improve themselves out of a job. And, as we have already seen, people reduction is not a goal of Lean. Growth (both business and people) and waste elimination are the objectives of Lean and it goes without saying that people are not waste.
You probably appreciate by now that over 95% of what we do is non-value-added or waste through your customers’ eyes. This means that there are far greater possible gains in cutting cost through waste elimination than in cutting cost through people reduction. There are, however, circumstances where organisations are employing excessive numbers of staff, often through years of mismanagement. This situation violates the ‘respect for people’ pillar as people are not utilising their talents fully and hence eventually become disengaged in the workplace. This situation should be proactively managed through redeployment to growth areas. If this is not an option, lay-offs can be a last resort option. This should be done in a supportive fashion, where the company makes every effort to help with new career opportunities for those affected. If a company has large cash reserves, it is the best long-term option if people are trained and developed for a period whilst new business opportunities are explored. However, job losses due to improvements are not acceptable business practices in a true Lean transformation. This is not only from a moral viewpoint; it makes business sense to use freed up resources from improvement to make even further process improvements.
Leadership
‘To lead people, walk beside them ... As for the best leaders, the people do not notice their existence. The next best, the people honour and praise. The next, the people fear; and the next, the people hate ... When the best leader’s work is done the people say, “We did it ourselves!”’
Lao Tsu (founder of philosophical Taoism)
Most managers are trained to manage (maintain the status quo), not lead; to lead is taking your organisation in a new direction. It is the leader’s job to sell and lead by example the new way of Lean thinking and culture, every day. Gary Convis, the former GM of Toyota in Kentucky, uses the description ‘to lead the organisation as if you have no power’ to describe the leadership style at Toyota. In other words, oversee the organisation not through the power of decree, but through example, coaching and assisting employees to achieve their objectives.
The highest form of leadership you can develop for sustained Lean success is known as servant leadership. This is the genuine sentiment that you want to serve first and foremost. The phrase ‘servant leadership’ was coined by Robert K. Greenleaf in The Servant as Leader.1 Qualities that a servant leader exhibits are a passion for developing people, taking the long-term view, being process focused and having patience and humility. Servant leaders are more concerned about serving others than they are about their own achievements or rewards. Treat others as you would want to be treated is the True North ideal here. Additional qualities include treating others with respect, listening emphatically, appreciating people, holding people accountable (a manifestation of respect – their work is important) and being truthful. This is not a soft or fluffy concept; the business case is echoed in the sentiment that if we take care of our people they will take care of us. When Sam Walton opened his first Wal-Mart store in Arkansas in 1962, he said: ‘If you want to ruin your business, just treat your employees bad because they will take it out on your customer.’ How would you as a Lean leader describe your own attributes in comparison with the ones listed in this paragraph?
The message here is that sustained organisational change starts with individual change. The best Lean organisations that I have worked with begin this process at the boardroom level, one person at a time, and it then flows downwards to the leaders throughout the organisation.
If individual change is required what needs to be changed? You need to demonstrate both in words and by your actions that you believe that people development and process improvement go hand in hand. Consequently, this requires the transition from an authoritarian style of leadership of commanding your people on what to do, to a philosophy of developing people through coaching. This is a major shift in the way most businesses are run. Leading people with process goals and not financial directives creates higher levels of engagement, and if we get the process right the financials will take care of themselves. To do this requires high-touch leadership and spending time on the frontlines coaching and developing problem solvers on a daily basis to improve the current standards. Chapter 10 showed how you could take the journey towards changing the culture of your organisation.
In a Lean environment the worst problems are concealed problems. Hence the new role of management is to both facilitate the design of the organisation so that problems are raised when they are in their infancy and to ensure that people are empowered and supported to address these problems. Therefore a vital part of sustaining Lean is building a culture that practises problem solving and process improvement every day. The top performing Lean organisations make no distinction between the routine daily work and improvement problem solving. The continuous and everyday focus on problem solving builds deep improvement capability. The result is the growth of talented Lean thinkers at the frontline, work team level, to the point where making improvements becomes an unconscious competence. The Lean daily management system (discussed in Chapter 11) is the physical mechanism for creating the Lean culture. However, even more important is the continuous nurturing of invisible aspects through the Cathedral model (discussed in Chapter 10).
