Continuing with our culture-related theme, we’ve found that the highest achieving organizations are those that have successfully planned and developed high performance cultures.
When helping clients build such cultures, our approach begins by identifying the underlying assumptions, beliefs and values that cause people to behave the way they do (the practices).
Key steps in developing a high performing/high achieving culture include:
Identifying a clear link between individual/team/department performance and organizational goals.
Helping people develop a clear sense of purpose.
Management devotes the necessary time and attention to a proactive and consistent performance management regimen.
A work environment that supports high quality and productivity.
People at all levels understand the core values and beliefs which drive behavior.
Leaders promote practices that are in sync with organizational values and beliefs.
Roles, responsibilities, and accountabilities are clearly defined.
Managers are skilled to coach for improved performance.
While these steps might appear simple, they are not easy to implement; and nearly impossible to achieve without significant contributions of time and energy from senior leaders. A well-defined performance management process is also a pre-requisite, which will be the subject of our next post.
A key focus of Conway Management‘s Continuous Improvement (CI) work has always been to help clients improve the way their businesses run; and, as noted in numerous posts, senior level management must provide support, exemplify desired behaviors and proactively lead the way in order to achieve a culture of CI.
Conversations about this reality often lead to questions about what constitutes a well-run company. While there are different ways to evaluate an organization, last year we shared a post about the Drucker Institute’s definition and listing of the “Most Well-Managed Companies” in the United States.
A most interesting aspect of this list was the holistic approach taken to rate the contenders. Data came from numerous sources, including employee ratings on Glassdoor to five-year shareholder returns and trademark filings, and the five criteria for placement were:
Employee engagement and development
According to articles in the Wall Street Journal, these benchmarks represent Drucker’s core, as has always believed companies should exist for purposes beyond profits, stressing that they should care for workers and benefit society.
These factors are well-aligned with our way of thinking, as a clear vision to external customers along with innovation, workforce engagement and workforce development have always been components of our programming.
It is, therefore, reassuring to see these items on a list such as Druckers’.
If you’re curious, below are the “top 10” finishers on this year’s list which, incidentally, includes all of last year’s “top 5.”
Among the highest achieving organizations we’ve worked with are those that have successfully planned and developed high performance cultures of continuous improvement. A vitally-important tool for bringing about a culture of continuous improvement and engagement within a workforce is communication, which many people agree is the most frequently-used skill in today’s workplace.
Aside from standard
team or project meetings, there are a number of ways leaders might go about
accomplishing this. For example, employee forums are an ideal way to
engage people around their work and contribute to the building of a high-performance
culture of continuous improvement.
Consider that one of
the most obvious yet often overlooked requirements for high performance is a
setting for employees to share and discuss problems and ideas for improvement.
But too often,
managers and leaders tend to believe that if someone has a really great idea
for improvement, they will raise it. Yet when we talk to people
close to the work, we more often hear ideas they have carried around for months
or even years but never found the right time or place to share; or felt their
idea would not be welcomed.
Even worse, when no
forum for sharing improvement ideas is provided, people adapt to the way things
are and stop noticing the waste—the elephant in the room—and
stop trying to think of better ways.
But it is important
for business leaders to recognize that some forms of communication are better
than others. In fact, as reported in a recent Society for Human Resource
Management (SHRM) article, a survey of 400 companies with 100,000 employees
each cited an average loss per company of $62.4 million per year because of inadequate
communication to and between employees. The article also referenced another
study showing that miscommunication in smaller companies of 100 employees cost
an average of $420,000 per year.
For example, many
organizations use suggestion boxes as forums. But the results are often
disappointing. While a suggestion box requires little time or effort to
initiate, its success relies on the ideas being completely and clearly
expressed in writing. Unfortunately, many people with good ideas simply
cannot express them well.
Furthermore, if a
suggestion requires more explanation or development before
it can be turned into a really great idea, the suggestion box does
not offer an opportunity for clarification, debate, or refinement. Even
worse, when the initial ideas are not fully formed or expressed, and management
doesn’t have an opportunity for clarification, the ideas are harder to act
upon, and often management loses interest. When people notice nothing
comes of the suggestion box, they stop offering ideas.
