Posts Tagged productivity

114 — Some Company Culture Maxims

    • There is no event in a vacuum. To understand an event, look at its context.
    • The event is not the problem. The person is not the problem. The system is the problem.
    • What people do reflects the culture. Culture is established by its leaders. What people do is information about the culture and about the leaders.
    • A company’s culture is the context for all that happens in the company.
    • Because the culture determines productivity and profits, it is the real bottom line.
    • The purpose of human systems is to serve people. If people are the subject, not the object — if people are put first — enthusiasm and high productivity will follow.
    • Don’t involve people just to solve problems. Use problems and problem-solving to involve people.
    • You can’t have a safe workplace if you don’t have safe meetings.


cc 114 — © Barry Phegan, Ph.D.

Posted in: About Company Culture — Definitions

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332 — A Plant Turnaround, The Manager’s Story

By engaging employees, a manager improves productivity and avoids closing the plant. This is his story in his words.

“I was a Plant Manager at the California Plant of a multi-plant Fortune 50 company. There I worked with Meridian Group for a number of years, and with their help, became a student of the cultural approach to leadership. During all my years at the California plant, this operation was the number one or number two performer in a thirteen plant nationwide production system. My job was to get quality products on the dock, and I did that through people.”

“I was recognized for my management accomplishments with a promotion to Vice President of the company’s flagship plant in the Midwest. In my five years there, I applied the lessons I learned in California, to take this plant from the highest cost producer to among the company’s lowest cost producers.”

“While much of this was done through capital improvements, the attention to the plant culture allowed these improvements to come on stream with a minimum of plant disruption. I kept this question in front of my mind. ‘How do you get the hearts and minds and interest of the people?’

Getting Everyone On-Board

“At the first management meeting at the mid-western operation, the managers were ready to give me the production numbers. But I asked ‘How many people were laid off this week, and on what shifts?’ I also asked about accidents. Second I said ‘I want a measure of the quality of production. Then last I’ll want the numbers.’ The response was silence from my managers.”

“I said ‘Here is the direction, how can we get there?’ I got the message out in weekly meetings, and annual meetings. I repeatedly explained the overall goal, and opened the plans to the people affected. This really threw them off base. They were used to management keeping things close. I kept asking [myself and managers], ‘How can we ensure that the people will trust management?’”

“We had weekly meetings with supervisors. These were “No-Agenda” meetings. The topic was relationships. The Plant Manager was there week after week.”

“First I explained the numbers, and if we don’t go from here to there, all our jobs will go, and the plant will shut down. ‘Do you agree with my figures? My choice is to do it or shut it down.’ I put all the numbers out for everyone to see and understand.”

“We had many different unions on the production floor. Because of the increased production, it meant layoffs in one area but more work in another. I committed to no long-term layoffs. That meant a lot of retraining.”

Operating Results

“Over five years we shrank the workforce from 2,500 people to 1,700 people, all by attrition and retirements. On the way we had 1 million man-hours without a lost-time accident. And we did all this while keeping people on-board.”

“I had a coherent master plan — reduce cost by one million dollars a month. We aimed at sixty million over five years. We easily achieved that. The actual savings were almost double our goal over the five years.”

 “I used lessons I learned at a smaller plant, to change the largest plant in the system.”

cc 332 — © Barry Phegan, Ph.D.

Posted in: Company Culture Leadership — Examples

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135 — First, Understand Who Has The Problem

A person with a problem is motivated to do something about it. Yet strangely we often take people’s problems from them and give them to people who are not motivated.

Example — Warehouse Gridlock!

It was 8:00am on the first day of my monthly consulting visit to this Southern California distribution center. I walked in and found the DC manager almost panicked. “The warehouse has filled the receiving docks with product and is beginning to receive on the loading dock. If this continues the warehouse we will go into gridlock. Then no stores will get their orders!

