Chapter 1 Keeping “People” Front and Center in People, Process, Tools – Optimizing the Supply Chain

CHAPTER 1

Keeping “People” Front and Center in People, Process, Tools

Over my career, I’ve seen the gamut of ways that companies administer their human resources. As a new hire at Toyota I was required to read 35 books on subjects ranging from the Toyota Production System* to how cultivating a rice paddy symbolized Japanese culture, and I was tested on my comprehension of these books. Later I was sent to Japan for further training, all to make sure that I understood the company’s culture.

I’ve seen a wide array of boss types, including the smooth and consummate gentleman; the pure politician; a couple of tyrants who complimented the people above them and punished those below them; a servant leader; and a genius who was probably insane. Managing people is like parenting. You have role models who you try to emulate, and you have jerks with whom you never want to be associated, ever again.

People, Process, and Tools is the foundation of the formula for success, and it relies on the theory that people are 60 percent of the solution to any problem. When we look at cash management, properly managing human resources can help create a productivity machine and make a business wildly successful. By contrast, when this vital resource is improperly handled, the entire organization can end up drained of time, money, and manpower. It’s truly bizarre that businesses so often fail to protect their most precious asset—their people.

As managers, we are driven by the numbers, the bell-shaped curve, and getting our bosses to approve the department’s compensation plan. We’re required to manage up, and often simply forget to thank the people below who’ve spent a year of their lives helping the business run.

Following are my thoughts on how to manage a business’s most important asset—its people.

 

Company Values, Principles, and Strategy

The Human Factor

A business is not just a for-profit enterprise: It also bears a social responsibility to its customers, its employees, and its community to make quality products at reasonable prices. It is not facilities, machines, and capital that build products, it’s the people who actually perform the work (Figure 1.1).

 

Figure 1.1 The human factor

All companies have a core set of values. An organization’s values must be authentic and fully supported by its senior leadership team; otherwise, people won’t follow. It is critical that employees grasp these values and actively work to put them into practice. They must be expressed and modeled repetitively in order to become successfully sustained and integrated into the culture.

Attaining business results revolves around the alignment of a business’s values and principles between the individual employee and the organization.

 

Business Strategy Deployment

Getting a corporate culture to adopt a strategy takes a greater effort than the act of designing and executing it. In a global organization, areas like languages, native customs, skills, and so on can have a profound impact on the success or failure of a program. Operations can have world-class processes and tools but still be failures at sustaining improvements if they fail to take the time to fully bring their people along. Making things more difficult, the bureaucracy often works very hard at not changing. People become comfortable with the way they are performing their job, afraid that change will have a negative impact on their lives. In some cases, they have developed a power base around the process to be changed and have ulterior motives for preventing improvements.

Managing the people aspect of a business is a vital part of achieving desired outcomes. It is necessary to emphasize areas such as leadership, organizational effectiveness, and continuous improvement in order to achieve and sustain a successful business strategy deployment.

A business strategy deployment is an integrated approach to driving organizational development (Figure 1.2).

 

Figure 1.2 Key objectives

It focuses on the business’s objectives and goals, concentrating on employee engagement and continuous improvement to assure a process is sustainable.

 

Prioritizing: Critical business objectives are developed and prioritized, flowing from the business leadership to the point of execution.

Alignment: All functional areas are clearly aligned with the goals of the business.

Precision: Assures a disciplined management process that integrates the business’s objectives and that annual goals are developed, communicated, and measured through all levels of the organization.

Accountability: Ensures that the responsible functions drive accountability for achieving the objectives and annual goals. The focus is to integrate all functions into moving in one direction.

Managing across regions, cultures, and functions can provide extra challenges toward maintaining these values, principles, and systems. A manager needs to be able to clearly convey roles and responsibilities (Figure 1.3) while attempting to give some local latitude to how they are executed.

 

Figure 1.3 Clear roles and responsibilities with a regional focus

Through all the years in the companies I’ve worked for, I’ve learned that there are three best practices for ensuring that a business strategy, results, and desired outcome are achieved. They are as follows:

 

Building realistic and measurable goals and objectives

Providing employees with an honest and timely evaluation of their performance

Routinely reviewing how business resources are deployed and developed.

These three methods of managing human resources provide the best balance of managing both the behaviors of and results for the organization.

