More on the Elephant:
Do the re-assigned managers increase productivity in new departments? Do they increase revenue or reduce costs? If yes, then the 'savings' appear in the improved company performance - still a greater spread between income and expense, yielding increased revenue.
Or not.
Ruth Baratta
Manager, Export-Import
Shaklee Corporation
We can easily recognize the meaning behind the phrase “elephant in the room," but there must be something larger than an elephant which can be used here. Beyond the area of technology, concern over the issue of displaced personnel is the single largest obstacle to implementing any kind of process improvements. I believe that it is the principle reason that lean practices are not more universally embraced.
Anytime you introduce something that can improve a process, whether it is software or process improvement or even education, there is a possibility that fewer manhours will be spent performing the process. Fewer manhours means fewer people. Management understands that this factor will offset the investment made in implementing the solution. The workforce understands that this will be the cost to them – fewer employees required. Line supervisors and middle management also understand that fewer employees means less management. Jobs going away is seldom a motivator.
We see this in action regularly as we are involved in implementation of best practices and process improvement projects as well as the implementation of appropriate metrics to measure improvements. Clearly these projects are meant to quantify and reduce waste, but many times the non value-adding activities are recognized as the thing employees are being paid for. If these processes are improved or eliminated, the job and the employee goes away.
Similarly the simple action of focusing on the process and measuring it puts the people involved in the spotlight. No longer can they assume a relaxed workday joking with colleagues, they must focus on meeting targets which are narrowly defined.
Moving employees to other positions is only viable to the employer if there are open positions available, and to the employee only if they are not receiving a pay cut in the process. In a high growth or high turnover environment this issue may be muted, however in a more stable business trying to improve service and profitability this is a major concern.
If you are in the former group you are fortunate and will likely have little resistance to implementing your plan. However if you are in the latter, you would do well to develop a serious strategy around this issue well ahead of any major investment in technology or process change. The strategy could be focused on ways that the improvements will help to grow the business, or it could be simple attrition of headcount over time to build ROI. However if it focuses on mass layoffs of personnel, you should count on little cooperation and likely a failed project.
Steve Murray
Senior Research Analyst
Supply Chain Visions
The adage, “work expands to fill the void”, is a classic response to the productivity improvement example you made in this article.
To avoid the dilemma of moving personnel around so that they are just doing something else to reduce cost or increase efficiencies, the focus should be made on changes that result in top line revenue growth instead. For example, by automating processes involved in standard delivery transactions, additional stops can be added to a delivery route allowing delivery revenue to increase. Likewise, everyday warehouse management and DC process improvements can positively impact revenue potential. The challenge is to identify activities that provide measurable revenue generating opportunities. As it becomes more difficult to demonstrate process cost reduction, revenue growth provides the appropriate metrics to monitor.
Ken Pywell
Zebra Technologies
I'm speaking not for Beckman Coulter but my experience with General Cable Corporation. We implemented a WMS/TMS system that enabled us to shift office personnel into a more active role in the warehouse and transportation. They went from keying historical transactions to actively directing the flow of the DC through the system. Supervisors were more active on the floor with better tools to support them. The reduction in force came in two ways. One, the elimination of temporary labor force once the system was in place. Then, additional reduction was obtained by attrition by not replacing those that left.
This supported the strategy to reduce cost while improving quality.
Ramon Rodriguez
Beckman Coulter
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