With daily deliveries to over 200 stores this was a serious situation. Fortunately the immediate crisis was soon averted but the broader system problem remained — buyers didn’t plan purchases and deliveries with the warehouse people. The result could be the sudden arrival of fifteen truckloads at already full docks. Then the receiving clerk, reluctant to tell the drivers (with loads of fresh food) to go away, diverts the trucks to shipping, leading to gridlock.

Poor Relationships

Communications between Buyers and warehouseman are rarely good. Buyers see themselves as special people and their suppliers want to keep it that way. If you sell meat to a company with 200 supermarkets you will do what it takes to keep that company’s buyer ordering your brand. You’ll do what makes that buyer feel like a king.

Being human, the buyer will soon begin to believe that is true, that he is very special. The lowly receiving clerk, having tried to talk with the buyer before and been rebuffed, soon gives up on directly solving his problem and takes the bureaucratic solution of going up the chain of command, working through channels. The clerk calls his supervisor who calls his superintendent who calls the manager who calls the director who calls the SVP who calls his EVP who talks across to the marketing EVP who tells his VP to talk with the buyer. Going up and back down the chain of command takes time, messages get distorted and none of those people, except the receiving clerk, actually has the problem. The clerk is the only one truly motivated by those fifteen extra trucks. (Of course once the problem expands and the warehouse starts to lock up, the warehouse manager has a problem — but that’s not the immediate issue.)

Ideally a problem should stay with the person who has it. In this warehouse we needed to create a situation where the buyer and clerk jointly plan purchases and deliveries. That means the buyer has to see the clerk as a peer and the clerk has to see the buyer as approachable, i.e. they have to have a personal business relationship. They need to feel that they are on the same ship. The buyer doesn’t have a problem, but the receiving clerk needs the buyer’s help to solve his dock problem.

Middle managers also have to change their cultural norms

We had to help the reluctant buyer talk with the clerk and help the clerk to see that his role included calling the buyer, whom he had never met and only rarely talked to by phone. We coached middle managers to let go of their traditional roles in the chain of command. They needed to know of the major boundary crossing — the clerk talking to the buyer — but learn how to stand back and not take the problem away from the clerk. This was difficult for managers who largely defined who they were by their ability to take on others’ problems.

New broad vistas

Though this seems like a small problem it was an excellent illustration of a company-wide issue that showed itself in many areas, and frustrated people at every level. Like most cultural issues, solving this particular problem led to curing the broader cancer. Once the management team understood the clerk/buyer problem they realized it was just the tip of the iceberg. They launched a process of exploring wider implications throughout the company. It took time, ruffled many feathers, and induced much self-reflection, but eventually built a more efficient, less frustrating, more cooperative workplace.

Who has the problem? A Second Example

It was the monthly meeting of the Transportation Department where the director, managers and supervisors discussed the culture — relationships, communications and involvement. Each person shared what he or she had done to involve his or her people in the previous four weeks.

Ted, a senior supervisor from fleet maintenance said that the drivers were frustrated by the 30 minutes delay they had at the start of the shift. “It is a long walk from where they parked to the trucks and then they have to wait for the trucks to be fueled, oiled and checked out. They are anxious to get on the road.” Ted was emphatic about the drivers’ frustration, “We are always looking for ways to involve people more in solving their own problems. Since the drivers are so frustrated I’d like to see if some of them might be interested in working on what they could do to make things better. What do you think?” Ted asked the group.

Darlene, the director of transportation, thought it was a good idea, but Joe, the fleet maintenance manager, and most significantly Ted’s boss, cautioned, “Changing parking and maintenance procedures is complicated. It involves insurance liability issues and other departments. It’s not really something the driver should do.”

The group reminded Joe that he had agreed that the person closest to the problem should be involved in solving it. As they discuss this issue further it was obvious they all understood that they as managers were not the ones closest to the problem; the drivers were, so they should be solving it.

Handling objections

Joe thew one more challenge to driver involvement, “Yes but with 400 drivers that half hour cost the company a lot of money. That’s a company problem.”

I tried to connect to Joe but keep Ted in the picture by asking him, “Let’s put a rough number on this and see if it is worth looking into. You have 400 drivers. Are they each delayed a half hour a day?”

