The Ohno Circle: Watch & Learn!

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The most important responsibility a manager has is to continually improve the system of work so his or her people can work more effectively and efficiently, producing higher quality and greater value for the customers. We surface and eliminate the waste in a variety of ways, asking people close to the work for their input, studying how other companies have achieved improvements, bringing in consultants and studying journals.

However, the most effective and least expensive process improvement method may be the simple method of looking and thinking about what you see.

For example, a small team of professionals was asked to determine how to fix the problems with a multi-million-dollar robotics line. This robotic line was designed to prevent stock-outs and excess parts inventory on the assembly line by using bar-coded totes, an overhead conveyor belt, and scanners and switches to send a new tote of replenishment parts to exactly the right workstation.

When a tote was emptied, it was placed on the return conveyor and when the return scanner read the barcode, the tote number would be captured. The scanner would record the emptied tote numbers, and every three minutes this list would be transmitted to the inventory software. Inventory would be decremented for workstations that had been assigned that tote number and a replenishment order would pop up at the material handling station.

The system failed so miserably that the supervisors had to take a complete physical inventory at the start of every shift to correct the inventory records.

The improvement team spent several weeks conducting interviews and studying the floor layout diagram, the process flows, and the computer code to crack a mystery that, as it turned out, could have solved in 20 minutes using the ‘Ohno Circle’ method.

As you may know, Taiichi Ohno is credited for much of the thinking behind the Toyota Production System, and he invented a novel method of making improvements. He would go to where the work was being done, draw a chalk circle on the floor, and stand in it.

He would stand for hours, watching and thinking about what he was seeing. He would look for what was getting in the way of people creating value and he would study the situation to determine what was causing it. This gave him the insight he needed to make lasting improvements.

Of course, the team of problem solvers had toured the line, but while they had looked, they had not watched. If one or more of them had stood in one place long enough to watch carefully, they would have seen the returned totes drop off of the return conveyor and nest one inside another. The next minute, they would have seen someone take the newly dropped empty tote from the top of the stack and use it for the next order. The material handler would key in the tote number, the new workstation destination, and the part numbers being sent there and send the tote on its way — often less than a minute after the tote had dropped off the return conveyor.

That is, the observers would quickly have realized that the tote re-use process was too fast for the information flow — which reported the list of emptied totes only once every three minutes.

Whenever a tote was reused before the list was sent, the inventory of the new workstation would be decremented instead of the inventory at the workstation that had returned the tote. With this insight, the problem was easily solved — change the frequency of the systems updates or change the return tote process so that no totes were refilled within 3 minutes of dropping off the belt. The latter was the easier solution, and a poka-yoke was quickly implemented to make it impossible for a recent tote to be selected and keyed in.

A little bit of watching can tell us a lot.

Increasing Customer Satisfaction

Dr. Deming

There are a variety of approaches to hearing the Voice of the Customer, a voice with which we should be very familiar!

Consider that we can know all there is to know about our internal processes and still not know enough about them to increase client satisfaction. For this sort of challenge we need additional tools and methods.

Customer Surveys are a staple for measuring and possibly surfacing areas for improvement. A popular tool for measuring customer satisfaction is the Net Promoter Score. Studying variation in the Net Promoter Scores (NPS) by area, customer type, and over time can help pinpoint trouble spots that are impacting customer satisfaction.

Analyzing customer Complaint Logs can help identify and address the problems that customers have identified and shared, but this is a bare minimum in the effort to increase customer satisfaction. The Complaint Log is a place to seek information about where we are falling short on what the Kano Model calls “Must-Be Quality.” The absence of the quality dissatisfies even though the presence in itself will not please the customers because it is assumed. Addressing gaps in the Must-Be Quality can lift one out of the hole, but will never lift customer satisfaction any further.

To effectively increase customer satisfaction, we need to create and deliver work that will delight the customers. One client described his method as the Ambassador Visit: “I go to meet with the customer, I say thank you for your business, and then I shut up. And listen.” Providing a good forum and opportunity for the customer to express what they like and don’t like is very useful. What’s more, the Ambassador Visit provides a forum to discuss what the customers see coming down the road, so we can proactively anticipate and address their needs.

