We are frequently called upon to assess organizations’ overall operational performance and provide recommendations for improvement. There are an infinite number of items that can be assessed – on time delivery, defects by department, cleanliness, inventory turns, over-time, rework, visual management, etc. Determining which factors are most important and how each should be weighed is difficult. Many organizations and consultants have detailed assessment methodologies that require many weeks of data collection, interviews, and assimilation to produce a “score”, which usually only provides an indication of which areas need focus. Rarely are specific improvement actions are provided.
Save your time and money and forget about the complex assessments. There are four basic elements that can be quickly assessed and fixed if broken.
1. Well defined and communicated goals and objectives (G&O’s). The first question that we ask business leaders is, “What are your goals and objectives?” This question must be answered before a meaningful action plan can be created. Clearly understood G&O’s help employees make smart decisions about what needs to be done and why. If goals and objectives are not clear, employees may focus limited resources (time and money) to areas that are not important to the strategic business goals. When creating G&O’s key points:
- Ensure the G&O’s are balanced; there should be something for every customer: Safety / Job Security (Employees), Quality (External Customer), Delivery (External Customer), and Cost (Shareholders). Myopic focus on solely cost is a red flag.
- The goals should be Specific, Measureable, Attainable, Relevant, and Time bound (SMART). For example, “Reduce cycle time for product X from 15 to 10 days by FW35.” Many organizations simply say, “Increase revenue”, “Decrease cost”, “Decrease cycle time”, etc. Vague goals are meaningless.
- All goals should be clearly align with the corporate G&O’s. If a goal does not tie back to a corporate goal, it rarely receives the resources needed to complete it.
- Here is a quick exercise to check that goals are clear and well communicated. Have the leader to write down his/her top 3-5 priorities on a 3×5 note card. Then, ask the leader to have their direct reports conduct the same exercise. If the subordinates’ goals don’t match those of the leader, we recommend addressing goal setting and communication first.
2. Visible list of prioritized actions, including owners, support, and timing. After clarifying their goals, we ask leaders to articulate the top three actions they are taking to achieve their G&O’s. This includes articulating who owns the actions and when they should be completed. The best leaders have immediate answers and ensure their direct reports can also answer the question. At this point, we are not analyzing the actions’ effectiveness, but rather looking for evidence of a detail-driven, action oriented, and accountable culture.
- We recommend a standard format for action plans in your organization. A simple Excel worksheet with action description, owner, start time, stop time, and impact/result is a simple way to begin.
- The plan should be visible for everyone to see. Action plans that are hidden on a shared drive rarely gain traction. Our favorite method is printing the plan on plotter paper on posting it in the hallway. When your people walk by they clearly see the top three “who, what, and by when” details.
3. The right metrics. Many organizations confidently tell us, “We have metrics!” After some further questioning, they often admit that the metrics are not good, that they have too many, or the metrics don’t measure progress towards the goals. We’re not solely looking for high-level measurements such as gross margin or revenue. Rather, we look for visually displayed process metrics. For example, parts produced compared to plan, % scrap, et cetera which clearly tie to the overall business metrics. If you manage the engineering department, displaying company level warranty costs usually fails to make a connection with employees. Instead, display metrics that the engineers directly affect like drawing errors found by downstream processes such as production or supply chain.
Visual indicators should clearly provide the following information:
- Current state. Clearly communicate how your process is performing today. A normalized value works much better than an absolute value. “Errors per drawing” is a better metric than “total number of drawing errors”.
- Desired future state (Goals & Objectives). We recommend a 52-week outlook in addition to a target value and also want to see a realistic performance path. A hockey stick plan, one that shows dramatic improvement at the end of the time frame, should raise a red flag.
- Projected performance level. If you are not at plan, what does the recovery path look like? If you are exceeding plan, are you shooting for a revised goal? Identifying specific actions and timing on the graph itself are extremely effective in communicating the how, what, and when of the plan.
4. Frequent (preferably daily) operating mechanisms. Goals and an action plan are rarely achieved if they are not closely monitored. Monitoring progress, taking action, and providing immediate feedback is critical to executing the plan. Frequent operating reviews led by the functional owners of each area provide a mechanism to both monitor progress and coach subordinates. In a transactional environment the meetings might focus on items such as open orders, RFQ status, current lead times, pricing updates, accounts receivable, etc. In a multi-shift facility a structured shift turnover meeting led by the supervisory elements should be conducted.
Getting these four concepts right creates a focused organization that understands where it is now, where it needs to be tomorrow, and how it will achieve those goals. Dramatic improvements are often seen just by doing these four things because they build a focused action-oriented and accountable culture.
This is why we recommendation you skip the massive spreadsheets and detailed assessment tools analysis until your organization demonstrates the ability to execute these four basics concepts.
Disclaimer: Even if your team follows these simple rules, success is not guaranteed. If your entire business does not value these behaviors, your efforts can be inefficient and potentially ineffective.