Mad Management: Management means improving quality, satisfying employees and lowering costs

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A number of readers have contacted me directly, asking me to explain further the three management skills I outlined in my last three articles. Here is a breakdown of what I think constitutes “good” management.

Good managers understand that they are in charge of part of a larger system, the aim of which is customer satisfaction at an economic cost. They recognise that the parts of that system are all interdependent, so, if one subsystem changes it affects others. For example, if production has to be ramped up to meet a surge in demand for a particular product, it will affect not only production, but every downstream department, from procurement, to despatch and planning. It will also affect the suppliers, who are part of the system. This will require persuasion and negotiation skill.

It will be important for those who are trying to ramp up production to understand that the unusual demand may be beyond the capability of some of the current manufacturing processes. In this case the system itself has to be changed. This is what is meant by “understanding variation”, achieved by constructing a control chart to establish whether the process is capable of meeting the new level of demand. If not, then no amount of “work harder” instructions will make any difference. Putting more effort and components into an assembly line that is already working to its capacity will just create waste and worker dissatisfaction.

The production process itself will have to change. This is not the time to behave like “decisive leader” a la The Apprentice, and demand more effort. It is exactly the right time to map and study the process by the use of a flowchart, with the help of workforce, and then use the collective wisdom of the shopfloor to see where the choke points are. There should already be one in production planning, but if not, you can prepare one quickly on a wall with post-it notes showing the flow of work at each stage from request to completion, and the time each step takes. The choke points will become visible and this is where you need to innovate, usually by removing unnecessary operations.

Here is an example. The production line in a Midlands factory employed a machine which painted the steam valves and was very unreliable. The flowchart showed clearly how much this “choked” the process. The flowchart gave the workers the opportunity to ask the manager why the valves had to be painted. Was it protective or for safety? Neither, said the manager, it was Marketing’s demand to have it in the corporate colours. “What!” said a sceptical worker: “It is tucked in the back of a refinery behind a bunch of pipes. Who is going to see it – maintenance engineers once a year?”

Because of the demand for increased output the manager agreed they could skip the paint step. Productivity went through the roof. How did they know? The control chart showed a big increase in average number of units produced and, more importantly almost, a reduction in the variation caused mainly by the redundant paint plant. Meanwhile, the manager did something really important. He investigated what had caused the demand surge as to whether it was a blip or a trend; vital for planning.

So, the change was an improvement (which is not always the case), thanks to deploying the common sense of the control chart and flowchart – and of the shopfloor. The added benefit was that the workers were very motivated by their involvement in the change and took an even greater interest in the performance of the production subsystem. They continued to study the revised flowchart and the trends on the control chart and ask the “why” question more frequently. And so, productivity continued to improve, as did job satisfaction.

(However, there was a downside. Production discovered that Sales were getting higher commission as a result of meeting the demand!! More of which next week.)

Nevertheless, this is what Dr Deming refers to as intrinsic motivation, or what Douglas McGregor 20 years earlier, called Theory Y, which is a belief that some managers had that the work force is internally motivated, enjoys their work in the company, and work to better themselves without expecting a bonus. This was the opposite of McGregor’s Theory X where management assumes that the typical employee has little to no ambition, shies away from work or responsibilities, and will only work when supervised closely – and, of course, that managers are cleverer.

We all know that managers generally get the workers they deserve. So the Y Theory manager gets a more generally amenable workforce, while the X Theory manager probably gets frequent visits from the union. But this does not mean that the Y Theory manager necessarily gets greater productivity. Here is where many British managers in the Eighties went wrong with what they called The Japanese approach. They instituted so-called Quality Circles, ie giving workers time off to sit down in small groups and discuss how the work was going, thinking this is what the Japanese did.

The problem was the Japanese only used the Quality Circles once they had trained the whole workforce, beginning with the managers, in understanding variation and how to map processes with flowcharts. These tools enabled them to make sense of the work and suggest changes that really were improvements, reducing waste, delighting customers – internal and external – and eating into our UK market share.