Creating the Culture for a Continuous Improvement Strategy.
As Dr. Deming said: “It is not necessary to change, survival is not mandatory.” However, if you do want to survive and, maybe develop and grow, you will need to keep on reinventing yourself and, to do that, you will need to create and sustain a culture of continuous improvement. But how do you do that?
First and foremost, there needs to be an acknowledgement that the single, most important ingredient in your culture is your people and that means, all the people, in all functions and at all levels employed by your organisation. All of them need to be dedicated to putting your customer first but, most employees in most organisations never reach this level of dedication because they are not allowed to. Why? As Deming also said, managers get in the way! Management create all sorts of systems and procedures to make work difficult and uncomfortable so, to create the right culture, we need to change many of our management system.
So, what do we need to change? Well, I am tempted to say ‘everything’ but for a start here is my short list:
Incentive schemes, sales commission and bonuses because they put employees on their own agenda: how to get more money, when they should be on your customers’ agenda: delivering what they need. I recall, many years ago, warning a managing director that if he incentivised sales his customer service would suffer but he went ahead anyway and, a year later service had deteriorated so much, he was forced to introduce an incentive scheme for customer service!
Targets, that would include sales targets and process targets. a. Sales targets are meaningless, cause employees stress and, often, result in the customers having their arm twisted to buy something they don’t want or need. And, as Michael Angelo said many years ago: “it’s not that we set targets to high and miss them, it’s that we set them too low and achieve them.” So many lost opportunities. b. Process targets are also meaningless because they are often just wishful thinking by management who set such things as ‘time to fulfil’ as a target without understanding that the world is a random place and people don’t conform. A great example of this confused thinking is the UK’s National Health System where the government sets a target for waiting time in Accident and Emergency at 4 hours! Please ask a person suffering from a serious accident how soon they would wish to be treated and the answer won’t be 4 hours! Which brings me to the one target I’m very happy to set and that is: what the customer needs – what they want, when they want it, how they want it, etc. And I know the customer wants it now, with no errors or defects, with a life-time guarantee and, no doubt, you think that’s unreasonable; well maybe it is but that’s what they want so you had better set it as your target because if you don’t someone else will! For the rest of your ‘targets’ change the language: time to deliver a product to a customer or time to see a patient in an A&E ward are not targets, you should call them “standards,” what you are currently capable of achieving with your current systems, processes and people. But they must be evidence-based, not guesswork or best intentions, you should gather data so that you understand what can be done and then base your standard times on that data. c. Satisfaction targets are also completely meaningless: I know of many companies who set a numerical target e.g. 85% satisfaction and when they tell me this I offer to write their target in a slightly different format: 15% dissatisfaction! Why would any organisation set a target to dissatisfy a percentage of their customers? It makes no sense. Yes, they may have a current satisfaction level of 80% but surely their target has to be 100% satisfaction not 85% (where does it come from?), nothing else makes any sense to me. The only sensible approach when making efforts to improve satisfaction is to have an intention and expectation that each initiative results in an increase in satisfaction but to claim that the results of an improvement initiative will show a 5 percentage points increase in satisfaction is pretty crazy: there is no science that will predict, to that level of accuracy, the reactions of people to a change in your product or service. d. Worse than setting targets for customer satisfaction is setting targets for complaints. Yes, some organisations set targets for being so bad at customer service that their customers complain! One company I know of had a target of 4 complaints per month, i.e. 4 complaints was O.K. but more was not O.K. (I never found out if 3 complaints in a month was not O.K. because the target was not achieved!) Obviously, the only sensible target for complaints is zero. Maybe you won’t ever achieve zero, but you definitely won’t if you don’t try.
Appraisals: the performance appraisals so loved by HR professionals and so disliked by everyone else; don’t the HR people just love their ‘normal distributions’ of appraisal scores? It makes life so tidy because we can all be reduced to a number and placed in a perfectly symmetrical bell curve. (This idea was invented by GE several decades ago and copied by countless organisations around the world who don’t realise that GE found it didn’t work and abandoned it long ago). Now, don’t get me wrong, I do think there is a place for appraisal, but it has to be kept away from HR, it’s nothing to do with them. A discussion between a manager and a member of his/her staff is a healthy process but it should be focussed on helping the employee to see where they could improve their contribution through, for example, further training. (If an employ believes that any sign of weakness will impact on his or her pay review or will be held on file in the HR department then it’s not something that they will be happy to discuss.) The most successful appraisal meeting starts with the manager asking the question: how did it go this last year? And that is, probably, the most you should hear from the manager, the rest is down to the employee doing the analysis and coming to some conclusions.
Performance-related pay, which is linked to Appraisals in many companies, is also a pretty dumb thing to do, why, because it has the opposite effect of that which is intended. To understand this, it is important to first understand human motivation and the impact of remuneration on motivation. First, I acknowledge that if I offer you $20 to fetch me a cup of coffee from the local Starbucks you will probably do it but, ask yourself the question, why are you doing it? And the answer is: to get the 20 bucks, not to do me a favour or a kindness. So, yes, money can stimulate behaviour, but it often stimulates the wrong behaviour because the only thing a reward does is stimulate people to get the reward (or, the only thing an incentive does is incentivise people to get the incentive). The real issue is that, at work, pay is not directly linked to motivation – if I double your pay you probably won’t work any harder but, and here is the issue, if I decrease your pay you will definitely reduce your work level and, maybe, to zero. In other words, more pay does not motivate but less pay demotivates. So, think about what your HR department is asking you to do: reward some of your staff with more money – which does not motivate them – but punish the rest of your staff with less money, which ends up demotivating them! So, if you add the zero level of motivation for those with the higher reward to the negative levels of motivation to those with the lower rewards then you can see that what your HR department is asking you to do has an overall negative impact on your employees’ levels of motivation, as I said, pretty dumb!
So, my message to managers is: get out of the way of your employees.