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HR and Lean John White

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Brief Lean Overview <ul><li>Following are lean introduction slides……………….. </li></ul>

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What do I mean by a lean state of mind? James P. Womack Founder and Chairman Lean Enterprise Institute, Inc. <ul><li>First, the lean manager eagerly embraces the role of problem solver. This means going to see the actual situation, asking about the performance issue, seeking the root cause, and showing respect for lower-level managers and for colleagues at the same organizational level by asking hard questions until good answers emerge. It's this critical, probing state of mind that permits lean tools to be put to good use as the lean manager applies the right tool for the specific problem and does this in context on the gemba rather than in the abstract in some conference room. Empty ritual is replaced with a rigorous thought process that engages employees and pulls forward their best abilities. </li></ul><ul><li>Second, the lean manager realizes that no manager at a higher level can or should solve a problem at a lower level. (And one of the worst abuses of lean tools lies in trying to do just this.) Instead, the higher-level manager can assign responsibility to a manager at a lower level to tackle the problem through a continuing dialogue, both with the higher-level manager and with everyone actually touching the process causing the problem. The lean law of organizational life is that problems can only be solved where they live, in conversation with the people whose current actions are contributing to the problem. But this requires support, encouragement, and, yes, relentless pressure, from the higher-level lean manager. </li></ul>

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<ul><li>Third, the lean manager believes that all problem solving is about experimentation by means of Plan Do Check Act. No one can know the answer before experiments are conducted and the many experiments that fail will yield valuable learning that can be applied to the next round of experiments. </li></ul><ul><li>Finally, the lean manager knows that no problem is ever solved forever. Indeed, the introduction of a promising countermeasure is sure to create new problems at some other point in the organization. This is not bad. It is good, provided the critical, probing mind of the lean manager keeps on the case in pursuit of perfection. </li></ul><ul><li>In short the traditional manager is usually passive, going through rituals and applying standard remedies to unique problems. By contrast, inside the mind of the lean manager lies a restless desire to continually rethink the organization's problems, probe their root causes, and lead experiments to find the best currently known countermeasures. When this lean mindset is coupled with the proper lean tools amazing things are continually possible </li></ul>

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<ul><li>A Leadership Approach… </li></ul><ul><li>A Management Philosophy… </li></ul><ul><li>A Set of Tactical Methods… </li></ul><ul><ul><li>A complete system , to create and sustain: </li></ul></ul><ul><ul><ul><li>Voice of the Customer </li></ul></ul></ul><ul><ul><ul><li>Optimize Value </li></ul></ul></ul><ul><ul><ul><li>Quality </li></ul></ul></ul><ul><ul><ul><li>Minimize Waste </li></ul></ul></ul>Lean

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Lean – relentless pursuit of waste elimination I ntellect Any failure to fully utilize the time and talents of people M otion Any motion that does not add value e.g. re-entering same information more than once D efects/Rework Correcting any errors or doing completion steps not done before W aiting Waiting for an appointment, for signatures, for a printer that has a long queue E xcess Inventory Any more than the minimum to get the job done T ransportation Any nonessential transport is waste O verproduction Producing too much, or producing too soon N eedless Processing Over-processing, unnecessary steps, signatures, reviews

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Research Background <ul><li>Companies have begun to understand that Lean is about more than 5S and U-shaped cells. </li></ul><ul><li>It is also about people , culture , and leadership . </li></ul><ul><li>Adopting Lean principles well beyond core manufacturing has dramatically changed many other corporate internal functions, including product development, supply chain management </li></ul><ul><li>Can the human infrastructure and HR department contribute to this success, and if so, how? </li></ul><ul><li>How can companies and their HR departments better engage the full human potential of Lean? </li></ul>

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Study <ul><li>Research study was conducted by Monica Tracey and Jamie Flinchbaugh, 2006. “How HR Departments Can Help Lean Transformation.” Target Magazine, Third Issue </li></ul><ul><ul><li>The study discovered from actual practice not only how HR, but leadership, creates better organizational conditions to support Lean Transformation. </li></ul></ul>

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Five Key Variables <ul><li>Results of the study indicated that five key variables predict successful Lean transformation. </li></ul><ul><ul><li>Two separate surveys designed: One addressed employees working under direct supervision; the other addressed supervisors and managers charged with ensuring Lean practices within their departments </li></ul></ul><ul><ul><ul><li>220 Managers and Employees from 72 different companies </li></ul></ul></ul>

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Study Slide # 1 Teams Developed Celebration of Successes Metrics Calculated Depts in Constant Communication Manager Discussed Role

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Study Slide # 2 Celebration of Success Metric Shared with Employees

