It is a fact that many organizations, businesses, sports franchises and small offices are underperforming because of incompetent management. The causes can be many, poor product or services, overstaffing and thus overspending, lack of well defined processes, incompetent personnel, compensation not based on performance, incentives which are misguided or nonexistent, poor leadership, a bad culture, just to name a few.
The key to solving these problems is to make decisions based on an objective, unbiased evaluation of the company and the ability to follow through with actions not limited by personal views and loyalties.
This can be a daunting task for those working within the organization, they don’t see the big picture , they are emotionally invested and thus unable to make the needed changes..
In most cases employees at many levels of the organization know quite well what needs to be done but are not in a position to cause a change. Telling the boss what he needs to do may not be a career enhancing move indeed. So the complaining goes on at the water cooler and the company continues to struggle. Sadly often the end is inevitable; the company is acquired or liquidated with negative consequences for all the people involved. It doesn’t have to end this way.
The struggling company’s management is in most cases very reluctant to seek outside help, they see that as a personal failure. The fact is that the opposite is true. The solution to a problem will never be found if there is no recognition that a problem exists. Thus seeking outside help is a sign of maturity and objectivity that is sorely lacking with many managers. Companies with competent Board members or investors are often rescued from within with the help of outsiders... The CEO is often the key problem and only outside people can point this out and cause a change. Indeed it never hurts to get a second opinion from a competent professional.
How do you measure a Company’s performance? Public companies
are measured in the financial markets by the stock price lus dividends paid.
However, these numbers are the result of the execution of the internal processes of a Company.
Measurements are always used in finance and manufacturing but are not as common in other departments. That is unfortunate. Lord Kelvin, the British scientist wisely stated that if we don’t measure a process, we don’t know anything about it. Measurements, if properly defined, provide an objective, unemotional view of an event, whatever it is. In addition, as soon measurements of a process are established, there is a very high likelihood that the process will improve. How do you introduce measurements? It takes good planning, training of the people involved and good judgment.
Here are some examples:
• Employees’ performance reviews timeliness
• Marketing forecast accuracy
• Sales forecast accuracy
• New Product Development’s milestones (timeliness, completeness)
• Production Yields
• Field failure rates
When employees are asked to measure a process, it is important that they understand the reason for it and that they be well trained in process analysis and measurements. The results of the measurements should be displayed within the company, regardless of the results. When the measurements show poor performance, there will be a tendency to hide them. The solution is to motivate and support those involved in the process in order to quickly identify the cause of the poor results.
Quite often poor results are due to an ill defined set of input and output requirements of the process itself. As an example, the timely release of a new product, be it software hardware or a combination of both, can be delayed by poorly defined requirements for the product. When the product is released new or different requirements are introduced which will require redesign and thus delays.
Simplicity and parameters that people can easily relate to should be used. A complicated formula is discouraged while using dollars to measure a process performance can be very powerful as everyone can relate to it. If a product has a poor yield, it always results in higher costs which can be easily quantified. As the process is improved and the costs are reduced, showing the savings in dollars is very effective. Secondary effects of better yields will be higher customer satisfaction and higher sales.
The integrity of the measurements has to be carefully monitored in order to maintain credibility. This is the price that has to be paid in order to assure compliance and continued improvements. The leverage for this effort is very significant and the Company’s performance will greatly be improved.
An additional benefit is that the processes and the employees involved in them can easily be evaluated so that opportunities for improvements are readily highlighted. The oft dreaded employees’ performance reviews will benefit as well since their performance is easily measured. Goal settings for teams and employees will also be greatly facilitated when process measurements are in place.
It is a fact that hiring someone is a risky proposition. No matter how much due diligence is performed there is always a chance that the new employee may not be a good fit for the job.
I have made my mistakes in hiring and I have always tried to reflect on what went wrong and quickly resolve the issues with my poor hires. Waiting for things to improve has never shown to be a worthwhile move.
The first and most important task is to define the requirements for the new hire. This should go well beyond the standard job description and include a detailed list of the expectations, performance evaluation criteria and short and long term deliverables.
