Anatomy of a Turnaround - Part 2: Critical Structure

In my previous article, I discussed the eight drivers of error rates in a plant and how they can be clearly measured in quality and safety metrics. 

If I'm walking into a plant that has performance issues, that's a good space to start. It'll lead you directly to chronic issues you can solve now which will typically be your highest impact leadership and systemic issues. 

For part 2 I want to dig into the nuts and bolts of proper leadership function: the hierarchy. This must be working correctly or change won't be possible.

There are four distinct work streams, each of which is critical and each of which must be able to direct the one below it to make a large organization run smoothly. This cascading function is why businesses use the classic hierarchy.

There are four levels of work which should be clearly defined and observable in a plant.  These need to be defined and the roles within them must be clear. 

The function of the hierarchy is quite visible when you arrive at a plant. Lack of compliance with simple standards at the technical level is almost always strong evidence of a problem in the function of the hierarchy itself.

Strategic – The site director is the only really strategic asset in most plants.  This person may have some staff to assist, but most factories don't have a lot of strategic maneuvering to chart.

There are often corporate players who work more in this space. Certainly, in smaller businesses this will play a larger role at the site level.

Primary Function: The strategic level is working to wield the entire organization in the market and making changes in the long term business positioning of the plant.  Strategic decisions (from a plant perspective) are those decisions that chart how the organization is maneuvered in the market.

Secondary Function: Accountability for the proper function of the organization. This person needs to be an expert in operational and tactical function at a minimum in order to properly ensure those levels are functioning correctly. This individual is accountable for the behavior and function of operational level players.

Operational - The operational level is where the management team falls. 

Primary Function: The operational level is primarily responsible for the organizational learning function.  They consume the reports from daily operations so that they may study each problem and attempt to eradicate it through written process. 

What does this process look like?

Fishbone - Each component of the fishbone requires a different approach to fix.  Therefore, it’s efficient to assign responses based on which “fishbone component” failed. Structure the staff/process for the operational level to be able to perform these corrections fully in one day. This allows you to consume daily problems to full resolution each day.

The operational level delivers systems, not single point fixes. Therefore, we assume each issue is a systemic problem. Single point corrections is a purely tactical action. The operational level adjusts processes for systemic impact.

• Human: a person deviated from procedure. To fix systemically, we must audit the knowledge and practices which failed.  This is classically called “quality assurance,” where you audit each person on the team in a repetitive fashion to ensure they know the right knowledge and are adhering to their known standards.  If you ensure they know the standards and they believe their leadership cares, they will meet them. I have a fantastic case study where I built a database auditing system for this and got spectacular results, roughly doubled production, reduced quality defect rate by 66%.

• Method: the procedure itself is flawed. When you find this issue (which requires an expert and technical understanding of the processes to find or fix), you must fix the process itself.  Then you have to train the people to the change and implement audits to ensure people know the new standards. Method changes are problematic in many organizations.  If you assume each day you will be able to identify 3 process changes which might need to be done, the act of updating 3 procedures and then training them across the entire facility daily becomes daunting.  If each of those procedures had to be trained across 60 people who aren’t all there, the tracking of all these tasks alone is a mammoth task.  In order to simplify this, I have found you can acquire excellent results by ensuring the SOP is correct (but not constraining), then building the very specific details into a repetitive knowledge audit system. Then your auditing team asks for those details from people and retrains them if they don’t know the required detail on the spot.  This ensures long term success.

  
  

• Machine: an issue with a machine requires prevention. Preventing the recurrence (and/or mitigating the cost) of that issue will generally involve one or more of the following 6 responses: 1) Change a preventative maintenance (PM) procedure. 2) If the PM is adequate to prevent the issue but wasn't performed then we must address an issue with PM non-compliance. 3) Modify a machine. 4) Stock a Part. 5) Add a task to the shop training program (procedures expected to be used more than once a year should be trained). 6) Add a piece of knowledge to the database where knowledge is kept. Hard won knowledge expected to be used less than annually doesn't make sense to train, just store it where you can find it.

  
  

• Materials: 1) Is the material defective to where I need to hold a supplier accountable? 2) Can I use another material that would yield better results?

The operational level staff should be evaluating all of the issues from the last 24 hours daily to determine and complete these tasks daily. 

Teams that aren't updating their procedures are failing to learn at the organizational level. If you cannot complete these tasks daily, chances are they're not really getting completed. 

If you don't know how all those process changes are going to get to the floor and you don't have an auditing system reporting whether people are complying with all those processes, then you need one. 

Tactical - 

Primary Function: Ensure the technical level (front line) employees are complying with standards and executing the daily plan.

Secondary Function: Make decisions on how to deviate and report any issues where the existing standards don't completely eliminate all problems and error states. This requires a very high level of technical competence. These people need to really know their processes.

Note: The greatest risk to this level is that the operational level will "skip" them. Only when the operational level holds the tactical level players accountable for ALL technical and tactical level behavior and performance will the tactical level be empowered to become the leaders you need them to be. 

Technical -

This is where the rubber meets the road and these people are the actual value of the facility. Any business can buy a building and some equipment. It's an expert team that's hard to build.

Primary Function: This level is responsible for following procedures that do the tasks required to produce your product.  This is front line employees. You want them to all do your tasks in accordance with established and audited standards.

Note: These people will comply with your standards if two criteria are met: 1) They know them and 2) They think someone cares. You must audit their knowledge in order to determine whether they know them and to show them that you care.

The last critical component to make a hierarchy work: "Shared Accountability".

• In a shared accountability system, we hold leaders accountable for the behavior and performance of their people. There is plenty of research to support this activity. 

  • Example: Suppose an operator on night shift makes bad product because he is not following procedure. The site director would be justified in writing-up or verbally correcting the manager for failing to ensure procedures are being followed. The manager would be justified in writing-up/verbally correcting the supervisor for failing to ensure the processes are being followed. 

• The leaders NEED to be reprimanded when subordinates don't follow procedures. It's never a "one-off". Procedural adherence is THE critical deliverable of the tactical level. This system will actually make the leader's jobs easier because it'll be clear to everyone WHY the leaders need them to comply with standards.

• Shared Accountability structures outperform organizations that deliver single point accountability by every measurable metric. 

• A site director should ONLY hold accountable the managers. The managers are responsible to the site director for all operational, tactical, and technical performance. 

• A manager should ONLY hold accountable the supervisors. The supervisors are responsible to the manager for all tactical and technical performance.

• A supervisor should have relationships with subordinates which are professional in nature and accountability is part of that relationship. When the behavior of an operator gets a supervisor in trouble, the operator will perceive a debt to that supervisor and will be more likely to invest in the change required. That debt empowers the supervisor.