 

Goals and Objectives

The old saying, “What gets measured gets done,” is absolutely applicable in setting and measuring goals for employees. When executing a business strategy, it is imperative that goals are set and quantified from the outset as seen in the goal and objectives figure (Figure 1.4). This keeps a proper focus and prevents conflicting objectives from encroaching and competing for resources.

 

Figure 1.4 Goals and objectives

 

Performance Evaluations

Part of a successful employee retention process is a continuous conversation between parties on the performance of the business relative to its goals and objectives. A regular one-on-one dialogue should exist between a supervisor and their associates throughout the course of the year.

By having continuous conversations, you are able to understand the reasons for certain behaviors and make corrections where appropriate instead of waiting for evaluation time. This leads to a conversation that simply reviews the improvements that have already been made. This also empowers the employee to reach their full potential. Another highly effective development tool is the 360-degree evaluation process in which customers, peers, and subordinates are asked about the behaviors of a leader. Successful internalization of this feedback provides the leader with greater knowledge of how to be more effective in driving the business’s values, principles, and management systems.

 

Business Resource Reviews

The purpose of performing a business resource review is for a manager and the supervisor to have a clear understanding of how a department is focused on achieving the business’s goals and objectives. It ties to the strategic and annual plans, providing updates from a human resources perspective for how processes are operating. Areas discussed should include actions to be taken and timing for their completion, as well as the following:

 

An update on the organization and people

A leadership assessment with results from the performance evaluations

Retention issues

Succession depth and planning

Diversity development.

By executing these methods of evaluating performance, a business can ensure that there is a proper balancing of behaviors that get the desired results.

 

Organizational Effectiveness

Recruit

You can’t play the game if there’s no team on the field, so recruiting a team should be a manager’s first priority. When executing the business strategy, a diverse mix of both seasoned veterans and youth from college campuses adds a fresh and dynamic approach to solving problems. In addition, it is vitally important that the people you recruit fit in with the values, vision, and goals of the organization.

Hiring correctly the first time is essential for driving and sustaining improvements. The costs of recruiting the wrong employee include hiring expenses, total compensation, severance pay, and legal fees. Experience shows that every time a business replaces a salaried employee it costs six to nine months’ salary.

 

Train

In order to execute the business strategy with speed and agility, a business must nurture its talent. There must be a keen focus on organizing the best people in the right way and giving them opportunities to grow and develop. Strong leaders understand that actively developing their people should be part of their daily routine.

The most effective development process is to learn the job at the worksite through the instruction of the employees who understand the job best. Development by on-the-job training raises everyone’s abilities and produces better quality and greater efficiency. This creates a commitment from one to another to execute properly.

 

Retain

Part of the reason that cash-strapped businesses often hesitate to hire new employees is the actual cost of hiring. It’s easy to forget that an employee’s cost is more than just their salary.

The average cost of recruiting, hiring, and training a new employee is estimated to be $4,000. Therefore, preventing employee churn* and strengthening employee retention is imperative to managing cash.

Providing clarity of roles and responsibilities is essential to employee retention and drives business performance. Goal alignment enables employees to focus on their objectives for achieving results. In addition, it drives the development of appropriate skills and removes ambiguity. It provides a clear understanding of the expectations for both the associate and the organization.

Building cross-functional teams* helps align the entire end-to-end process* to execute the business strategy. By aligning functions, a business can further develop its organizational capabilities in areas such as leadership, productivity, and operating expertise.

Finally, providing people the opportunity to grow and learn (which doesn’t necessarily mean spending dollars or cash) should be a part of all employees’ performance development review.

 

Leadership

Leadership is defined as the ability of an individual or organization to guide other individuals, teams, or entire organizations to a desired outcome. It involves:

 

The capacity to establish, communicate, and execute a clear vision for others to follow

Providing information, processes, and resources to make timely decisions

Guiding the process by balancing conflicting priorities

Ensuring teams are accountable for the performance of the organization.

A leader drives changes in the way people think, work, and act. They create and set the expectations that ultimately shape the culture. Leaders step up in times of crisis and think or act creatively in tough situations.

Servant leadership is an ancient philosophy and set of principles that is still practiced today. Traditional management revolves around the accumulation of power at the top. Conversely, a servant leader shares power, puts the needs of the organization first, and assists in developing their teams’ skill sets in order to perform at the highest possible capability. They are comfortable in their own skins and recruit a team that is smarter than themselves.