Engaging people in Lean
Look after the basics
A good way of engaging people in the Lean journey is to find out what niggles and frustrations they have with their current work. Solving these at the outset is a sign of genuine commitment to the transformation journey. If the fundamentals that enable people to do their best at work are not in place your company will be on the back foot straightaway. So you need to address these first. This includes ensuring that everyone is trained and qualified to do their jobs and they know what is expected of them, they have the correct equipment and tools to perform their jobs and they get regular feedback on their performance.
Management integrity is crucial for sustaining Lean – we must do as we say and treat everyone with equal fairness. Solving people’s ‘hassle factors’ sends out the message that Lean can help people to make their work easier.
Many Lean journeys today take a discontinuous approach to improvement rather than a continuous one. There are stop-start improvement blitzes every few weeks or months. This is not a true application of the Lean philosophy. To realise the full potential of Lean we need to practise on a daily basis, just like top class athletes do. The reason for this is to keep sharp and to develop the thinking and observation skills to be continually spotting waste. Discontinuous improvement will only keep you at your current level of performance due to the eroding effect of entropy and other interacting factors. As a manager you must cultivate your people to develop the sensitivity to see problems and to be alert to waste every day, and feel comfortable in raising them via their local visual management centre.
Hierarchy of needs
Maslow’s hierarchy of needs was a model developed by Abraham Maslow in 1943. He listed five needs to describe the ladder of human motivations. In order to achieve the next level the lower needs in the ladder must be satisfied before those higher needs become motivators. To fully engage the hearts and minds of your people you need to satisfy all the levels of this model, and you should think about how your organisation is currently satisfying these needs.
The five needs that are relevant to Lean transformation are:
- Physiological: these are the needs required for survival such as air, food and water. Lean improves the probability that an organisation will survive and prosper in the long term, hence providing stable employment that in turn will provide good wages for people to purchase the essentials of life such as food and water.
- Safety: these are the needs necessary for a sense of security such as health, employment and a good home. Lean provides a people centric and safe work environment in terms of a physically safe work environment according to this need. It also provides a psychologically safe environment where people’s ideas and opinions are welcomed and acted upon in a timely manner.
- Social: these are the needs vital to a feeling of belongingness such as friendship, intimacy and family. Teamwork, trust and collaborative relationships are cornerstones in realising business improvement in a Lean system.
- Esteem: these are the needs crucial to feeling respected, confident and appreciated for your achievements. The ‘respect for people’ pillar (discussed in Chapter 1) is a precondition for long-term prosperity through the application of Lean. This manifests itself in respect for people’s talents and the continual development of these for the benefit of the employee and the growth of the company.
- Self-actualisation: these are needs related to intellectual growth and fulfilling an employee’s true potential. Challenge is a key theme in Lean, and people rise to a challenge when it is framed as ‘their’ challenge. Challenging people in a constructive way to achieve stretch objectives nurtures their growth and the fulfilment of their potential. The triumph of achievement and the spiritual sense of accomplishment that accompany progress through performance improvement increase the desire to continue the journey of achieving further success.
If you keep Maslow’s five needs in mind it will help you design a successful Lean roadmap from a people engagement side. This is crucial as nothing will happen without engaged and involved employees!
Job enrichment
Job enrichment is a further way of motivating employees on the Lean journey. It provides them with the opportunity to maximise the full range of their talents. It was developed by the American psychologist Frederick Herzberg in the 1950s. Job enrichment aims to redesign jobs to make them more intrinsically rewarding. This means that they appeal to the person’s sense of self-worth. Characteristics that will help you build enrichment into jobs are:
- Skill variety: increasing the number of tasks that your employees are competent to perform builds skills and mastery, and increased motivation as boredom is alleviated.
- Task identity: the degree to which employees perceive how their job affects the overall delivery of a product or service. A job has a high task identity if your employees do it from the beginning to end with a timely and visible outcome.
- Task significance: the degree to which the job has a substantial purpose and meaningful impact on the lives of other people, whether these people are in the immediate organisation or in society. A job has high task significance if people benefit greatly from results of the work. A non-cynical environment is required for this element to be sincere. A clear connection between one’s work and the organisation’s visions nurtures task significance.
- Autonomy: this is employee empowerment to intervene in process disruptions, etc. and requires trust in people’s self-management and the removal of fear of being punished for honest mistakes. Trust is a manifestation of respect for people, and is required to break down barriers between departments which are an essential requirement for the Lean principle of flow – value flows through departments.