Ted, “On average that’s about right.”

“And what is the driver cost with benefits, overhead, etc.? Would you guess about $50-$60 an hour? Let’s say $50? How many days a week are we talking?”

Ted “Six on average.”

I wrote on the board and said, “So we can set a rough cost is 400 x $50 x 6 × 52 × 0.5 or about $1/2 million a year.”

Joe interjected again, “Well you couldn’t really say that. The drivers would probably do something else with that half hour. It wouldn’t go directly to savings.”

I asked, “But even if only a fraction did, would it be worth having the drivers look into it?”

Joe said “Yes” and with that the group agreed that Ted should work with the drivers. After the meeting, Ted asked me if he could call and discuss next steps. He thought a small driver group would be keen to work on this and he could help them get underway.

The Result

Ted didn’t call.

Just before the next month’s meeting started, I asked Ted why he hadn’t called. Ted said that his boss Joe didn’t really like the idea. I decided to let the issue sit. One of the rules of culture changes to go where there is support, not push where there is resistance.

Two meetings later Joe proudly described how he was working on the parking issue and driver delays. It was clearly difficult for Joe to see that he could solve the problem and engage drivers at the same time. He was so used to taking responsibility on by himself. Using Joe’s announcement as an opportunity, I invited the group to discuss once again the goal of culture change and the need to keep the person with the problem engaged in the solution. During this discussion I could see that Joe was thinking hard. From his expression I could tell he was slowly recognizing that he didn’t need to work directly on the problem, but could still keep it under control simply by being involved in the project’s development. With Darlene’s gentle prompting, Ted was now able to regain control of the process with the drivers while Joe learned a little more about defining a problem and about letting go.

This was the beginning of a real culture change in that large division. Decision-making and involvement was pushed down to the level where there was the most energy for solving the problem — with the people who had it, not with their managers — who didn’t.

Another Example. Who Had the Problem at Continental Airlines?

This is from an old The Wall Street Journal article.

“At a Houston meeting in late 1994, with Continental teetering on the brink of a third bankruptcy, eight major creditors began yelling at him (Mr. Brennenman, the then CEO) — at which point he headed for the door, announcing that he was going home to watch television. “They were screaming. ‘How could you do that?’ Mr. Brennenman recalls. “I just told them they were the ones with the problem, not me. The first step in problem solving is figuring out who’s got the problem.” Continental ended up with breathing room, and within 14 months those creditors were all repaid in full.”

cc 135 — © Barry Phegan, Ph.D.

Posted in: About Company Culture — Person and Behavior

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142 — What’s the Cash Value of Developing Your Culture?

Today most executives agree that a well-developed company culture is a formidable competitive asset. However like all business decisions, the investment in developing your company’s culture should be weighed against the benefits.The pages below will help you calculate the cash return from investing in outside expertise to develop your company culture.

1. Assess Your Existing Company Culture 

Most managers are not familiar with thinking or talking about their company’s culture. This first question prepares you to answer the unfamiliar questions that follow. This question has statements about qualities or attributes of a well-developed company or business unit culture.

How are these qualities in your company or business unit? Check Agree   X   or Disagree   X  

Agree ___  Disagree ___    People here feel useful and productive.
Agree ___  Disagree ___    People here can be creative.
Agree ___  Disagree ___    People here see endless opportunities for improvements.
Agree ___  Disagree ___    People here know how they fit into the big picture.
Agree ___  Disagree ___    People here feel they belong.
Agree ___  Disagree ___    People here know they are valued for their work and contributions.
Agree ___  Disagree ___    People here have fun.
Agree ___  Disagree ___    Relationships at work are mature and non-political.
Agree ___  Disagree ___    People here have enough information to make good decisions.
Agree ___  Disagree ___    Most people here bring their full energy and creativity.