A leader is not a bully or a coward and does not act passive aggressively toward their team. They make people better by building a safe workplace, nurturing the team’s growth, and taking responsibility for their actions. They are fully engaged in the activities they are responsible for and encourage experimentation: They celebrate success and empower employees by giving up control.

Leaders are role models whose primary task is to coach, counsel, train, and provide the necessary resources for their organization to meet its business objectives.

Case Study 1.1

St John Ambulance

On a recent trip to London I had the chance to meet up with an old friend who I’ve always thought of as the best human resources leader I’ve ever known. Steve Foster is currently Director of People and Organization at St John Ambulance. Prior to working there, he was the human resources leader for a multinational firm where we worked together, attempting to do the right thing with an organization that literally had tentacles all over the world. We were required to design programs to fit different cultures, geographies, and circumstances.

The case study is from the nonprofit where Steve now works in the U.K. Its roots literally date back a 1,000 years; that’s a long time for a company culture to evolve! I thought it especially pertinent, as he is facing the very real challenge of blending an organization made up of both volunteers and paid staff.

 

Background

St John Ambulance1 is the United Kingdom’s leading first aid charity. It can date its lineage as far back as the year 1080 when it established a hospice in Jerusalem. This nonprofit organization is supported by over 4,000 salaried employees and 30,000 volunteers whose mission is to provide efficient and effective first aid training to local communities and at public events, such as the London Marathon, pop festivals, and sporting events.

St John Ambulance’s vision is: Everyone who needs it should receive first aid from those around them. No one should suffer for the lack of trained first aiders.

Their values guide their thinking and actions, and they set out the “way we do things” as:

 

Humanity—Treating others with compassion and respect

Excellence—Pride in doing an excellent job

Accountability—Delivering what we promise

Responsiveness—Continuously learning and improving

Teamwork—Working together effectively

Their corporate values spell HEART, as people are at the heart of St John Ambulance.

Although St John Ambulance has roots that date back a millennium, they have been able to transform themselves into a vibrant twenty-first-century organization. So how exactly does St John Ambulance deliver this vision—with its set of core values—to over 30,000 people annually, with only a small paid staff and a large number of volunteers? As one might expect, managing and supervising first responders is far more challenging than building an automobile, thermostat, or security system. This is literally a life-or-death scenario every day, where Six Sigma* is totally unacceptable.

It started by establishing leadership competencies for each layer of the organization based on their corporate values of HEART. These competencies are defined for everyone—from the CEO to a manager, including first-responder volunteers. This set of required skills describe the behaviors that should be displayed, as well as those that should not be displayed, at each level of the business. These competencies are presented in combination with each position’s description in order to provide a full picture of how each individual is meeting the requirements of their role. They go on to affirm that the incumbent in each role should be able to demonstrate the ability, not only for their own level but also for the people who work for them.

Next, St John Ambulance developed a performance and development review process based on managing this process. This starts with understanding the following from the employee:

 

Identifying progress made against the previous year’s developmental actions

Identifying what they are doing differently now versus 12 months ago

Referring to their competencies, what four to five things they are feeling really good about

Referring to their competencies, what two to three things they could have done better

Identifying their frustrations and/or disappointments

Identifying their aspirations for training or moving to a different role

Anything else that they’d like to discuss.

The supervisor then reviews any applicable regulatory training requirements as well as each of the competencies for the position. The employee’s strengths are identified as well as their developmental needs, with actions, timing, and necessary required management support. This completes the overall assessment for the employee. It’s a very simple but direct method of managing people across regions, functions, and abilities.

 

Final Thoughts on People, Process, Tools

Over the past year, I have had the opportunity to tour operations all over the world. I visited an incredible variety of businesses from traditional brick and mortar to the fastest ecommerce businesses in the world, and my biggest takeaway from these visits is that it doesn’t matter, it is still people, process, and tools that drive business success.

It comes down to the basics—a well-thought-out business structure + strategy + people + fundamentals = success.

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1 St John Ambulance is a trade name used by a number of affiliated organizations in different countries, counties, states, or provinces dedicated to the teaching and practice of medical first aid and the provision of ambulance and community volunteer services, all of which derive their origins from the St John Ambulance Association founded in 1877 in the U.K. See https://en.wikipedia.org/wiki/St_John_Ambulance