- Feedback: access to information and collaborative input from peers regarding the quality of your work is another form of job enrichment. Training and coaching should be provided to address identified performance gaps. Recognition for a person’s success is another potent form of feedback. Celebrations of milestones that mark progress and facilitate employee interaction with the end users of their work builds pride and also fosters intrinsic motivation.
‘Recognition is the free fuel that drives your business.’
Lee Cockerell (former Executive Vice President of Walt Disney World Operations)
We all engage when we feel valued for the work we do and when our opinions are listened to. Our frontline people in general know far more about our processes than we do as they are operating them every day. Do we ever ask, ‘What do you think?’, ‘How would you make this better?’ or ‘What is the one thing we could do better?’ It is surprising even today how often this is neglected and many workers still feel like second class citizens as a result of their treatment by directive management attitudes.
Ideal state mapping
Another major source of motivation for improvement is comparing actual performance to ideal (see the ideal state value stream map in Chapter 3). Acknowledge how much waste exists in all the work your organisation does every day (remember the 95% non-value-added aspect of pre-Lean processes). And yes, this is true regardless of the industry sector you work in. Lean works in all sectors, as Table 12.1 illustrates. We all perform generic processes at work – the common denominator is people doing work.
Table 12.1 All work is a process
| Manufacturing | Services |
|---|---|
| Strategic planning | Strategic planning |
| People development | People development |
| Design new products | Design new services |
| Process orders | Process applications |
| Purchase materials | Purchase supplies |
| Manufacture products | Provide services |
| Payroll | Payroll |
| Demand management and logistics | Demand management and logistics (most) |
| Accounts receivable | Accounts receivable |
| Accounts payable | Accounts payable |
| Recruit people | Recruit people |
Involving management in mapping key value streams builds a compelling motivation to improve performance. This is one of the main reasons why management must actively participate in Lean activity, as without practising Lean themselves managers will not fully understand the potential for improvement.
Self-efficacy
Self-efficacy is a further motivational factor to leverage for sustaining Lean. Self-efficacy is a person’s confidence in their capability to carry out an assignment. Without confidence in our own ability, we cannot perform to our potential. The central premise of Lean is to harness the full potential of your entire workforce. Previous performance experiences are the most significant source of acknowledgement that affects the development of self-efficacy. To build self-efficacy in a Lean environment we must build up people’s confidence and ability through continuous participation in problem solving and the implementation of small improvement ideas. Small is beautiful and bite sized improvements have a higher probability of success, hence bolstering self-efficacy. If and when ‘failures’ are encountered they must be treated as positive experiments (the connotation that a test of change can either pass or fail) and learning opportunities. They must not be treated as occasions to assign blame. This behaviour motivates people to continue to engage in problem solving. The resultant increase in capabilities that the problem-solving process develops furthers self-efficacy which in turn translates into a virtuous cycle of greater participation in improvement. A true win–win situation arises!
Oh, if only we had the luxury of time for improvement work!
‘You will never find time for anything. If you want time you must make it.’
Charles Buxton (philanthropist and politician)
One of the most common reasons I hear when improvement activity stops is ‘there is so much going on, we’re too busy to allocate time for improvement work’. The predominant culture in most of our organisations is one of fire-fighting – implementing temporary fixes to problems. In addition we are predominately working around or patching up problems without addressing their underlying causes.
Appreciate common and special cause variation
Common cause variation is a normal effect arising from factors interacting in your processes. For example, the time for your pizza delivery to arrive on a Friday night is a natural consequence of interacting factors such as customer demand (walk-in, phone call and internet), the number of employees working, pizza variations mix, and the expertise of those handling the order. The important thing to bear in mind about common cause is that it is a natural outcome of every process. A process with only common cause variation is considered to be stable and its outcomes are predictable. The pizza manager can use Lean to improve the performance of individual (bottleneck process first!) processes through methods such as standard work. This will improve the overall capability of the business and reduce the range and impact of common cause variation on the performance of the business.
Special cause variation, on the other hand, is variation in performance that can be attributed to an unusual factor or number of factors impacting on a process. It develops from some unusual event or incident (usually one of the 6Ms discussed in the cause and effect diagram, see Figure 5.1). For example the time it takes the pizza delivery man to deliver the pizza may be significantly affected by heavy traffic caused by a concert in the area or his car breaking down on his way to your house. The run chart also discussed in Chapter 5 (see Figure 5.5) is used to identify the early signs of a special cause entering a process and it enables us to react before the customer sees the effects.