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Key Variables <ul><li>Development of teams as a supporting structure of Lean </li></ul><ul><ul><li>Mandatory for Hourly – Needs same for Salaried </li></ul></ul><ul><li>Calculation and communication of metrics </li></ul><ul><li>Communication among organization members, particularly across organizational barriers </li></ul><ul><ul><li>Value streams </li></ul></ul><ul><ul><li>Site Leadership Process </li></ul></ul><ul><ul><ul><li>Taking the Customer Order to Shipping the Order </li></ul></ul></ul><ul><li>Communication to employees regarding their specific role in Lean transformation </li></ul><ul><ul><li>Event training </li></ul></ul><ul><ul><li>Team interaction </li></ul></ul><ul><li>Acknowledgement and celebration of successes toward Lean transformation </li></ul><ul><ul><li>Report-Outs </li></ul></ul><ul><ul><ul><li>Each participant takes a section to discuss </li></ul></ul></ul>

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First Variable <ul><li>Development of Teams as a supporting Structure </li></ul><ul><ul><li>Needs of the team </li></ul></ul><ul><ul><ul><li>Common language </li></ul></ul></ul><ul><ul><ul><ul><li>OpEx (Crane’s Lean terminology (Operational Excellence_ </li></ul></ul></ul></ul><ul><ul><ul><li>Common principles </li></ul></ul></ul><ul><ul><ul><ul><li>Lean Foundation principals: (Safety-Quality-Delivery-Cost) </li></ul></ul></ul></ul><ul><ul><ul><li>Common Tools </li></ul></ul></ul><ul><ul><ul><ul><li>Tool Champion Process (Each lean tool is a certification event) </li></ul></ul></ul></ul><ul><ul><ul><li>Common Drive </li></ul></ul></ul><ul><ul><ul><ul><li>Visuals, Metrics and Goals </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Design work around them visually so that there is high agreement about what work must be done and how it should be done. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Problems need to be exposed immediately so that they are resolved . </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Performance boards—filled out hourly </li></ul></ul></ul></ul></ul>

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First Variable..cont <ul><li>The way an organization pays employees can be the first dagger in the cooperation expected in a Lean environment </li></ul><ul><ul><li>If incentives focus on individual behavior or performance, the resulting behaviors will not support a unified team approach. </li></ul></ul><ul><ul><ul><li>Meaning each employee working independently verse toward a customer demand target (Takt-Time) </li></ul></ul></ul><ul><ul><ul><li>Collective Bargaining Agreement </li></ul></ul></ul><ul><ul><ul><ul><li>How do we drive behavior when wage rates tend to be progressive—time in grade? Typically unions shy away from bonus schemes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Instead of pay, Crane Merchandising added language to the contract requiring participation in: Events, Performance boards and metrics. </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Culture of not “getting involved” is a work in progress </li></ul></ul></ul></ul></ul><ul><ul><ul><li>Non Union Employees </li></ul></ul></ul><ul><ul><ul><ul><li>Not much research done on pay and Lean </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Have more latitude in this environment </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Structure of pay for performance based on the more traditional competencies need to be looked at. Do we begin to look at Kaizen participation and or tool champion status </li></ul></ul></ul></ul></ul>

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First Variable..cont <ul><li>Teams need a great deal of autonomy to manage and improve their process. Teams are still part of the larger organization around them. Providing more autonomy than necessary or prudent can be a big mistake </li></ul><ul><li>Focusing on the expected behaviors of working with a team can be effective target for incentives </li></ul>

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Second Variable <ul><li>Calculation and Communication of Metrics </li></ul><ul><ul><li>Metrics “keep score” and determine if progress is being made </li></ul></ul><ul><ul><li>Metrics must be easy to update by the process owners </li></ul></ul><ul><ul><ul><li>SQDC Metric Boards (Safety-Quality-Delivery-Cost) </li></ul></ul></ul><ul><ul><li>Metrics must be predictive as possible and should support daily decision making </li></ul></ul><ul><ul><ul><li>HR should participate in the Daily Walk Around </li></ul></ul></ul><ul><ul><ul><li>Tool Box meetings (Daily production Start-Up Meetings) </li></ul></ul></ul><ul><ul><ul><li>Performance Boards </li></ul></ul></ul><ul><ul><ul><ul><li>Hourly snapshot on takt time and reasons why did not make it </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Material/Machine downtime/Labor </li></ul></ul></ul></ul></ul><ul><ul><li>It is important to understand that any time metrics connects to pay, behavior is influenced. Most often, the outcome is negative, although it does not make the practice a negative one. </li></ul></ul><ul><ul><ul><li>Kaizen participation is mandatory if requested to participate </li></ul></ul></ul><ul><ul><ul><li>No pay actions tied to metrics </li></ul></ul></ul>

