Other writings here have discussed the importance of culture in creating and sustaining an effective CI program. But now we’ll turn our attention to some of the tools and methodology—and this post, to get us started, will give some starting details for the tools that brought us to the peak of industry performance. Where before we’ve discussed culture, and how it works invisibly, we’ll start taking more time to discuss the parts that work visibly as well—things like tools, keys, rules, and the results one can expect.
I realized early in the planning process for our continuous improvement program: it will be challenging to design tools that actually help people do their jobs better in measurable ways. In particular, I had to design tools that would work to advance the value I’d decided was most important: accountability. And when I say I had to “design tools” for accountability, it ultimately means I had to create an experience that reinforced accountable behavior. Let’s just say that there were a few “trials” before we managed to launch the following key items:
Manufacturing and Office Continuous Improvement (CI) Teams were designated in each dedicated value-stream such as a production cell (e.g., assembly or machine operation department) or functional support team (e.g., sales, human resources, or engineering). Teams were minimized to fewer than 10 team members. The teams were required to measure and track metrics that we know impact profitability; therefore, manufacturing teams would track data like scrap, rejects, and efficiency while the office teams would have to identify (and then track) two other metrics that impact profits.
CI Boards were established in each team’s area and were required to display (at a minimum) the standardized forms for tracking team metrics, the minutes of team meetings, any CI projects (resulting from any incidence of a “root cause/corrective action” item), previous quarter report cards (explained later), and CI savings created by certain projects. I did find it necessary to differentiate between CI and 5S projects; this allows you to drive CI implementation through RC/CA with focus on 5S (note that 5S will lose priority over CI projects if not differentiated). Teams were allowed to decorate and display other forms, reports, pictures, or other materials that supported team efforts, successes, morale, or celebration. Although we did stick pretty closely to our standardized program forms, we encouraged people to put unique touches in the spirit of playful competition.
Standardized Team Meetings were conducted twice per month. A standard meeting agenda form is provided to guide those team meetings (since, as you know, most people don’t know how to conduct a good meeting). The first of those two monthly meetings is for the team is to review their metrics from the previous month and start the Root Cause/Corrective Action ball rolling as needed—and that’s for any place where the team didn’t see continuous improvement. As many RC/CA inquiries create projects, the second monthly team meeting is to follow up on RC/CA and any projects which have sprung from it. (The effectiveness of these meetings is one of the subjective factors audited as described below.)
Senior staff would audit every CI team every quarter. Two members of my senior staff would schedule these audits in advance. We developed a standardized audit form (a “report card”) and used it to ensure comprehensive, even-handed audits were conducted (as even senior managers will sway widely when not given a standard to follow). At the end, the report card provides an objective score (which is based on the measurable data) and a subjective score (which is based on evidence of the team’s commitment and effort). Every team is given a printed copy of their quarterly report card, and every team is required to display it on their team’s CI board (also checked during the subsequent audit). These audits are then used to reward the best CI team in each plant and the office every quarter. Winning teams get to present their successes at quarterly rallies, they receive a modest reward like a gift card or lunch, or perhaps some company outerwear.
What you notice is that the CI projects become the centerpiece of this program, that that’s where real improvement happens in the company. That’s where innovation is at its peak. That’s where employees realize that they’re actually important.
We’ll be posting the forms that we use; you may do with our models what you wish. You can also see some examples of forms and CI Boards in my video presentation.
I created a gain-sharing “bonus” in which all employees participate on an equal basis. At the point that I initiated this “turnaround” and implemented this program, it was immediately apparent that (a) scrap and (b) supplies needed to be reduced, while (c) quality of product and (d) profit both needed to be improved.