Another client finds tremendous value in visiting clients as they work with the product — meeting them in the field to watch, listen, and study the customer’s challenges and how the product currently helps them — and how it could help them if something were to be changed. This approach, sometimes called Contextual Inquiry, provides value in understanding what is truly working as expected for the customers and how we can solve problems for the customers that they did not even think to mention.

Regardless of which or how many of these tools we might use, we might also keep in mind, on a daily basis, Dr. Deming’s frequent quote, “Quality is for the customer.” He also reminded us, “No customers, no orders, no jobs!”

Using Flow Charts

Often we have a process through which we want to increase the throughput or output without adding resources. In these situations a Process Flow Chart or Process Evaluation Chart is an excellent tool to start with.

A Process Flow Chart or Process Evaluation Chart (the latter is populated with measurement data) can be created by bringing together the participants in the process and mapping it out together. Some organizations believe that mapping the processes with the frontline associates always results in lightbulbs going on and the associates voicing concerns and ideas once their process is on the wall.

There are always surprises, they find ‘black holes’ or dead ends, see the ‘wastes’, waiting and handovers get visible and they learn what the other ‘swim-lanes’ (teams or team members) do and how what they do impacts others and vice versa. They always start to create action logs based on the concerns/ideas and they serve as the basis for the improvement project.

Another approach is to start with observation. Follow the process, observe the work and gather what data is available about the current process. This can be compiled into a draft of a flow chart to bring to a meeting with participants from all areas of the process under study. At this meeting, the group goes through the draft, discussing, adding to, questioning, and correcting the draft to better reflect reality.

Below is a graphic summary of flow chart symbols and their meaning:

Clarity Applies to Processes Too

SIPOC

Our previous post focused on performance management and on how important it is for managers to express clear expectations when engaged in the practice.

Along similar lines, ‘clarity’ applies to processes too.

In fact, over the past fifty years, a tremendous number of analysis and problem-solving tools have been developed and are available to deploy in the unending quest for clarity, with the end goals being better service to customers and producing greater value with less waste.

In today’s world, the efficiency and efficacy of continuous improvement depends on selecting the best analysis and problem-solving tool at the right time; and, perhaps, the most important tools for success start with scoping.

SIPOC: Defining and Scoping Improvement Projects
One of the most valuable tools early on to effectively define the process, problem, and project is the SIPOC (Suppliers, Inputs, Process, Outputs, Customers).

Some organizations always start with the SIPOC to get the team on the same page so they can answer:

  • What is the process?
  • Its purpose (why are we doing this)?
  • Who owns the process (surprisingly sometimes not obvious/known)?
  • Who are the customers/suppliers?
  • Who is the primary customer?
  • What do they get out of the process or provide for the process?

Once the team members have achieved clarity and a shared high-level understanding of the process using the SIPOC, and have gathered the data that enables them to measure the gap between the current situation and the ideal, they can create a good problem statement, objective, scope, and timetable.

These together are key components of a Project Charter, the ‘North Star’ of a project that helps keep the project moving forward to successful completion.

Managers Should Focus on 5 Key Areas of Clarity

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In a past post we shared insight into the importance of performance management and the impact front line managers have on workforce retention as well as people’s productivity and engagement levels.

In that post, one of the best practices we shared was for managers to set clear expectations. It was also noted that, according to data published by SHRM, only about half of all US employees say they know what is expected from them at work.

Taking this concept a few steps further, there are five key areas in which the most effective managers provide clarity as part of their performance management process:

  1. Clear expectations
  2. Clear capability
  3. Clear measurement
  4. Clear feedback
  5. Clear consequences

How Do You Motivate People to Improve Their Performance?

motivation

Concluding our series on performance management, today’s focus shares input from our Partners in Improvement on how to motivate people to improve their performance.

During our discussion, some focused on the individual quantitative measurements to focus and motivate individuals on achieving important goals. For example, tying individual goals to the organization’s KPIs was cited as an effective way to align behaviors with goals and make sure everyone knows exactly what they are expected to do.

Other Partners said that group rewards and recognitions were more effective than individual metrics. For example, one Partner described how teamwork deteriorated to the detriment of the organization as a whole after his organization switched to individual metrics and rewards instead of rewarding everyone based on achievement of the company’s key strategic metrics.

We also discussed experience with financial rewards relative to intrinsic rewards, such as recognition.

Financial rewards did not necessarily produce the best results. One participant explicitly pays people for participating on improvement teams in some of their plants while one of their Midwestern plants is prohibited from paying for participation. The Midwestern plant relies on intangible rewards such as recognition and expressions of “thanks.”

