Business Column: If you want better workers then you will need much better management

Pictured is John Carlisle.
Pictured is John Carlisle.

There is much talk today of the need to educate/train the workforce and increase productivity. In fact, the Sheffield Telegraph recently published just such an article by Paul Corcoran, chief executive of Sheffield College, most of which I agree with – except the focus, which should be on management.

When I emigrated from the copper mines of Zambia to England many years ago I began work with a platinum refining company in London. I found the workforce just fine, especially the artisans. I found management to be a real puzzle. They seemed to have no idea of what the workers needed at work to do the job they were capable of. They also treated their suppliers as if they were a lower class and basically messed them around.

The biggest victims were the foreman and the union representatives who had to translate some of the daft management policies into productive and safe work. Many of them suffered from stress illnesses, which I later found was common across the UK. No surprise there.

After 30 years of research and consulting, and two spells of being a professor in Business Schools I have concluded that the cause of our productivity crisis is not the workforce, but the management system they have to work under. Dr W Edwards Deming called this the prison of management, designed to “control” (restrict) the employees. At its source are two flawed principles: focus on cost, and seeing people as a problem, including customers.

The results are what I call Mad Management. It is an illness that exists everywhere in the UK: in business, in universities, in public services – everywhere. In other words, we have an epidemic. Unless we can contain this epidemic we can forget about increased productivity.

Symptoms: Here is a light-hearted example of Mad Management in the heart of Sheffield: the train station (above). As a frequent train user I noticed to my astonishment a few years ago an embellishment to the station stairs. Arrows suddenly appeared, pointing up and down, as did No Entry symbols. We were instructed to walk up and down on the left – something most of us had been doing for years! You may have noticed them? You haven’t? Oh dear, because it cost quite a lot. What management seemed unaware of was that, strange as it may seem, people are quite capable of choosing not to bump into each other.

The results are what I call Mad Management. It is an illness that exists everywhere in the UK. Unless we can contain this epidemic we can forget about increased productivity

However, if they did bump into someone on the platform bridge it was because they were usually looking up for a confirmation of the platform their train was on. Of this there was none. So, mad management gave us something we did not need, and did not give us something, ie a TV screen showing the trains and platforms, that we really needed.

I am pleased to note recently that Sheffield station has recently acquired a new TV screen doing just – years after we were instructed to “keep left”. Somewhere someone must have talked sense in the boardroom, or else someone may have actually listened to some employees.

In Japan there is a word, gemba, which is translated as “the shop floor”; but which really means “where the truth is”. The staff who work at the coalface know what the needs are, of both customers and the organisation itself. The trouble is Mad Management does not ask and when told does not listen, and this can lead to really serious consequences. What follows is one of the worst examples of both cost focus and not listening, from a top British company, BP, in the USA.

The infamous BP Deepwater Horizon explosion in the Gulf of Mexico in 2010 was the worst accidental oil spill ever and, more importantly, killed 11 workers. It came as a complete shock; but not to the workforce. After all BP had been excoriated for the earlier (2005) Texas City refinery explosion that killed 15 people, injured 180 and devastated the local community. In both cases the on-site workers, including managers, had warned the company that safety was a problem.

Before the worst oil spill in Alaska that occurred a year later when more than 200,000 gallons of crude oil spilled on to the unique Prudhoe Bay ecosystem, the Steelworkers Union especially had been warning the company for about three years that cost-cutting was a danger. These went unheeded and cost BP a massive $85 million in fines; so much for cost savings, by the way, at a time when BP was pulling in massive profits.

A 2010 investigation found that regular maintenance of BP’s pipelines and facilities throughout Alaska had been neglected for more than a decade, due to a company-wide effort to reduce operating cost. But now, said the Board, we have learned our lesson. Safety was Job 1, declared the new CEO. Oh, really?

The lessons had been piling up for years. Just a month before the Deepwater Horizon explosion, BP was fined $3 million, for 42 alleged wilful violations and 20 alleged serious violations for exposing workers to safety hazards at its Toledo, Ohio, refinery. The Center for Public Integrity analysed OSHA records and found that two refineries run by BP—the ones in Texas City and Toledo—accounted for 97 per cent of all flagrant violations found in the refining industry over the past three years. So much for learning lessons! The real lesson should have been the danger of cost-cutting.

Almost inevitably two other oil spills followed in Alaska less than a year later. In July 2012 BP agreed to pay $13 million to resolve yet more violations in Texas City refinery. In 10 years to 2009 BP clocked up a record $109,000 in safety fines; $108 million more than any other oil company. For deeper insights into BP and other infractions go to Sheffield’s own illustrious journal, Hazards, which captures these mad moments very well.

Cost-cutting, a serious case of management lunacy. It is clear that BP’s priority was not safety, but cost. There was a “corporate culture that seemed to value controlling costs above human life” (Lustgarten, ProPublica, 2012), and the workers, community and environment paid for it.

So, why is BP still reasonably well regarded? Well, because much of the business community is still infected and thinks that a focus on costs is good for business – especially if it increases shareholder value. And they are wrong. One of the biggest risks that a company runs is to cut costs, because, like BP you may just be cutting the things that make the company safe, or the things that make the company effective, like a good supply chain. Deepwater Horizon alone cost BP $62 billion in settlements and created a $5 billion loss for the company in 2015. As I said, Mad Management!

More to come, especially on the health service ...