The Workplace
Agree ___  Disagree ___    This is a powerful company that engages employee’s hearts and minds.
Agree ___  Disagree ___    Procedures here are designed along with the people who will use them.
Agree ___  Disagree ___    Relationships and communications are fine.
Agree ___  Disagree ___    Power and control are widely shared.
Agree ___  Disagree ___    People are involved in decisions that affect them.
Agree ___  Disagree ___    The company creatively responds to challenges, suggestions, and change.
Agree ___  Disagree ___    Employees recommend working at this company to family and friends.

Agree ___  Disagree ___   Leaders here put people first.
Agree ___  Disagree ___   Leaders here are good coaches.
Agree ___  Disagree ___   Leaders here ask people how they can help them.
Agree ___  Disagree ___   Leaders here set a clear direction — “This is where we are going.”
Agree ___  Disagree ___   Leaders here recognize, celebrate and reward desired behavior.
Agree ___  Disagree ___   Leaders here give everyone background information, the big picture.
Agree ___  Disagree ___   Leaders here protect people from abuse from the system above them.
Agree ___  Disagree ___   Leaders here make cooperative, team decisions.

Hopefully that got you thinking culturally.

2. Valuing Your Potential Company Culture

Studies indicate that most employees bring to work around 20% of their potential contribution. With a well developed company culture people will bring much more. Even with a conservative estimate doubling that 20% to say 40%, it’s clear why a more developed workplace, that more fully engages employees, is overwhelmingly competitive and profitable.

The six questions below describe some ways employees respond when leaders deliberately develop their company’s culture. Answering questions 2 thru 9 is difficult. Please try to put an approximate number against each item. You may not even know where the decimal point is. That’s OK. Remember, “Perfection is the enemy of the good.” Just make your best guess.

What would be the annual $ value to you or your company if all your managers and employees:

$ ________  Took full responsibility for identifying and solving problems in their work areas, without just passing them on to their boss?

$ ________  Watched and cut costs as carefully as you do?

$ ________  Look out for what is good for the company rather than just what serves themselves or their department best?

$ ________  Treated customers as if they cared about them personally, and customer loyalty doubled?

$ ________  Communicated so well up, down, and sideways that work always flowed smoothly across departments and throughout the company?

$ ________  Continually sought new, creative ways to improve work processes and build the business?

Nationally, The Cost of Underdeveloped Cultures is Enormous.
Nationwide the greatest loss to American business is the withheld energy and creativity of employees at all levels. If you assume even a minimal lost productivity of 5% (and it is probably closer to 50%), the annual national cost is in the trillions of dollars. Developing a powerful workplace culture — where people bring more of themselves to work — saves you your share of this terrible national waste. In many companies, reallocating a small part of the money now lost to low productivity, absenteeism, turnover, and dealing with unnecessary problems, would more than cover the costs of getting their people involved in a positive way.

3. Productivity

What would be the annual added value if employee, plant, business unit, or company productivity increased?

10% $ ___________        20% $ ___________      50% $ ___________       100% $ ___________

4. Labor related issues (If your facility is unionized)

Over the last 12 months what might have been saved if there were no discipline hearings, arbitrations, or attendance discipline issues?

$ _______________

5. Accidents and Safety

If applicable, what would be your annual savings if you had no major accidents and lost time injuries were well below one/million+ labor hours?

$ _______________

6. Attrition/Turnover/Retention

What would you save annually on recruitment, training, etc. if turnover was cut by 75%?

$ _______________

7. Reduced Management

Traditional workplaces have high control costs. In developed company cultures, employees take responsibility and control, solve workplace issues and feel freer communicating across boundaries and levels. These companies have low control costs, i.e. far fewer supervisors and middle managers. What would you save annually with 20% or 40% fewer supervisors and middle managers?

