Management consultant guru and statistician Dr. W. Edwards Deming spoke frequently on executive responsibility in maintaining American employee’s intrinsic motivation. He warned that if CEO’s did not develop deep employment cultures built around capturing man’s innate desire towards improving the organization, the resulting loss of self esteem, dignity, and cooperation of the American worker would become nearly insurmountable. He believed this would ultimately become a root cause behind America’s decline in operational excellence, productivity, and ultimately become a limiting factor in America’s ability to compete in a global marketplace.
It turns out he was right, but what can be done about it? What tools can be used by executives today to reinvest in man’s intrinsic motivation to increase stakeholder’s rates of return on human capital, and lost productivity?
New Balance Tennis Shoes (NBTS) is a 2.0B privately held company that manufacturers tennis shoes using American labor in their various Mass. locations. Their competitors include Nike and Adidas, both of whom offshore manufacturing operations. To keep their 1,300 American jobs here in the U.S., founders Jim and Anne Davis recognized the need for investing in their employment culture, and process improvements beginning in 2003. When they began, throughput rates were dismal, and employees had few opportunities to improve the system.
Early on in their journey, executives, and employees at NBTS were introduced to Kaizen events. Kaizen is the Japanese word for “continuous improvement.” These events focus on improving anything relating to man, method, machine or material, and how they contribute to waste, and inefficiencies in the business process. Employees are responsible for identifying specific methods for achieving target conditions or goals during, and after the Kaizen event.
The goal of Kaizen events is to have employees study problems, and identify root causes of waste and inefficiencies in the system. They are designed to improve morale, business process, and the systems they function within. Ancillary benefits include increases in production rates, and capacity as waste is identified then eliminated by Kaizen participants.
Through the use of Kaizen from 2003-2008, work in process (WIP) at NBTS was reduced from 9 days to 4 hours. Production facilities were dramatically reduced in size, production capacity was expanded, and today it takes proud American workers just 4 hours to make a pair of tennis shoes. By comparison, it takes 6.6 overseas workers to match the productivity from just one American New Balance employee. (1)
What other tools can the CEO use today to overcome negative employee morale while improving organizational productivity?
Don’t wait for your corporation’s culture crisis to begin.
Doing well doesn’t mean you can’t do better tomorrow. Waiting too long to improve your culture may mean giving your competition an opportunity to pounce just like Toyota did to the Big Three 30 years ago. When Toyota first came to America in 1973 there was a gas crisis. Customers wanted options to replace their gas guzzlers. Once they experienced Japan’s higher quality, lower cost, and longer lasting vehicles, the needle had swung too far for American manufacturers to catch up.
Improve Your Organization’s Thinking On Failure.
Great organizations use failure as their catalyst to improve. Employees don’t fear retribution from disclosing failure to management; they are encouraged to do so.
Onboard a U.S. Navy aircraft carrier a missing wrench can lead to catastrophe if it is ingested into the engine of an aircraft. Wrenches must be accounted for at all times. When they are not, production is shut down while the teams look for it. When the wrench is located, the ensign who disclosed the loss of his wrench to a senior officer is rewarded by the executive in command. The failure is then studied in great deal to identify, and remove its cause. The executive wants to make sure he sends the right message to his team. Improvements can only begin once we identify where the opportunities exist for doing so.
Establish a constant purpose for your business, and make it clear to your employees. If for example your purpose is to stay in business, serve your customers, and employ people, it’s going to be much easier for employees to get on board towards contributing towards these goals than if your only objective is to make money. While making money contributes toward all of these objectives, employees will improve things when they understand their contributions towards your business’ purpose.
Reverse course by eliminating lay offs. New Balance executives assured their employees no one would lose their jobs if they contributed towards improving the business. Management created a Kaizen structure that enabled employees to do so. Employees deserve the chance to help you improve, and Kaizen enables this behavior .
If you engage your employees to out think everyone else, and give them a structure in which to do it, you’ll capture more market share, and become the dominant force in your industry while your competition wonders what you’re doing so differently.
Colin D. Baird, VP with Los Angeles-based Sullivan, Curtis and Monroe, implements strategies and process improvements that improve operating efficiencies while emphasizing a more holistic approach to reducing risks related to people, excess motion, and waste.