Surprising to many, the Midwestern plant had a much higher rate of participation than the others, seeming to demonstrate that intangible or ‘intrinsic’ rewards can be more effective than monetary rewards.

Another organization found recognition, sometimes coupled with small gift cards, was an effective method for their organization.

The keys to effective use of recognition as a motivational method are timeliness and making the recognition public. This is no time to keep your appreciation under a barrel. One successful program is called ‘Six Star’: people award one another stars for helping an internal or external customer. When someone gets 6 stars, they get a gift card and the ‘star of the month’ gets a party, recognition, and a parking space

Conclusions:
While there are clearly a wide range of views about how to manage and motivate performance, several final conclusions generated quite a bit of support:

  • Performance Management must be about much more than individual performance measurement. As Deming said, over 90% of problems are caused by the system not the person. To manage performance, we must manage the system by which people, plant, process interact to produce results.
  • Frequent observation and feedback is more helpful to people than formal annual reviews.
  • Frequent communication about what an organization needs and wants greatly increases the odds that the organization will get what they need and want.
  • Group rewards encourage teamwork, while individual rewards encourage an individual to optimize his or her own goals even if it may sub-optimize the organization as a whole.
  • Tying money directly to performance appraisal can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.
  • Avoid managing performance through the rear view mirror – be proactive!
  • Make more of the goal setting process which produces targets against which we measure performance and take corrective action.

How Do You Manage Performance?

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Continuing with the theme of “performance management” from our previous post, which shared input from our Partners in Improvement, this post will focus on the specific activities associated with the practice.

While most readily agree that managing employee performance requires first and foremost clear communication of what is important for the organization and how the individual could best contribute, they also recognize that, as one Partner put it, “the #1 reason people don’t do what you want is that they don’t know what you want.”

So, communication about targets and goals can be listed as the first requirement or item on the list of “best practices.”

Further, this communication must not only be done as part of the strategic planning and execution process, but also as part of the everyday conversations and coaching between employees and their managers.

Along similar lines, coaching was considered to be the most important and effective Performance Management method.

This would include providing frequent constructive feedback for individuals, implementing a mentorship program, coaching of teams, and
senior managers exhibiting the behaviors that they are looking for.

The Partners recommended sitting down with people regularly to have a dialog about what is going well, what help they need. Immediate feedback is most useful.

The next activity identified and discussed was performance reviews. Not surprisingly, annual performance appraisals came in for some criticism — but there were also some suggestions for how they might be done better.

Several Partners mentioned that the annual reviews were a source of angst and dread, perhaps by both parties. They were always late and were considered among the more onerous of management responsibilities.

Others questioned their effectiveness. For example, when a bank implemented formal performance appraisals that evaluated Loan Officers on the dollar value of loans approved and measured the Credit Department on ‘the quality of the loan portfolio’ (i.e., no defaults), it reduced profits and created dysfunction and animosity. The Credit Department was careful to take no risks, while the Loan Officers focused on quantity, hoping that something, at least would be approved.

The bank as a whole suffered.

This example is by no means an exception — Purchasing Departments are often measured by purchase prices, leading to excess inventory when they order in bulk and substandard material when they give too much weight to price instead of incoming quality and timeliness. One of the drawbacks of annual individual performance reviews – especially when tied to compensation — is the high risk of driving the optimization of individual metrics while sub-optimizing the organization as a whole.

But one of the Partners said that their performance review process was greatly improved by increasing the frequency from annual to quarterly. The feedback discussions were both more timely and less stressful.

Others found that when reviews were de-linked from salary adjustments they could focus more effectively on coaching. But then another participant said that they had stopped doing reviews when they had a salary freeze and not able to offer bonuses because the reviews and the salary increases were linked to one another so closely,

Finally, the amount of time spent on performance management varied from 10% to 45%, and it seemed to differ in large part based on whether an organization was focused on formal annual reviews or on frequent coaching or people and evaluation of processes. The majority leaned toward more time and more frequency of interaction.

Our next post will complete the series and will focus on the motivational aspects of performance management.

What is Performance Management?

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Recent posts have focused on retaining and engaging people, so it seemed logical to continue the discussion about how we interact with one another in the workplace.

Certainly Performance Management embodies this activity.