Here are some
additional examples of costly miscommunication in business environments
identified by Helen Wilkie, a consultant and author specializing in profitable,
Long, boring, poorly planned unproductive meetings that reach no conclusion and serve no purpose
Sales presentations that show no concern for, or understanding of, the client’s needs
Wasted time due to miscommunication about time or scheduling
Badly written e-mail messages that cause misunderstandings, ill will and wasted time
The email habit of unnecessarily “replying to all”
Employee alienation caused by managers who don’t listen
Lack of understanding between people of different age groups
Lack of understanding between male and female employees
Ultimately, the best
forums are regularly scheduled gatherings in which people can surface and
discuss problems, waste, and opportunities for improvement.
Examples of effective
discussion forums were shared during one of our Partners in Improvement
sessions, which included:
Monthly safety talks
at the end of which the company president discusses pertinent issues with team
members and provides input as well as support
session between management and team members during which leaders not only offer
ideas and support, but also gather feedback on successes and challenges
Regular “town hall”
meetings where he shares information about what is going on and what to expect,
and also provides an opportunity for people to raise questions or concerns
Since our inception we have stressed the fact that an organization’s leadership must champion a Continuous Improvement (CI) effort if it is to become cultural and if it is to succeed in a sustainable fashion.
Along similar lines, the Enterprise Engagement Alliance has shared data as well as experiences indicating the same holds true for engaging employees and customers; and just like a culture of CI, a culture of engagement generates a measurable return on investment.
“A CEO-led strategic and systematic approach to human capital management can enhance performance and create a better experience for all,” an article on the Enterprise Engagement Media website states.
“Without the leadership of the CEO, it is impossible for an organization to fully engage all its stakeholders in its brand, mission and goals—customers, employees, distribution partners, vendors, communities, shareholders, etc.—or to achieve measurable ROI.”
The Enterprise Engagement Alliance was the first to give a name to this strategic and systematic process to connect and align all stakeholders toward a common brand, mission, values, and goals, naming it “Enterprise Engagement.”
Based on a recent interview with Aron Ain, author of WorkInspired, How to Build an Organization Where Everyone Loves to Work, and CEO of Kronos, a leading global provider of workforce management cloud solutions, our previous two posts have demonstrated that creating a high-trust culture is worth the investment — just as Covey predicted in The Speed of Trust.
Kronos’ success nicely exemplifies what a culture of trust can yield. But building this culture isn’t easy.
“We’ve worked incredibly hard to instill trust throughout the organization, one manager at a time, starting with me,” Ain said. “First, we give employees atypical degrees of latitude and freedom. Until proven otherwise, we assume their competence, judgement, and good intentions.”
Kronos also deploys tools that support the creation of a high-trust organization, such as Predictive Index, to help people get to know one another, and a performance feedback and rating system that gives substantial weight to an employees’ effectiveness at building trust. They also establish HR policies that demonstrate trust as an organizational philosophy, such as work-at-home options, and unlimited time off.
In addition, the management at Kronos works very hard on three specific management behaviors that support effective deployment of trust:
Communication is key, as trusting your people to just do what they think is best for the organization doesn’t work out nearly as well if internal communication is weak. In fact, communication is so important that Ain devotes the second chapter of his book to overcommunication.
“Don’t just communicate,” he says, “overcommunicate. You really can’t do it enough!” He goes on to note that inquiry and listening are just as important forms of communication as updating and explaining.
The courage to lead is a high-profile concept at Kronos. Patrick Lencioni in The Five Disfunctions of a Team identifies the lack of trust among a management team as the root cause of most poor performance. At Kronos, the concept of courage has an even higher profile, as managers are required to lead with genuine courage. They have developed a Courage to Lead program, which has three major sections: Be Bold & Humble — Challenge & Support — Disrupt & Connect. And the first principle under Be Bold & Humble is: ‘Trust others, both within and outside your functional area.’
Studying results is the third component of the Kronos formula for building a culture of trust. Trust doesn’t mean assuming everything will all work out as planned. Far from it! In fact, Kronos’ approach aligns nicely with Deming’s Plan-Do-Study-Act cycle: they plan carefully, try out an innovation or improvement, then study the results, and act on what they learn.
“We measure everything,” Ain says. This is their commitment to “exposing reality” — seeing how the plans and decisions are actually working without succumbing to wishful thinking.
Our previous post identified the role that trust plays in an organization’s success, and referenced it as “the soft concept producing results that are hard to beat.”
While trust may seem too soft a concept to produce a competitive edge, the facts indicate otherwise.
