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deming, improvement, leadership, lean, management, transformation

The People Formula

All anyone asks for is a chance to is a chance to work with pride.” – W. Edwards Deming

When you get right down to it, the formula for creating an organization that performs at a high level and continually improves is fairly simple.  Although there are obviously factors that make implementing the formula more difficult than it appears, companies often further complicate things by ignoring the people aspects of the business or taking actions that actually detract from it.

The basic formula for organizational development is as follows:

HIRE WELL x CONTINUALLY DEVELOP x KEEP HAPPY

The reason the variables are multiplied is because ignoring any element (i.e., making it a zero) results in a zero for the entire process.  Although one could debate the “how” of each of the formula’s elements, it is difficult to disagree with the elements themselves.

Hire Well

The importance of the hiring well component of the formula is recognizing hiring a process that requires continual improvement to effectively support the organization’s higher-level objectives.

Hiring well means finding people who are competent and a good fit with the culture and direction of the organization.  Too often, businesses focus on the competency component and underplay the cultural fit requirement.  Because the search process often starts late – when the workload has grown beyond the point where current staff can handle it or the person currently holding the position is moving on – there is pressure to hire quickly.  The “easy” stuff like verifying previous employment and validating technical skills takes front and center while cultural fit tends to be assessed through gut feel.

Although not the subject of this post, there are a number of ways to verify the fit of a candidate’s personality and values with the organization.  The point here is to recognize that hiring is a process with target conditions that are aligned with the objectives of the company.  As such, it is just as important to apply the Plan-Do-Study-Act (PDSA) cycle to hiring as it is to any other process within the organization.

The target condition for recruiting and hiring could include things like cycle time, quality of candidates, cost of recruiting, offer acceptance rate, and overall employee turnover.  Once the target conditions are established, the process can be managed and improved through kaizen to continually improve its contribution to the organization, as a whole.

Continually Develop

It should come as no surprise that developing people is a critical element of organizational success.  With that said, though, there are really very few organizations that continually develop the abilities of the people working in them.  This includes coaching people to better understand the processes with which they work, improving problem-solving capabilities, and providing the opportunities to learn.

To do this well often requires that leaders improve their ability to coach, something drastically needed in most companies.  The best environments for developing people tend to be those that stretch thinking and learning is guided by experienced and qualified coaches.  Objectives are set aggressively and people are put in situations that force them to think differently to achieve them.  It is similar to working with a personal trainer.  Although it often hurts, sticking with the regimen and following the trainer’s advice often leads to improved physical condition.  In the workplace, developing problem-solving capabilities can also hurt, but lead to significant achievements if the coach is effective and the person is committed.

It should be noted, however, that missing a stretch objective should never count against a person as long as he or she learned and showed commitment to the process.  Punishing a person for missing a stretch target will only serve to halt learning and stop people from accepting such objectives in the future.

Keep Happy

Keeping people happy is another area where a kaizen mindset can help.  Although employee turnover may not be the best measure of happy employees, it is a start.  The ideal condition for any company should be 0% turnover, but getting there may require setting the target at a level that is better than the current rate.  Once it becomes clear where the organization’s current turnover rate is in relation to the target, steps can be taken to close the gap.

One first step that many organizations can take to quickly improve employee satisfaction is to eliminate the traditional performance review.  Although studies have proven over and over again that grading performance – especially when based on force-fitting results to a normal curve – results in far more dissatisfaction that satisfaction, many organizations refuse to let go of the process (see blog post on performance reviews here).

Hiring well (bring in technically competent people who fit within the culture) and continually developing team members should greatly improve the performance as the organization moves toward the “perfect” workforce.  As you move toward the ideal condition, applying a normal distribution to ratings is illogical and destructive to the organization.  Leaders often do not understand the importance of the system in employee performance, and that the system is the leadership team’s responsibility.  If leaders want a perfect workforce, and team member performance follows a normal distribution year-after-year, the fact that the situation is not improving is more of a reflection on leaders than workers.

Putting it Together

Keeping the formula in the forefront will help improve the organization’s focus on its people.  The traditional management force that is still so prevalent in western business, however, will continually interfere with true improvement of the people-side of the business.  Moving beyond attempts to improve motivation and performance through superficial means will require hiring and developing leaders who respect people and truly understand the connection between people and organizational success.

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About Gregg Stocker

Gregg Stocker is a lean advisor for Hess Corporation. He possesses over 20 years experience in a variety of disciplines including operations, manufacturing, human resources, quality, and strategic planning, and has worked in manufacturing, service, and oil & gas industries. He has extensive international experience, including successfully leading an $65 million business in The Netherlands. He authored the book, “Avoiding the Corporate Death Spiral: Recognizing & Eliminating the Signs of Decline,” (Quality Press, 2006) and was a contributing author to "The Lean Handbook," (Quality Press, 2012). Gregg is a frequent speaker and recognized expert in business and performance improvement having been interviewed on television, radio, and in a number of newspaper and magazine articles including The New York Times, Washington Post, BusinessWeek, and InformationWeek. Gregg has implemented change in organizations ranging in size from $10 million to more than $100 billion. He is a team-oriented leader who achieves results by improving teamwork, focus, and communication throughout the organization.

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