It is only fair that candidates have a clear understanding of the task at hand and many poor hires are a result of misunderstandings and undefined requirements.
The next steps are the screening of resumes and interview process. The hiring manager has to personally screen the resumes and take ownership of the whole hiring process.
The list of people that will interview the candidate should include the people that will have interactions with the candidate within the department and across the company lines.
Each interviewer should have the list of requirements for the candidate and meet with the hiring manager prior to the interview in order to fully comprehend the process and its goals.
During the interview process, it is crucial not to take anything written in the resume for granted. Resumes can be easily embellished and or written by someone other than the candidate. If a candidate meets all the initial requirements, it is important that all key
requirements be probed in depth by those that have the knowledge. In case of a technical hire, some key questions/tests should be included. One should be vary of sweeping claims like “I have developed new markets that contributed to 50 millions of revenue”.
If you are hiring a CEO it is quite possible that he or she worked at a Company that did achieve such a goal but the candidate may have not have had much involvement. The same with lofty claims of a new product release in a very short time or a technological breakthrough. Again a very detailed investigation needs to occur in order to assess the candidate’s claims accuracy.
The best way to reduce the risk of hiring? Hire interns first. They are even a lower risk than someone you know and have worked with at another Company. They may not adjust well to the new environment. The best way to make a bad hire? Rush through the process, focus on the positives and ignore the negatives.
Every person at certain stages of a career has to deal with different cultures. We can experience this event when we relocate, start working at a different company or even when we get the first job. There are often different cultures within the same company due to management styles or even physical location. It is not uncommon that a group of people working in one building perceive themselves as having a different culture than those working in another building. The same phenomenon can happen within the same building.
In today’s global business environment, it is imperative that everyone, especially managers, understand how to effectively interact and manage a diverse group of people. When a company is acquired by another company the two cultures have to be integrated as much as possible to make the new company a success. The management of different cultures is even more challenging when companies from different parts of the world are combined. Yet another scenario is when a manager is hired by another company and he or she takes along other personnel from the previous company. The intention is usually to cause a change of culture but it can often backfire if it is not managed properly.
In order to successfully achieve the integration of different cultures, the manager has to focus on clearly defining the mission of the company and set clear, measurable, actionable goals. Quite often a manager puts too much emphasis on how a task should be done rather than on the goal. The process used is not as important as the set of deliverables that need to be completed. Working hours, traveling policy, management structure can be overemphasized and derail the whole effort. It is a fact that many acquisitions never meet expectations and the poor management of different cultures is often a big reason.
Changing a culture is necessary when a company underperforms.
In such a company, turf wars, little or no ownership of the company’s performance and the blame game are common. In order to cause a change, a careful evaluation of the top management is required and personnel changes have to be made when no cooperation in resolving the problems is evident. When such a process is used, a dramatic turn-around can be achieved regardless of the size or composition of the company.
NTF is not a welcome acronym in any industry. When a problem is reported either in manufacturing or in the field and no defects are found, the unit is labeled as NTF (no trouble found). What happens to such units? It depends on the culture of the Company. The successful Company with a culture dedicated to continuous improvements will analyze every NTF unit, even in R&D if necessary and get to the root cause. The less quality driven Company will ignore the problem and often pay a heavy price for it, both in reputation and in the bottom line.
It is true that at times the reports can be erroneous and such events can help develop complacency. Therefore it is important that a good tracking system is developed so that trends and yields can be accurately tracked.
The root causes are either in manufacturing (this includes a component problem) or in R&D. The first step in processing a NTF unit is to duplicate the problem. This is often a difficult and time consuming task, especially if the problem is intermittent. Thermal cycling a unit is a good aid in finding hardware and even software problems which can be timing related. It is important to make comprehensives test suites available to customer service and manufacturing as part of the release process of any new product.
If the test coverage is comprehensive, the root cause will be found quickly and the solution will be reliable.
Top management must provide adequate resources for addressing NTF related problems and signal the importance of getting to the bottom of the problem which can be difficult to solve and require resources already preoccupied with other tasks which drive revenue and the release of new products. When the problems are not addressed, they can grow into major events which can very expensive and damage the reputation of the company. The same thought process has to be used for other manufacturing or field failures.