When we asked our Partners In Improvement to define Performance Management, we heard a range of perspectives: the strategic orientation of the organization, process Performance Management, setting of goals and objectives, individual performance appraisals, daily direction and feedback which reinforces the behaviors we are looking for, providing tools and coaching to help people be successful, and rewards and recognition.

From the strategic perspective, Performance Management begins with the identification of what’s vital to the organization. If these priorities are not clear and it is not clear what role everyone plays in the priorities, the rest Performance Management is unlikely to mean much. One of the Partners measures customer loyalty, sliders/defectors, and Continuous Improvement (CI) impact at all levels.

Several of the Partners pointed out that Performance Management refers not just to people management, but to process management, and plant management (which one of the Partners called the “3 Ps – People, Plant, and Process”).

One of the Partners explained that she always starts by measuring the performance of the process. To improve the process, based on the root cause analysis she would work to improve the people performance, tools, materials, methods, the environment, or whatever factor was driving the performance of a process.

However one might define the practice, one issue on which everyone agreed was that Performance Management must be an every day job for managers, and it must be approached on a proactive basis.

Our next post will pick-up from this point, and will share perspectives on the specific activities that comprise an effective approach to Performance Management.

Retaining Talent Through Engagement

Continuing the theme of “retaining talent” from our previous post, we have found the combination of productivity and engagement drives many things, including employee retention.

In reality, and like most things in business or in life, it’s the ongoing execution, work, measurement, and improvement projects (which sounds remarkably similar to Deming’s Plan—Do—Study—Act cycle) that will yield better performance results as well as higher levels of employee engagement.

In fact, we have found engagement can be a bi-product of productivity, as opposed to the other-way-around, which is the more accepted ‘conventional wisdom’ opinion.

Thus, it is by taking a formalized approach to creating a workplace culture that is linked with team productivity, performance, and job satisfaction that an organization will achieve the fore-mentioned levels of performance gains, engagement, and talent retention.

In a white paper shared in the past, we described an approach that aligns nicely with the ISO 10018 People Involvement and Competence guidelines. It incorporates Continuous Process Improvement (CPI) as well as Continuous People Involvement (CPI), so we call it CPI².

ISO 10018 and the concept of CPI² will require a formalized plan for improving the work and the workplace… a formalized plan for helping people to achieve higher-levels of productivity and job satisfaction, which will yield better business performance as well as the “skyrocketing” levels of engagement we all strive to attain.

To achieve optimum results, a system for gathering, synthesizing, and analyzing data must be developed, followed by a rigorous method of priority-setting to decide what to work on.

People at all levels must be involved; they must be educated, empowered, and engaged so that the concept of improving both their work and their workplace becomes cultural, and so they become emotionally-invested in their work and workplace.

Supporting this perspective is research conducted this past year by Dale Carnegie and MSW Research, which revealed that although there are many factors that impact employee engagement, there are three key drivers:

  1. Relationship with immediate supervisor
  2. Belief in senior leadership
  3. Pride in working for the company

Recognizing these drivers as “targeted outcomes” is a good first step for business leaders who would like to initiate and document (a-la ISO 10018) a formalized approach to engaging people into their organization’s quality and improvement system.

A Good Question About Retaining Talent

retain

We all know that unwanted workforce turnover is disruptive and costly*. In a recent article, fuse, a workforce management firm, shares four of the most common reasons employees opt to leave a job. It’s likely we know these reasons as well…

But the good question posed in the article is whether or not we are taking proactive steps to avoid unwanted turnover!

In case you’d like a quick refresher, the article identified the following as the most common reasons employees leave:

  • Poor relationship with their manager
  • No clear path forward
  • Good work isn’t valued
  • The job doesn’t promote work-life balance

With a little forethought and planning, it shouldn’t be difficult to avoid these pitfalls; and, as the article states, “With the market for skilled talent becoming more and more competitive, smart employers will take stock and do whatever it takes to keep their best and brightest satisfied.”

To add additional perspective, when Gallup announced that the percentage of engaged workers had, for the first time in a very long time, increased just before the pandemic, their research showed that the primary reason for the increase (from 30% to 36%) was that organizations had made improvements in their approach to developing people.

  • the cost of replacing employees is somewhere between 90-200% of their annual salary based on a recent SHRM study!

Challenges and best practices associated with continuous improvement