20%   $ ____________          40%   $ ____________

8. Your Culture Goals

Imagine that in 18 – 36 months you have the culture you want. What would that be? How would you like your company to be different? What four main results or outcomes would you want? (See also 312 — The Five Steps to An Unbeatable Culture,  1. Choose Your Culture Change Goal)

a. _________________________________________________________________________

b. _________________________________________________________________________

c. _________________________________________________________________________

d. _________________________________________________________________________

9. Estimate the Return

Everything described in 1. thru 8. is realistic and achievable. If you developed the culture you want, what would you estimate its annual added value would be to you, your company or your business unit? Keep in mind that the benefits of culture change are cumulative and ongoing. They begin appearing within the first eight weeks, are normally visible company-wide within the first 12 months, and solidly in place within 2 to 5 years. The three main variables are the industry type, the strength of top management support, and the company’s size.

Estimated Return/year   R $ _____________________

10. Select The Investment

Few managers are skilled in culture change. It is practically impossible to do without professional assistance. The figures on the chart below are drawn from my experience. However organizations vary enormously even within industry type, so the numbers are guides only. They represent only the investment in outside expertise. However the internal investment of top management time is relatively small, perhaps 3 – 4 hours per month, and that is mostly in the first six months of the culture change process. Employee problem-solving teams pay for themselves almost  immediately. After six months the culture change process naturally merges with normal operations and does not require additional management time.

Locate your company on this chart by # Employees (total FT payroll)
If you have say 500 employees, imagine a vertical line half way between 100 and 1,000 on the # Employees line. Your estimated Investment/year would be half way between $400k and $2,000k, i.e. $1,200,000. Write your Investment/year number into Question 11, 2nd space.

# Employees                                    10               100               1,000          10,000              100,000
Investment/employee/year         $9,000          $4,000           $2,000             $500                 $100
Years to complete change               1                  2                    3                    4                     5
Total Investment                            $90k            $800k           $6,000k        $20,000k         $50,000k
Investment/year                             $90k            $400k           $2,000k        $5,000k          $10,000k

11. Calculate Your ROI

Divide the Return/year (your estimate from Question 9)

R $ ________________________

by the Investment/year (taken from the above chart 10.)

I $ _________________________

R/I  =  _______ X 100 = _______ ROI %

Surprised? Typically the ROI in company culture is exceptionally high.


cc 142 — © Barry Phegan, Ph.D.

Posted in: About Company Culture — Why is Culture Important?

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133 — Splitting Thoughts and Actions Cuts Profits

For many employees, what goes on in their head is not what they show through their words and actions. This split between thought and behavior is stressful and unproductive, a waste of company resources — bad for people and bad for business.

One of the many threads that led to my interest in culture was the book Something Happened by Joseph L. Heller of Catch 22 fame. In his book, Heller chronicles the inner life of Bob Slocum, a corporate middleman acutely conscious of company politics and power.

Like your average corporate employee, Bob Slocum struggles with what to say and what not to say in a meeting. He tries to interpret comments and glances in a hallway. He is uncertain about where he stands in the eyes of those above him. He does not say what he thinks. The contrast between his thoughts and actions, his feeling and words is jarring. What is real and unreal, true or false, rapidly blurs.

This describes my own experiences in my 20s, first as an employee, and later as a supervisor and manager in several companies. Later I thought, “If Slocum experiences corporate life like I do, perhaps others do also. Why don’t we talk about this at work?”

Dividing Thought and Action

We each adopt to the world of work. If we don’t we are ejected. I learned, as most of us do, that at work we discuss the abstractions, the ‘quantitative’ details of production — the numbers. In business meetings we rarely discuss the hard data of our immediate concrete experiences of work. We do not put these personal facts on the table. We sit in meetings thinking constantly, saying little. If we do talk about our feelings, it is at lunch, at the water cooler, in the restroom, after the meeting, or to our spouse in the evening, or to our friends at social gatherings.

Joining Thought and Action

Companies with well-developed cultures build relationships and trust that allow people to say what they are thinking, to be what they long to be, to hold together thought and action, to bring more of themselves to work. These companies are highly energetic and creative, a pleasure to work in, very productive, and exceptionally profitable.

cc 133 — © Barry Phegan, Ph.D.


Posted in: About Company Culture — Person and Behavior

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