Increasing profits is a goal of all companies — but how can you really make that happen?
As a 25-year veteran of the plastics and petroleum industries, I've had my fair share of experience doing that. Here are two of my most effective techniques.
When starting an improvement effort, meet with all of your employees at all sites as quickly as possible, in groups of 20-70, depending on the size of the company. Tell them, to the best of your knowledge, how the business got to the situation that it is in and what you think needs to be done. Don't present an emotional speech with sports metaphors. Don't announce a new corporate initiative; it will be met with a residue of cynicism from past initiatives. Take a low-key factual approach.
After each presentation ask for questions and expect to hear a lot of emotion and skepticism; it's probably justified. Be truthful and polite with your answers and admit if you don't know the answer. Don't make any promises that you can't keep.
Follow your initial communication with regular updates, since it requires multiple communications to ensure that a person truly hears a message. Send a newsletter or e-mail to employees on a biweekly or monthly basis to repeat a key portion of your original presentation, to note any changes in the business environment and, once the improvement process is under way, to highlight improvements that employees are making.
Perhaps the most effective communication approach you can use is to have lunch at least twice a week with four to eight employees at a time. Bring the food right to the employees' work location, whether it's a maintenance shop, accounting department or sales office. Being on employees' home turf while bringing food makes them comfortable enough to say what is on their minds — and they do, which might be quite uncomfortable for you at first. But stick it out; it's worth it.
Start each lunch by repeating the business strategy — you can never repeat it enough — and saying what you've been doing to implement it. Then ask the employees for their “questions, comments and insults” on the strategy. Asking for insults always draws a laugh as an icebreaker and helps initiate very meaningful discussions. Also, ask to hear their ideas for improvements.
This is their time to talk so you should say relatively little. Their complaints are sincere and are usually offered respectfully but forcefully. Their improvement ideas are often quite insightful and specific, especially if they have received the problem-solving training described below.
Be sure to take a lot of notes. When lunch is finished your notes will allow you to summarize what you just heard them say, which demonstrates to them that you were listening carefully to their ideas and complaints.
After the lunch, review your notes to identify issues that need your attention, especially those areas where there are obstacles to rapid improvement. On occasion you will find that you can make very positive changes that same afternoon.
Even though the lunches take time, they will make your job much easier. You'll hear more straight talk about the problems your business faces at the working level than you'll hear anywhere else. That will allow you to test your assumptions, remove obstacles and make important midcourse corrections on a far timelier basis.
Start small, win big
If you begin to solicit ideas for improvement and have the trust of your employees, you'll get so many suggestions that you simply won't have time to evaluate and get started on them on a timely basis. The danger is that you will become the bottleneck and that cynicism will build as your workers tire of waiting for you to get around to their ideas.
Instead of being the bottleneck you need to provide the proper training and guidelines so employees themselves make the right decisions and proceed quickly on improvement projects.
Start this process slowly. Train only a few people at first. I use a skilled outside person to provide two days of training on teamwork and problem-solving skills to the first team. Each team consists of 10 employees that work in a common area. They learn how to work together to identify, quantify, and solve problems in a nonjudgmental and quantitative way. They identify 10-15 problems in their area that they think are ripe for improvement.
The team chooses which problem they want to work on as their first project. This allows them to practice and improve their newly learned skills on a problem they are passionate about, usually a problem that has been around for a long time.
During the problem-solving phase the trainer meets with the team one hour per week to monitor its progress and provide advice.
The typical team solves the problem surprisingly quickly, usually within six weeks. This success then gives them confidence and passion to move on and solve problem No. 2, then problem No. 3, etc., in rapid succession. The team members become remarkable problem-solving machines, achieving more high-priority financial and workplace improvements than any boss could ever dream of.
A critical part of their motivation and repeated successes is that neither you nor the trainer chooses which problems should be attacked or even makes recommendations as to which area to focus on. The team does the choosing.
It is also important to use an outside trainer so that the team members can be candid with the trainer and the trainer can be candid with everyone in your company, including you!
The only guidelines to the team are that they have to choose a problem they believe can be solved in 90 days or less and that if any investment is required the savings from the project must pay for that investment within one year. As it turns out the investments required for the team's projects are usually minimal and the paybacks are rapid.
Each 10-person team generates at least $30,000 per year in increased profit, with many teams exceeding $100,000. Because the team is the driving force behind solving the problems, their successes continue for years. This is in sharp contrast to most improvement programs you've heard of, where the initial enthusiasm fades over time.
The first team's success always generates curiosity and interest from other employees. They see the higher morale and confidence of the first team and then want to be trained as well. It's almost like the tale of Tom Sawyer whitewashing the fence: Tom Sawyer started alone but ended up having all the others join in. You'll find that even the skeptics are willing to be trained after seeing the successes of the teams and the positive reactions of fellow employees.
These two techniques are effective because they create a climate of openness, respect and innovation, and provide employees with the necessary training to quickly turn improvement ideas into real profits.
Jim Schaefer is director of Shelburne Group Inc., a management consulting company in Shaker Heights, Ohio.