Unfortunately it is common practice to observe organisations reacting to special cause variation, as in the example above, in unstable processes and believing that they are working on improving the capability of the process. A markedly more effective approach is to work on improving the capability of the process so as to minimise the probability of special cause(s) affecting your business. When stability increases, a virtuous circle transpires: people spend less time fire-fighting the chaos from processes and have more time to spend on further improving stability. This in turn generates even more time for proactive improvement work. Hence the more kaizen we can perform the more time we will have for kaizen in the long run and hence the potential for incessant increases in performance.
‘If you don't have time to do it right, when will you have time to do it over?’
Leverage the facts
Value stream mapping demonstrated that pre-Lean organisations spend 95% of their customer fulfilment time doing tasks that increase cost and do not deliver value that the end customer is willing to pay for! Under those circumstances, why would anyone spend all of their time on their regular job? When this realisation becomes accepted and engrained across the organisation, the excuse that there is no time for improvement simply becomes insupportable. Hence improvement work and kaizen activity should be mandated as an expected part of everyone’s job description. It should not be treated as a nice to do discretionary activity when spare time becomes available.
A powerful analogy to help people realise that we can make time for Lean is to connect with people’s outside passions such as their hobbies or sporting activities. We seem to be able to creatively make time for these dedicated pastimes in our lives despite many competing activities. Try to draw out ideas from your people about how we can treat Lean as a passionate pursuit and what resultant actions will allow us to make time available.
Leader standard work releases time for improvement
Leader standard work makes time for improvement by systematically asking people to examine their current workload and to make decisions about what current non-value-adding activities they should stop doing. Ask, what can be delegated straight away and in future through training and developing other employees to take on the tasks that, in turn, nurture that person’s growth through up-skilling.
‘Patching up’ a problem every day is hugely wasteful (this is like weeding the garden and leaving the roots intact) when compared with a countermeasure that tackles the root cause(s). Hence, the seemingly wasteful practice that some Lean organisations adopt of deliberately providing extra capacity in the work week to allow for kaizen activity is vital to sustaining the gains.
Stephen Covey talked about four spaces in relation to effective use of our time. Many tasks are urgent, the temptation to do them now is strong, but are they important? The four spaces are as follows:
- Important – Urgent: make the numbers (customer fulfilment tasks) and pressing issues. (Do these now, they pay the bills!)
- Not Important – Urgent: such as interruptions, many meetings (many meetings are enormous time wasters, track these for a week in your diary and you will be amazed at how much time they swallow up!). (Manage these by cutting them short, rejecting them and avoiding requests when working on high priorities.)
- Not Important – Not Urgent: such as leisurely surfing the web and time wasting. (Avoid these!)
- Important – Not Urgent: such as proactive Lean improvement work and development of others and yourself. (Plan in non-negotiable time to do this work after category 1 items are completed.)
The last space often seems a nice to do, but this is where we need to spend more time as this is the important work that assures the organisation’s future. Conscious awareness of these categories will help to ensure that you dedicate time for Lean.
The capability trap
In their seminal paper Nelson Repenning and John Sterman2 set out a compelling case for overcoming the dilemma of failures in process improvement endeavours. They provide the example whereby increasing the work week by 20% through overtime might increase output by 20%, however only for the duration of this overtime. In contrast, improvement in process capability will boost the output generated by every subsequent week that you work.
They state:
‘While it often yields the more permanent gain, time spent on improvement does not immediately improve performance. It takes time to uncover the root causes of process problems and then to discover, test, and implement solutions, and the resulting change in process capability (to become evident) ... As the performance gap falls, workers have even more time to devote to improvement, creating a virtuous cycle of improved capability and increasing attention to improvement ... Shortcuts are tempting because there is often a substantial delay between cutting corners and the consequent decline in capability (due to a “grace period” where the gradual decline in capability is not immediately noticeable).’
The authors explain that a common mistake that management make in light of the delay in performance improvement is to conclude that the particular improvement method is not working and it is abandoned. To overcome this requires the awareness that there is a ‘worse-before-better’ dynamic at play.
80/20 Pareto rule
The 80/20 rule (see Chapter 5, Section 1) is another powerful focusing principle in the quest to make time available for process improvement. Identify the 20% of activities that are delivering 80% of the effectiveness in your ‘routine work’ and transition the remainder of your time to the ‘non-routine’ activity of process improvement.
