Professional Documents
Culture Documents
Turn Around or Shut Down
Turn Around or Shut Down
May 2013
If a business unit isnt making money, many organizations assume that more involvement from management is needed to lead the team to profitability. After all, managements role is essentially to help employees achieve the organizations goals. But when an Indian conglomerate learned that one of its business units was in the redand to its surprise, had been for many yearsit found that the traditional management approach might be killing the money tree instead of providing it the nurturing it needs.
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Do or Die
Given 12 months to transform the chemical unit, and the freedom to do so by any means necessary, the business head quickly enlisted the help of a project team to dive into performance metrics and scour research for a solution. The team collected data on three key dimensions: customers, employees, and internal process capability of the chemical unit. Data revealed that the overall customer satisfaction score was a healthy 72 percent; however, the employee satisfaction score was at a grim 51 percent and the overall process performance score was a dismal 13 percent. The business head observed that with the possibility of unemployment looming overhead, morale had sunk to very low levels among the units 71 employees. Research from Fleming & Asplund and the Gallup Organization has suggested that engaged employees drive profitable business outcomes. It was strategically decided that the primary area of focus in the chemical business would be to improve the people score. That, inturn, would boost efficiency and hopefully recover losses. The chemical unit head felt a high-magnitude approach was needed. During this time in India, the concept of self-directed teams was Figure 1: Acknowledge, Qualify, Transform, and Embrace (AQTE)
Acknowledge
Acknowledge linkage between organizational strategy and role of Human Sigma 1 Prepare deployment charter 2
being promoted by local consulting firms. For most organizations, this way of doing business was a hard sell and it demanded a radical shift in thinking. As the chemical unit head explored the approach, he realized it stood on a sound foundation of organizational process alignment and customer-centeredness. He also recognized it includes lean thinking, a distributed leadership model, and people management through empowerment.
Hands-free Management
A self-directed team is a highly trained group of employees responsible for working under minimal management supervision. These teams are different from most others in that they often have more resources at their disposal, a broader range of cross- functional skills, greater decision-making authority, and better access to information. Self-directed teams are equipped to conduct planning, set priorities, coordinate with others when necessary, assess the state of processes, and take corrective action. A 22-step road map to people excellence under the name Acknowledge, Qualify, Transform, and Embrace (AQTE, which is pronounced equity), is illustrated in Figure 1. This approach was developed by the business head to deploy the new work system. It breaks down the concept of self-directed teams into four
Qualify
Identify gaps in customer, process, and people scores 5 Identify customer segments 6 Identify value convergence points 7 Identify resources required to create value at value convergence points 8 De ne/rede ne processes in line with customer request 9 Map current skill levels for operatives and competencies for nonoperatives 10 Identify skill and competency gaps 11
Transform
Reorganize people in teams to suit rede ned processes 12 Prepare location plan for identi ed members 13 Develop position description and authority matrix 14 De ne service levels between teams 15 Reevaluate physical and IT infrastructure requirements 16 Develop PMS for new structure 17 Devise criteria for reward, recognition, and growth 18 Facilitate training and development for members 19 Establish leadership development process 20
Embrace
Administer self-tracking system to manage value and CPP score 21 Establish knowledge management system 22
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A Q T E
the role of Human Sigma in realizing organizations vision. the gaps in meeting customer and process requirements. people processes to unleash the power of Human Sigma. the learnings for sustained growth.
Most functions handled by other departments were transferred to each BU so each was nearly self-sufficient. Examples include human resources, IT, and supply chain management. Additional measures were taken to improve the people score and support staff in this new way of doing business, including: Employees received training to broaden their skills and expertise. Performance-based monetary incentives were offered for teams and individuals. The installation of visual boards to monitor team performance during shifts. Stronger sales efforts so that BUs sold what was being produced in the required quantities. A focus on the root cause of the problem and the process instead of placing blame on individuals. Empowering employees to experiment with new ways to complete old tasks. The CEO assured staff members that they would be placed in a different area of the organization if the self-directed teams approach failed and the chemical business was shut down. Employees underwent a comprehensive training program that was facilitated by the COE. First, skills needed in each BU were identified. Then, each employees mastery of technical skills was assessed and ranked among seven levelslevel one being basic, and level seven being expert. Not surprisingly, most employees ranked highly in skills related to their core area and lower in skills they didnt routinely use. Based on the skills and expertise level required in a particular BU, employees received additional training to better support their team. Once an employee acquired a new skill and demonstrated independent use, a percentage of their salary was permanently increased.
phases, which are shown in Figure 2. It also includes the principles of Human Sigma, a process for improving and reducing variability in employee and customer engagement. AQTE discards a function-based structure (FBS) and replaces it with a process-based structure (PBS). Most organizations have a traditional FBS, which is hierarchal and ridden with silos, giving employees little opportunity to gain knowledge outside of their specialty areas. A PBS is supported by a flatter organizational structure. Because this structure emphasizes working toward a common goal, there is more collaboration among teams, fewer silos, and more engagement.
Y axis
People score
Cu
e tom
r sco
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13% Pro ces ss
X axis 51%
72% Z axis
cor
Y axis
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The chemical unit continues to thrive. The CEO has invested in additional infrastructure to expand the chemical units manufacturing capacity and to produce even higher grades of chemicals.
Process score
65%
People score
Cu
m sto
er
sco
re
13% Pro ces ss
cor
Y axis
Since a self-directed team culture depends on accountability, functional relationships, and transparency to be successful, training sessions focused on the development of soft skills, mentormentee relationships, knowledge transfer, and leadership.
Acknowledgments
Paras Surana: Project Black Belt Pramil Pal: Production Manager Amardeep Singh: HR Manager Sanjeev Banga: Sales and Marketing Manager Rajesh Garg: Procurement & Supply Chain Manager Ajai Dyal: C onsulting advisor on Self Directed Team methodology Vibhu Bhatia: Executive Assistant to Business Head
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