Any time the company’s performance improved over the established goal for each of those four elements above, more was able to enter the bonus pool. The contribution to the bonus pool increased exponentially the greater our improvements over our goals. The process, in short, was this: take company financial numbers by month, apply an algorithm that measures improvement, allow algorithm to determine bonus pool based on levels of success. The bonus is tracked, posted, publically known, and it is paid quarterly. (We’ll have more information on the algorithms we used to calculate it later.) On an annual basis, this bonus is equivalent to 10-15% of total compensation for the average employee.
It became apparent through the implementation of these programs that many of the company’s first line leaders were not trained to lead C.I. initiatives. As a result, I developed a “Leadership Academy” for all company leaders. The program was based on the twelve basic leadership principles I determined were necessary to lead CI in our company. One of the twelve subjects is offered twice every month and each candidate is mentored by a member of the senior staff (who can reinforce principles learned, discuss career development, and help them solve their first problems). The program takes one year to complete. The Academy was so successful that we created a “Team-Building Academy” for key non-leader positions (for instance, engineers and technical support) with a focus on conflict management, which exists in all strong and progressive teams.
Outside of leadership and team building, you will still continue to discover how important training is to continued success and sustainability within a continuous improvement culture. In addition to the leadership and team-building training we developed, my management team and I have developed a “pay for skills” training development program for key skilled and unskilled positions in the company. (Read an article highlighting the success of this program.)
One last comment about training in a manufacturing environment: it’s the most important thing we do—and the worst thing we do. But many people ask me: how can I afford to do so much training? The sincere answer I give: “we can’t afford not to.” Successful CI proves that your most valuable asset is your people, and therefore training is one of the best investments you can make.
Allow me to restate several key rules to creating a successful CI culture:
- Management must lead by example. It must be a top priority—and to make it one, your people must perceive it as one of your top priorities.
- Employees must have ownership. This is the importance of a gain-sharing program like the one I just discussed. If you’re not prepared to share the success in such a way that it also benefits your employees, don’t start. You’ll be wasting your time.
- Tools—like the ones I’ve discussed above, and will be showing you again later—are ultimately very simple. Keep it all at a sixth-grade level. You want people focusing their energy on improving their work, not on figuring out complicated forms. This will be a continual change to you, since many of the issues you will encounter will not be simple problems.
- Training is important. It’s the most important thing we do, it’s the worst thing we do.” Be open to and encourage training for your people.
- Theme matters. Give your program a name. (See other postings on this subject.)
- Remember to sustain the journey. You must evaluate the effectiveness of the whole program, and ask how it, too, can be improved. This should be regular, annual at a minimum.
- Make CI a priority in your company, second only to safety and quality. If you do that, profitability will come.
- Everyone participates. It’s a condition of employment, period. There should be zero tolerance for people who don’t “buy in” to the concept. You will be surprised when some people (like production workers or professional managers) refuse to join the club. But as I like to say, “we provide them the opportunity to pursue their careers elsewhere.” And that’s the way it has to be.
This was, of course, a very basic approach to launching a CI culture. It met most of the standards and keys and rules that I’ve seen for successful programs. In another posting, I’ll address the improvements that we’ve made to our continuous improvement program over the past few years to sustain and improve itself.
But just to give you some pleasant parting thoughts, I want to share the benefits my company has come to through its Continuous Improvement program, and which might also be possible in yours:
- Doubled value through increased efficiencies
- Increased sales volumes, better customer and supplier relationships (they’re welcome at our internal improvement activities!)
- Maximized team member ownership (largely through gain sharing); causes them to run a lean company, avoid over-hiring, and keep each other accountable
- Better cost control and technology development – since everybody benefits from profitability
- Stronger management/workforce relationships, and a clearer focus on accountability in a progressive atmosphere
Click here to have a look at my full presentation on this topic, which includes a fair bit of the material you’ve read here. If you have a use for them, you can click here to download the PowerPoint slides that were in use during that presentation.
Once again, we’re only scratching the surface, ladies and gentlemen. I will continue to dig deeper and get into the details as we write into the future. I welcome your questions and any opportunity to discuss CI culture with you.