In fact, a high level of trust is essential to creating an agile, highly competitive organization and here are four reasons why.
1.)No Trust — No Speed In a world where new challenges arise very quickly, it is the failure to act, failure to improve, and failure to innovate that poses the biggest risk to a company — not the risk of making a mistake. However, to an individual in a low-trust environment, by far the biggest risk is making a mistake. For these individuals, trying something new is much riskier than doing what’s been always been done. Innovation or even simple improvement is not going to happen. The whole organization slows down.
Covey, in The Speed of Trust, puts it this way: “When trust is low … it places a hidden ‘tax’ on every communication, every interaction, every strategy, every decision.” People don’t fully hear what their leaders are saying, because they factor in guesses about the leader’s intentions. They wonder how transparent their leader is being. Employees don’t buy-in to decisions that they don’t trust.
Aron Ain, author of WorkInspired, How to Build an Organization Where Everyone Loves to Work, and CEO of Kronos (a leading global provider of workforce management cloud solutions), points out that lack of trust places “a huge overhead burden on a relationship.” He insists that when you employ someone, you should go ahead and trust them! Will you get burned on occasion when trusting people?
“Absolutely!” Ain says, “But almost always my trust in team members has proven well-founded. And the benefits are numerous.”
By building a culture where employees know they are trusted and where they trust their managers and teammates, Kronos has created an organization where it is safe for people to be creative and to aim for the best possible outcomes, continuously getting better and better.
2.) No Trust — No “Exposing Reality” Exposing reality means trying very hard to look at things the way they really are, rather than the way we wish they were. As Ain points out, “the faster you see things as they really are, the faster you can get to work on improving them.”
But in a low-trust environment, people are especially motivated to gloss over uncomfortable truths and to declare victory and move on rather than checking to see if they did or didn’t get the results they expected. Trust enables us to admit what we don’t know, recognize and recover quickly from mistakes, and to put uncomfortable information, questions, and contrary opinions out in the open, where the team can work through them with honesty and passion to arrive together at the best strategies and decisions.
3.) No Trust — Poor Results In a low-trust environment, employees hold back information or ideas that seem risky to share, so leaders make decisions based on incomplete information and without knowing all the potential consequences. And when employees believe their managers are making decisions without all the relevant input and information, they often question or even slow-walk the decisions.
Covey cites polls showing that only 45% of employees have trust and confidence in senior management. Lencioni, in The Five Dysfunctions of a Team, places lack of trust at the foundation of his pyramid of dysfunctions culminating in poor results. Without trust among a team, people keep their cards close to their chests. They are afraid to admit the limits of what they know, afraid to admit any vulnerabilities. Because they don’t trust one another, they fear conflict and withhold uncomfortable information and dissenting views. Without complete information, these teams make poor decisions, and the decisions they do make are poorly executed because they do not arrive at a shared commitment to the decision unless they have aired and resolved dissenting views. Thus, a lack of trust leads to both flawed strategies and poor execution.
4,) Trust Inspires and Engages Covey observes that “trust is one of the most powerful forms of motivation and inspiration. People want to be trusted. They respond to trust. They thrive on trust.”
This is exactly what Ain sees happening at Kronos. “Because we place so much faith in employees,” he explains in WorkInspired, “they return the favor, placing a remarkable degree of trust in us. Their trust in turn leads to far better performance — more innovation, quicker recovery from mistakes, more energy and enthusiasm at work.”
The next step, of course, is identifying the best way to build a “culture of trust,” which will be the subject of our next post.
You might call it a “secret weapon” but, to be honest, it is the exact opposite. Because unlike a weapon, it is constructive rather than destructive; the only harm it could do a competitor is to leave them behind.
And it is anything but secret!
In his recent book, WorkInspired, How to Build an Organization Where Everyone Loves to Work, Aron Ain openly shares the pivotal role it has played in Kronos’s amazing growth story.
This “secret weapon” is trust — the soft concept producing results that are hard to beat.
The role that trust plays in an organization’s success has been written about before by keen observers of human and organizational dynamics.
Patrick Lencioni in The Five Disfunctions of a Team identifies the lack of trust among a management team as the root cause of most poor performance.
Stephen M. R. Covey in The Speed of Trust: The One Thing That Changes Everything passionately echoes this view, citing research indicating high-trust organizations out-perform their low-trust competitors by 300%, because a lack of trust increases costs while simultaneously reducing an organization’s speed and agility.