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Second Variable..cont <ul><li>Metrics tied to pay are often outcome metrics, whereas metrics for daily decision making are often predictive measures, not outcome-based. With this in mind, the predictive measures used for empowered decision making must be linked to those used for the incentives. </li></ul>

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Third Variable <ul><li>The research found that communication in a Lean environment must be vertical, horizontal—and two-way. </li></ul><ul><ul><li>Top down </li></ul></ul><ul><ul><ul><li>It is not enough for a Lean leader to be excellent communicating the vision and direction to the masses of the organization; but also convey information about the changes going on at the top </li></ul></ul></ul><ul><ul><ul><li>Lean changes both the work and the way people think, so employees need to see that individuals at the top of the organization are changing also </li></ul></ul></ul>

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Third variable..cont <ul><li>Bottom-up communication is equally important </li></ul><ul><ul><li>It provides valuable, timely information about changes that are going on, and about new barriers that arise as progress is made. </li></ul></ul><ul><ul><ul><li>Get results of kaizen events to office and hourly groups not in the kaizen </li></ul></ul></ul><ul><ul><ul><li>Management team attend report-outs </li></ul></ul></ul><ul><ul><ul><li>How do we get all office employees engaged??? </li></ul></ul></ul><ul><ul><ul><ul><li>Crane launched a program in 2008 requiring every salaried employee to participate in 3 kaizen events over an 18 month period. This is managed by HR </li></ul></ul></ul></ul><ul><li>Horizontal communication must occur, not up-across-down but directly from the source of the information to the need. </li></ul><ul><ul><li>Across the value stream </li></ul></ul><ul><li>The key variable differentiating between these two states is how well an organization communicates directly from person to person </li></ul><ul><ul><li>Do kaizen participants talk it up amongst other employees? </li></ul></ul><ul><ul><li>How is information disseminated </li></ul></ul>

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Third Variable..cont <ul><li>Lack of employee communication was found to be one of the top barriers to implementing continuous improvement. </li></ul><ul><ul><li>The study traced the roots of employees’ negative attitudes to the management team not consistently communicating with them. </li></ul></ul><ul><ul><ul><li>Kaizen events well posted </li></ul></ul></ul><ul><ul><ul><li>Doe we require all salaried employees to participate in one kaizen event yearly? </li></ul></ul></ul><ul><ul><li>It was also discovered that employees need to be trained in communication and discussion techniques; otherwise they really do not understand how to ask questions and how to elicit feedback </li></ul></ul><ul><ul><ul><li>Is tool training enough </li></ul></ul></ul><ul><ul><ul><li>Do we require a tool certification in team interaction and interpersonal communication? </li></ul></ul></ul>

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Fourth Variable..cont <ul><li>Most corporate initiatives have a distinct beginning and a clear, objective outcome, but Lean is a never ending journey </li></ul><ul><ul><li>At Crane Merchandising we re-do the kaizen event in the cell every 6 months </li></ul></ul><ul><li>The research demonstrated that companies who celebrate success along the journey are more successful at Lean. </li></ul><ul><ul><li>Define milestones </li></ul></ul><ul><ul><ul><li>Value stream and kaizen roadmap </li></ul></ul></ul><ul><ul><li>Communicate progress </li></ul></ul><ul><ul><ul><li>Through Public Report Outs </li></ul></ul></ul><ul><ul><li>Celebrate </li></ul></ul><ul><ul><ul><li>Everyone at the site celebrates </li></ul></ul></ul>

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Fifth Variable <ul><li>Rewarding progress is a more complicated challenge </li></ul><ul><li>Suppose you reward people in proportion to the size of the ideas they contribute; all you will get are big ideas, and you will minimize the development of people not in a position to make big contributions </li></ul><ul><ul><li>Awards can quickly become entitlements </li></ul></ul><ul><li>The study showed most of the successful companies give no significant direct compensation for ideas or participation in Lean. </li></ul><ul><ul><li>Not enough empirical data supports one common sense approach </li></ul></ul><ul><li>The most effective encouragement is to support the people who contribute the ideas day in and day out by listening to those ideas and acting upon them </li></ul><ul><ul><li>What type of plans should we use </li></ul></ul><ul><ul><li>Salaried verse hourly </li></ul></ul>