‘Besides the noble art of getting things done, there is the noble art of leaving things undone. The wisdom of life consists in the elimination of non-essentials.’
Lin Yutang (writer and inventor)
The Lean drive for perfection does not allow time for a breather. Consistency and initiative keep the Lean flywheel turning. When business gets frantic, that is when we most need Lean, because it is at these demanding times that Lean can provide the greatest benefit. Every big problem you now face that is making your day crazy was once a small problem. This is a powerful statement for you and your organisation to reflect on: what big problems do you have now that started out like grains of sand? The Lean system is designed to surface these small deviations at the point of cause, hence greatly increasing the likelihood of stamping them out in their infancy.
‘There is a time in the life of every problem when it is big enough to see, yet small enough to solve.’
Communication
The way that Lean is framed in your business will have a major impact on how the transformation process is perceived. Will we lose our jobs as a result of improvement or will we be saddled with more work? A communication plan is an essential element of Lean transformation. If you do this well you’ll alleviate employee concerns regarding the fear of the unknown.
Communicate the positive personal and business impacts to people. These include safer work areas, job security, higher levels of involvement in running local work areas, less frustrating wasteful work, and business growth due to shorter lead times, higher quality and lower costs.
Communication stops the rumour mill in its tracks. In most organisations there are tremendous communication deficits. After three days of hearing a message we recall only approximately 10% of the message. Hence a common rule of thumb is to ‘overdo’ the communication that you think is adequate by a factor of ten. To maximise the effectiveness of your communication it needs to be delivered in various ways such as group meetings, one to one coaching sessions, in print, via websites, and through the organisation’s visual management centres.
Middle management
Middle management, and typically supervisors, are arguably the group with most to lose and the least to gain from Lean. They are pulled from all sides, for example they have to keep their team engaged and also deliver the expectations of the senior management team. They are essential to success as they are the critical link between the frontlines and management. In the short term this ‘loss’ factor is really felt, as there will be additional work requirements (problem solving and people development), however over the longer term efficiency and productivity gains combined with reduction in mistakes and defects will be of colossal benefit to them. You need to ensure that your middle management have the full support of the top management team.
A propensity for risk taking
‘People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.’
Peter Drucker (writer and management consultant)
The creation of an environment where it is acceptable to fail is a further building block for sustaining Lean. Progress always involves a certain level of controlled risk taking. Playing it safe could turn out to be the highest risk strategy of all if your organisation goes out of business! Risk taking can be fostered when the leader recognises that efforts made for the right reasons will sometimes fail. A supportive response to these failures sends the message that risk taking in the pursuit of commendable goals can become a positive learning experience, will be tolerated, and indeed encouraged.
A rising tide should lift all boats
To support the ‘respect for people’ pillar, the benefits of Lean should not be confined to just increasing shareholder value. All stakeholders in the process should share in the benefits. Gainsharing ensures that improvement work benefits everyone. Gainsharing is a system in which an organisation seeks higher levels of performance through the involvement and participation of its people. As operational performance gets better, employees share financially in the savings. Gainsharing measures are typically based on True North metrics (people growth, cost, quality and delivery) which are more controllable by frontline employees rather than the macro, corporate wide, practice of profit sharing. Dividends are self-funded and calculated on savings generated through the Lean transformation.
Review
It is important to state that sustaining the momentum is one of the great challenges of all management and business practices; this is not confined to the Lean transformation. Application of the Lean methods and tools is necessary but not sufficient to realise the full potential of Lean to deliver sustained operational excellence. You must go further, and address the people side of Lean. The journey to transforming your organisation is all about leadership. Engaging everyone in the practice of everyday improvement is certainly a major shift for most organisations, and to sustain the Lean transformation you need to crack this challenge. Leaders have to develop effective tactics both to release time for improvement and also to weave improvement work into the daily routine work so that they become the inseparable way that the business is run. To make a leap of faith from the comfort of the status quo, employees need vivid and compelling communication throughout the journey. The frontline supervisor is of critical importance in making Lean endure. In reality Lean is two steps forward and one step back; mistakes and problems are good and need to be embraced. The positive bottom-line impact of Lean should be distributed so that all stakeholders benefit. Lean leaders recognise that they need to measure differently than in the pre-Lean environment to develop the new habits and behaviours that are required to sustain and continuously improve performance. Finally, to achieve true Lean means not just sustaining what we have improved, but also continuing to make more and more improvements along the staircase towards True North.