What’s different about Ain, CEO of Kronos, a leading global provider of workforce management cloud solutions, is that he can tell us how trust is working in action today and about the tools and methods in place to support the practice and enhance the effectiveness of trust.
At Kronos, everyone is expected to give trust both within and outside their functional areas and to practice behaviors that earn the trust of their employees, teammates, and managers. According to Ain, the culture of trust contributes to much more than high engagement and retention, as important as those are, but to amazing business results.
And the results Kronos has achieved are great! Revenue has tripled; Kronos has surpassed 35,000 customers worldwide, innovations are rolling out faster than ever, and employee engagement scores are through the roof. Kronos once again occupies the #1 spot in the Boston Globe’s Top Places to Work list in Massachusetts. It received an award from Fortune Magazine for Best Workplace for Millennials – 2018. It is on both Glassdoor’s and Fortune Magazine’s lists of top 100 places to work and has received numerous other awards for workplace engagement.
Based on a recent newsletter by our associate Sheila Julien, our next post will share four specific reasons why “trust” works and why it is essential to creating an agile, highly competitive organization.
The point has been made, in prior posts, that “change” is not always perceived as being good, and instead tends to promote fear, uncertainty, doubt; and even resentment!
Consider that, in organizations of all types people tend to look with skepticism at new policies and procedures, and look with deep concern at new compensation plans or updated benefits programs. Similarly, in their daily quest for new customers, sales people constantly struggle to overcome buyers’ comfort with the status-quo; and people at all levels regularly cringe at the suggestion that there might be a different or better way to do their jobs!
Yet without change comes stagnation… and potentially worse things too. Current-day examples include Polaroid in instant photography, Blockbuster in video, Xerox in copiers, or the Yellow Pages! Each of these household name enterprises experienced significant declines, or worse, as competitors introduced new and better alternatives.
The cassette tape replaced the eight-track, but was then outdone by the compact disc, which was undercut by MP3 players… and the list can go on.
A Selling Mission… If we’re to learn from these examples, then we must accept the fact that change — either in the form of innovation, continuous improvement or both — is a critical component of growth and ongoing success. Without innovation and change we run the risk of losing our competitive position or potential obsolescence.
“Whatever made you successful in the past won’t in the future,” said the late Hewlett Packard CEO Lew Platt.
But if people tend to resist change as previously noted, how might managers or business owners best go about getting the team to accept it — to buy in? How can we help people more readily embrace improvement programs, try new protocols, accept new pricing models or generally believe in the up-side of change?
Simply stated, we must sell it.
Just like the sales and marketing experts who create the “new and improved” ad copy, slogans and selling presentations, we must sell the concept of change to our staff members before trying to present or roll-out new policies, procedures, campaigns, programs or plans.
And just like any sales mission, this will require forethought and planning.
We might start by identifying how the team will benefit from a proposed change. What’s in it for them? What are the consequences of not changing? What will it cost? What opportunities might we lose?
What’s the competition doing?
The next step is to determine how to properly position a proposed change. Since we know there is a tendency toward defensiveness, it’s important to make people understand that they are not the problem. In other words, a change in policy or approach need not mean that the team has been doing things the wrong way. Rather, it means the world is changing and we must change too, lest we fall behind.
Finally, once the presentation is made and the new whatever is launched, there must be follow-up reinforcement and assessment. Has everything worked as we’d hoped? Should we modify the new plan? Are there unforeseen consequences? While we don’t want to send a message indicating we’re not resolved to the new program or approach, it is also a good idea to let everyone know we’re fair and open-minded — that at the end of the day we’re all on the same side.
Change may be unsettling, but without it our futures are at risk; and there are clearly ways to minimize the negative effects. It will require effort, planning and, like any selling mission, persistence, as behaviors and attitudes are not easily influenced.
Margaret Thatcher may have summed it up best when saying, “You may have to fight a battle more than once to win it!”
It has happened to most of us. Has it happened to you?
That is, has there been a time when data supported a decision you knew to be the right one, but for some reason or reasons you did not get the outcome you expected?
Perhaps you find an exciting investment opportunity like the winners you have spotted before, but it yields mediocre or poor results. Or despite your experience and successful track record when judging candidates, a person you just “knew” would be a good fit turns out to be a bad hire.
With experience can come wisdom… but also confirmation bias.