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Lean and HR <ul><li>HR, like any other function needs to apply Lean practices and principles toward process improvement in its own work </li></ul><ul><ul><li>Intellectual Capital Process (Hiring, Organizational Design, Succession Planning, Compensation) </li></ul></ul><ul><ul><li>Monthly metrics </li></ul></ul><ul><ul><li>Holding people accountable </li></ul></ul><ul><li>The HR function needs to actively support the Lean Transformation throughout the company </li></ul><ul><ul><li>The function by virtue of its interactions with every part of the company, is actually in an ideal position to be a powerful ally in Lean transformation </li></ul></ul><ul><ul><ul><li>Be the advocate and drive the process </li></ul></ul></ul><ul><ul><ul><li>Manage the kaizen participation and certification process </li></ul></ul></ul>

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Recommendations for HR <ul><li>Culture </li></ul><ul><ul><li>Creating a Lean culture is to create an environment that supports four of the five predictors from this study </li></ul></ul><ul><ul><ul><li>Teams developed and functioning to support the structure of Lean </li></ul></ul></ul><ul><ul><ul><li>Communication processes that operate across boundaries </li></ul></ul></ul><ul><ul><ul><li>Clarity of all employees’ roles in the Lean organization </li></ul></ul></ul><ul><ul><ul><li>Process for calculating and communicating the metrics and followed by process owners </li></ul></ul></ul><ul><li>Recruitment </li></ul><ul><ul><li>Seeking the Character traits needed </li></ul></ul><ul><ul><ul><li>Ability to communicate effectively </li></ul></ul></ul><ul><ul><ul><li>Work in teams </li></ul></ul></ul><ul><ul><ul><li>Create and follow measurements </li></ul></ul></ul><ul><ul><ul><li>Work across organizational boundaries </li></ul></ul></ul><ul><ul><ul><li>Identify and celebrate success </li></ul></ul></ul><ul><ul><ul><ul><li>What other traits?? </li></ul></ul></ul></ul><ul><ul><ul><li>Process oriented </li></ul></ul></ul><ul><ul><ul><li>What else have we found that was a successful trait? </li></ul></ul></ul>

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Recommendations for HR <ul><li>Pay and Recognition </li></ul><ul><ul><li>Fair and suitable reward and recognition is vital in the recruitment and retention of employees especially in a Lean implementation process. Pay for Performance </li></ul></ul><ul><ul><ul><li>This does not imply a high pay structure </li></ul></ul></ul><ul><ul><ul><ul><li>Study shown those success in Lean were not necessarily the highest paid </li></ul></ul></ul></ul>

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Recommendations for HR <ul><li>Developing, Choosing, and maintaining Lean Leaders </li></ul><ul><ul><li>Lean is a long-term evolutionary, and inclusive environment. Leadership for it differs from crisis based, charge the hill hero leadership. </li></ul></ul><ul><ul><ul><li>Examples on why those styles do not work </li></ul></ul></ul><ul><ul><li>Understanding the choice between developing leadership for Lean and choosing leaders who would support Lean still needs examination </li></ul></ul><ul><ul><ul><li>We have started the development process through the Tool Championship process </li></ul></ul></ul><ul><ul><ul><li>Crane Merchandising has not found many external candidates really know Lean—resumes have the right buzz words but our hiring process separates out the “want a bees” </li></ul></ul></ul>

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The Change Model Shock Anticipation Fear Anger/Betrayal Depression Acceptance Search for Solutions Develop Plans Execute Plans Emerge Stronger Cycle Time Denial Resistance Exploration Commitment Data Source: “Managing Transitions” by William Bridges Guilt Endings Transitions New Beginnings

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Assisting the Lean Team Leader <ul><li>HR can provide assistance by providing input on shaping and getting the message out, on team organization and leadership </li></ul><ul><ul><li>Who best to know the organization and what works well with each group </li></ul></ul><ul><li>In order for organizations to sustain Lean operations, the Human Resources function must support them, beginning with hiring people who are likely to be happy and to succeed in a Lean working culture </li></ul><ul><ul><li>How do we know someone will be happy? What is happy? </li></ul></ul><ul><ul><li>How does one succeed in a Lean working culture? </li></ul></ul>

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References <ul><li>Tracey,Monica W and Jamie Flinchbaugh, 2006, “How Human Resource Departments Can Help Lean Transformation, Target Magazine, Third Issue; 5-10 </li></ul><ul><li>Flinchbaugh, Jamie, 2006, “Leading Lean; Lean and Human resources, Assembly Magazine </li></ul><ul><li>Tracey,Monica W and Jamie Flinchbaugh, 2006,”HR’s Role in the Lean Organizational Journey, WorldatWork Journal, fourth quarter 2006, volume 14, number 4 </li></ul>