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Published Date: 14-08-2009
Author: Executive Compass
Category: Tender Writing & Bid Management
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If manufacturing companies are to improve their business performance and productivity, they need to look very closely at the attitude of their employees, says David Fox, Chairman & Chief Executive at PP Business Improvement, part of Power Panels Electrical Systems Ltd.

Fox is adamant that if you don’t remove the poor attitude problem first amongst your workforce, any enterprise-wide improvement initiatives – such as 5S, Lean, Six Sigma and Seven Wastes – are likely to fail or will not sustain themselves for long enough to reap any rewards.

“If a business wants to continuously improve its performance and productivity, it needs to start by recruiting the right people with the right attitude,” continues Fox. “This is not an easy process at all, because most companies already have a workforce when they realise they need to change things. However, it is crucial to the success of any business improvement initiative, particularly manufacturing companies who embark on lean, 5S or Six Sigma programmes, that any attitude problems are eliminated prior to the project.”

Companies should not waste time and money on training employees who have the wrong attitude towards change. Fox’s company, Power Panels, a manufacturer of electrical control panels, did exactly this for three years. “We had to somehow find a way of changing people’s attitudes in order to keep continuously improving the business,” he continues.

”After five years of study and learning to 1998, we felt we knew sufficient about Japanese manufacturing philosophy, but the company had reached a brick wall in terms of improving its quality rating above 98%. Japanese companies, who we have learned much from in the past, tend to focus their efforts on the process rather than on the people. These philosophies maintain excellent discipline, but this method of learning leaves little if any room for people to develop.”

With Power Panels’ quality rating still at 98% in 1999, the company decided to open a brand new training excellence school, whose primary objectives were to provide structured learning facilities to all employees, as well as acting as a catalyst in changing peoples’ attitude towards change throughout the business.

“Before 2000, we had tried many different process improvement techniques in order to improve our business performance and productivity, but this only got us so far. The attitude of a significant section of our workforce was holding the company back.”

Fox warns that teamworking exercises, which form part of most business-wide continuous improvement programmes, once introduced to the workforce can make certain individuals nervous, at least to begin with, but then very quickly these people begin to embrace the change. “Once they have completed the first few exercises, they begin to feel a sense of achievement and are revitalised, enthused by the new learning. The important thing to remember here when embarking on any culture change programme is to ensure that the rate of learning is always greater than the rate of change,” states Fox.

The next important step in continuous improvement and improving business performance, he adds, is to ensure that you continuously train and develop the skills of your workforce. Training should not be viewed as a cost to the business, but as an investment. Training of all employees must be a continuous process. At Power Panels, each of the 150 employees is now provided with an average of 200 hours of training per year, 60% of this practical, and the other 40% theoretical or classroom-based. This structured learning includes kaizen, Health & Safety, 5S, advanced lean, Seven Wastes and Six Sigma.

According to Fox, the third key element in any continuous improvement programme is to make the learning ‘strategic’. He explains: “This means training everyone, not just isolated pockets. You need to make sure that lean, 5S or Six Sigma initiatives are embraced by the whole business, not just by certain departments or manufacturing cells. Unless your whole workforce is committed, the results will be disappointing. To achieve continuous improvement, you must provide structured training for your people. Strategic learning needs to be tailored to the objectives of the business.”

When it comes to introducing 5S, lean, kaizen or Six Sigma programmes, Fox warns that these are merely tools companies can use to improve the business, but that they cannot be carried out in isolation. “You need to use a broad brush approach across the whole business for these programmes to succeed. And you need to keep the employees engaged at all times.”

“Ownership is critical too. Employees must be able to spot problems and issues in their department and solve these. Structured learning and training that includes specific practical projects will ensure that your employees are trained to identify potential problems and know how to resolve them. Only then will people start to take ownership.”

Is there a role for software in continuous improvement and performance enhancement? “Yes, in the sense that you need to calculate statistics and reports to check whether you are meeting your key performance indicators,” says Fox. “You need to constantly monitor the productivity rates and benchmark yourself against other businesses. However, software is merely a supporting mechanism, it doesn’t directly help you to improve your business performance.”

Obviously, there’s a cost associated with any business improvement initiative. But the economics is simple. The more you train people, the better they will perform in their daily tasks and so the better the business will perform as a result. It’s a win-win situation for our business and our customers, because any improvements that come from an initiative are shared. In fact, Power Panels hasn’t lost a single customer in the last six or seven years, so we must be doing something right.”

Fox reminds us of the importance of attitude. Power Panels’ recruitment policy, which is now based on a strategy adopted by Jack Welch at General Electric in the early 1990s, is based on a system that classifies existing and potential employees into three categories: A, B and C. A’s are people who are fully competent and committed to the business. B’s are employees who are fully committed to your business but require further training to become competent employees.

C’s are the category that needs removing from the business. These people may be fully competent in terms of skills, but fight against change and typically have a very negative attitude towards change or new initiatives. The simple policy employed at GE was to ensure that the business always recruited either A’s or B’s, never C’s. Of your existing workforce, look for ways of removing the C’s from your business first and then try to turn the B’s into A’s through structured learning.

Unfortunately, there are no short cuts here, says Fox. “You can’t simply throw lots of money at improving business performance without first dealing with the people issues. In 1998, we implemented GE’s recruitment policy but it’s been a long, painful struggle. Almost 30 per cent of our workforce at this time were C’s. We ended up wasting three years trying to turn these C’s into B’s and failed. We then introduced a new recruitment policy in which we only hired people who were deemed as being A’s or B’s. 100 per cent of our employees are now either an A or a B.”

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