Confirmation bias is the tendency to pursue and embrace information that matches our existing beliefs. We tend to seek out and enjoy people who write or say exactly what we think. We gravitate toward these sources not for information but for confirmation.
Researcher and writer Thomas Gilovich posits the “most likely reason for the excessive influence of confirmatory information is that it is easier to deal with cognitively.” It’s easier to think what we think!
Yet confirmation bias in business can be especially hazardous and costly to highly-experienced and successful individuals. These minds are adept at spotting patterns, learning from experience, scanning the horizon and connecting the dots. If that describes your talents, take a look at this classic puzzle nicely presented by the “The Upshot.”
If you attempted the puzzle, how did you do?
For those who opted out, in this puzzle participants are given a numerical pattern and are asked to determine the underlying rule. The pattern is quite simple, and participants can test their theories as often as they like before specifying the rule. Yet 77% of participants fail to identify the rule because as soon as they find a pattern that supports their theory they conclude it is the correct rule.
In other words, 77% of participants succumb to confirmation bias.
This is a common occurrence in business. When trying to solve problems or make decisions we overwhelmingly look for patterns that support our theories rather than looking for data that would clue us in that we have missed the mark. And with each piece of data that does not refute our theory, we become more confident in our belief.
This exercise shows how people tend to work at proving their theories right, instead of robustly testing the theories to prove them wrong. Once we have seen enough supporting evidence to confirm we are right, it is far more natural for us to fully embrace our premise or idea.
For instance, maybe we are tasked with determining why a certain work process is not being done well. Is the work done less well by inexperienced employees, or when the machine is overdue for maintenance, or when the materials have a certain characteristic?
We could test all three of these ideas with data. But our natural confirmation bias makes us far more likely to look for evidence that the idea we favor is correct than to look for ways it may be mistaken. So, we start testing the idea we think is most likely and as soon as we find enough evidence to support it, we risk diving into the solution and excluding the other possibilities; and we could very well be headed down a path of action that is sub-optimum for our organization.
In our next post we’ll take a closer look at examples of confirmation bias in the workplace and steps that can be taken to avoid it.
As you are most likely aware, “utilization” is a measure of the actual number of units produced divided by the number possible when machines and people work at full capacity.
Conventional wisdom says that the best way to maximize profits is to encourage every department within an organization to achieve 100% utilization. Like so much of conventional wisdom, this has a ring of truth to it; and it has the added beauty of simplicity. We can evaluate and reward each department independently of one another, and if everyone is given incentives to get as close as possible to 100% utilization, then the company will surely be maximally profitable.
But this premise will fail us in the real world… a world riddled with variation.
For example, let’s say a company has three operations: • Glass Blowing • Filament Insertion • Cap & Wrap
Utilization of the 3 departments is 50% in Glass Blowing, 100% in Filament Insertion, and 80% in Cap & Wrap. So where do you focus your improvement efforts? The natural conclusion is that you would focus on increasing utilization in Glass Blowing: either by increasing production (which would simply increase the inventory of bulbs waiting for insertion) or by decreasing capacity.
But if you look at the throughput of the process as a whole, you see that Filament Insertion is the bottleneck. At 100% utilization, they are unable to produce enough to keep the next operation, Cap & Wrap, fully utilized. Furthermore, Glass Blowing, despite the lousy utilization numbers, is already piling up inventories of bulbs waiting for filaments. The utilization numbers suggest that Filament Insertion is the last area needing improvement, but to improve the process flow, it must be the first area to improve.
If the world were perfectly predictable, we could reduce the capacity in Glass Blowing and Cap & Wrap to exactly match Filament Insertion to achieve 100% utilization. But if we did so in ‘Murphy’s world,’ any variation in glass blowing production — such as machine downtime, absenteeism, yield deterioration, material availability or quality issues — will not only impact Glass Blowing utilization numbers, but the bottleneck — Filament Insertion —will also be idle! Production opportunity lost at the bottleneck is lost forever. Instead of trying to optimize individual operations, identify the bottleneck and make sure there is enough capacity in the feeder operations to ensure that any disruptions do not impact the utilization of the bottleneck capacity. Instead of aiming to maximize utilization at each operation, as conventional wisdom would have us do, we must find and eliminate waste at the ‘bottleneck’ or ‘rate-limiting’ step in order to increase profitability.
Challenges and best practices associated with continuous improvement