Every company has to be on guard at all times in order to avoid damaging quality problems.
Reputation can easily and quickly be tarnished and management has to reinforce the need to proactively monitor all the processes. The resources to do so have to be adequately allocated and the reward systems must reflect this philosophy.
I was truly shocked to read in Business Week (April 19, 2010) that in 2005, Toyota recalled more vehicles in the U.S. than it sold. This can only coincide with a major breakdown in the corporate culture. It can happen to any Company, regardless of its track record. Let us be on guard and not ignore any reported failure, whether the problem has been found or not.
This is a dilemma that every company has faced or will soon have to deal with.
There are two scenarios; one applies to products already in production, the other one to products soon to be introduced to the market. When a problem arises, stopping production or delaying the introduction of a new product are
very big decisions. Every function within the company stands to lose, the executives will not get their bonuses, sales cannot sell the product, production is idled and engineering has to stop everything and work on a solution. Consumer products get most of the press (Toyota these days) but industrial products are just as susceptible (the Airbus 380, the Boeing 787). The financial consequences can be devastating and many companies are permanently scarred and never recover.
It is a fact that no company is exempt from such a potentially catastrophic problem.
Companies can have the best talent and world class processes, yet problems will surface. Prevention is a key attitude that can minimize defects.Often, problems are reported and not taken seriously. A good reporting system is mandatory along with a culture where every anomaly is investigated. When a problem or defect is reported it has to be treated as a nugget that can help improve the design or the process in production. The problems most often ignored are the intermittent ones. They are also the most difficult to fix.
The technology has pushed the integration to higher and higher levels and as a result fewer and fewer people can get to the root cause of a problem. Software plays a dominant role in virtually every product and this just adds another layer to the challenge in finding the root cause of a failure.
The culture of a company has to foster a zero defect attitude and a relentless desire to investigate failures. This will minimize serious problems and assure that when one
arises, the real root cause is found and no repeats will occur. When a product is released to the field, there must be a very efficient process to capture and investigate problems.
Failure to do so will result in expensive recalls.
Maintaining customer satisfaction has to be the driving principle on whether to stop production. Is anyone satisfied with a defective product? The answer is obvious.
Stop production, find the root cause, rework all inventories and fix the problems in the field. In the case of a product about to be launched, delaying the introduction to the market is the only way to adhere to the principle of assuring customer satisfaction.
This applies even if new firmware or software can be downloaded later on.
Microsoft has paid dearly (Vista) for releasing software prematurely.
In the management arena, ownership implies one's
willingness to embrace a task and carry it through
to its completion with best effort,dedication and
A sole proprietor typically has the highest ownership,
after all his livelihood depends on it, while Congress
has the lowest, only to be out done by multinational organizations like the United Nations.
When employees have no skin in the game, they don't
believe that their performance has any consequences.
I say that they don't believe because it is never the
case. There are always consequences to one's action
Management's task is to instill a sense of ownership
in the employees. This is most effective when the
employee truly understands that his or her work is
important to the success of the company.
Management also needs to back this up with
personal contacts, recognition and compensation.
Telling someone that his or her work is important
and then never showing any interest in it is a
good way to promote indifference or lack of ownership.
Start ups and smaller companies are most likely to
have more dedicated employees but the same can be
achieved in larger organizations.
Good management is the key!
What does it mean? Many companies are held in
high regard for a variety of reasons, the CEO,
brand name, financial results, surveys (top 100/500).
These companies have a strong infrastructure with
good processes which management drives and
supports, a stream of innovative new products
which meet customer needs and generate most
of the revenue.
A lot of good decisions are needed to achieve
such lofty status. Every company has the potential
to be a great company.
Exposing this potential and motivating management
to realize it while attending to day to day activities
is our philosophy. In any business there is no
intermission to design new processes or train new
people, it has to happen concurrently. Where does
one start? From the top. A simple one page
describing the segment of customers to be served, the operational and financial goals and the culture of
the company is needed. Every stakeholder needs to
hear it and buy into it.