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Last time , we covered silver bullets 3 and 4 for achieving and sustaining organizational excellence that have been validated to drive high performance in today’s organizations…they were..
3) High performing, world class organizations plan for the future
4) High performing, world class organizations measure performance .
This time we will cover silver the last bullets 5 and 6…..
5) High performing, world class organizations focus on their processes.
6) High performing, world class organizations focus on their workforce.
5) High performing, world class organizations focus on their processes. Why is that critical? Processes are the way in which organizations design and deliver products (services, programs) that meet customer needs. Well-designed processes promote efficiency, high productivity, and consistent outcomes; poorly designed (or executed processes) promote inefficiency, waste, and errors: Consider these pain points:
- The cost of poor quality is estimated to be on average 20% of sales (in terms of repair, rework, scrap, write-offs, warranty claims) for any type of organization – businesses, healthcare, schools, nonprofits. So for a $500 million organization, roughly $100 million is waste. This is an average: some organizations are worse. (Quality Digest)
- Deming estimated that about 94% of organizational issues (errors, waste, breakdowns) belong to the system (processes), which by the way, are the responsibility of management.
Here are some best practices in process management:
- Design and innovate work systems that relate to and capitalize on your core competencies. “Work systems” refers to how work gets accomplished (through workforce, suppliers/partners, contractors, collaborators to produce and deliver products and services). Great companies will systematically determine what they choose to outsource to external resources and what they choose to retain internally due to core competency, intellectual property, efficient and cost, or other factors.
- Design work processes that deliver customer value, profitability or financial return, organizational success, and sustainability. Process requirements should incorporate input from customers, stakeholders, suppliers, and partners as appropriate. Design for Six Sigma (DFSS) and other methods are helpful in ensuring that processes conform to stakeholder requirements.
- Manage processes so that they:
o optimize cycle time, productivity, and cost control;
o they minimize rework and errors;
o they promote agility and rapid response to changing needs;
o and they incorporate new technology and organizational knowledge.
- Measure, manage, and improve work processes so that they:
- achieve better performance,
- reduce variability,
- improve outcomes,
- and stay current with business needs and directions.
- · You can use simple techniques like Plan-Do-Study-Act (PDSA) or more sophisticated tools like ISO, Lean- Six Sigma and use DMAIC –Define, Measure, Analyze, Improve and Control as a stage gate improvement process with embedding the right “tools” at the right time for the right job. But you should pick a process-tool(s), train your people on it, create an environment that supports the use of it (including rewards), and stick with it.
- Use problem solving tools throughout your organization so that your people can quickly diagnose and address process failures. The Seven Quality Tools (which include simple tools you’ve all used) and the Japanese A3 method are good places to start. These methods should align (or be embedded) in whatever improvement method you choose.
- Systematically improve EVERY process in your enterprise to keep them current with the changing environment and organizational needs.
- Ensure work system and work process continuity, sustainability, and preparedness for disasters and emergencies.
Core process definition allows a basis for process mapping, measuring and improving and is the basis for employee’s engaged alignment to achieve overall organizational objectives…
6) High performing, world class organizations focus on their workforce. Why is that critical? In short, engaged employees are assets; disengaged employees are liabilities:
- Highly satisfied groups of employees often exhibit above-average levels of customer loyalty (56%), productivity (50%), employee retention (50%), safety performance (50%), and profitability (33%). (Gallup)
- Companies with engaged employees have 19% higher operating income, 17% higher operating margin, and 28% higher earnings per share. (Towers Perrin)
- Over the last 10 years, Fortune’s “Best Companies to Work For” (perhaps a proxy for engagement) average annual stock return was 18% versus 12% for the S&P 500 – that’s 50% better than the market. (Fortune)
So there is a direct link between engaged employees and organizational results.
Consider these pain points: US workers are not happy:
- Of surveyed executives, 47% believed that employee trust has declined as a result of the way their company has managed the cost reductions the last two years. And while 42% believe their companies are not fully effective at measuring the impact of cost reduction efforts on employee morale, fully 37% – more than a third of US businesses – believe that their organization’s handling of the economic downtown will make talented employees more likely to leave. (Hewitt & Associates)
- Only 45% of US workers are satisfied with their jobs (so 55% are NOT). Only 51% find their jobs interesting, 43% feel secure in their jobs, and 51% are satisfied with their boss. The result: between 50-70% of US workers are – or will – seek a new job. (Conference Board)
- Only 17% of US workers highly engaged. (Towers Perrin)
Here are some best practices in workforce focus:
- Systematically assess your workforce capability (your ability to accomplish work through the knowledge, skills, abilities, and competencies of your people) and capacity (your ability to ensure sufficient staffing levels to accomplish work processes and meet customer needs).
- Recruit, hire, place, and retain workers, ensuring that they represent the diverse ideas, cultures, and thinking of the community and that they represent – and are consistent with – your organization’s values and culture.
- Manage and organize the workforce in such a way to accomplish the organization’s work, capitalize on core competencies, and address strategic challenges and action plans. This is all about ensuring your organization structure and job design supports your strategy and complements your organizational strengths.
- Ensure, measure, and improve workforce health, safety, and security.
- Support employees with appropriate policies, services, and benefits, tailored to the needs of different workforce groups.
- Identify the factors that affect workforce engagement, and measure levels of workforce engagement across different employee groups. There are many tools for this (Gallup Q-12, Hewitt, Passionwerx, others).
- Develop and train your leaders and your workforce. Development should support your organization’s core competencies, address strategic challenges, and promote the accomplishment of action plans; it should promote organizational improvement and innovation; it should include ethics.
- Manage career progression and succession planning throughout the organization.
- Reward and recognize employees through a performance management system that supports customer focus and the achievement of organizational action plans and goals.
Engaged employees lead to engaged customers; engaged employees also promotes innovation and organizational alignment to core business processes and their improvement.
So there you have it – the six things that organizations need to do in order to achieve and sustain performance excellence:
- You need to focus on customers – to listen and anticipate their needs, to build relationships and engage customers so that they are committed to your organization, are loyal, and are willing to advocate for and recommend your organization to others.
- You need to have effective leadership that sets vision; aligns, guides, and manages the organization; focuses on workforce, customers, and partners; communicates effectively; and ensures accountability, transparency, ethical behavior, support of key communities.
- You need to set and deploy strategy – to set a course for the future, a grand vision for the organization.
- You need to measure performance, both at the day-to-day operating level as well as the strategic level – ensuring that facts (rather than intuition) become the basis for organizational decision making and improvement.
- You need to focus on your processes so that you can optimize your resources and deliver products, services, and programs that satisfy – fully satisfy – customer needs and create value for the enterprise.
- You need to engage your workforce so that they are satisfied, capable, and fully motivated to reach high performance, to serve customers, and to achieve organization objectives.
ALL organizations need to manage and improve ALL of these areas – it’s really only a matter of how WELL they manage the system. True excellence is difficult; sustaining it is even more challenging. The journey to excellence never ends and is very rewarding as data shows “excellence” winners have 2 times more profitable growth than their competitors….why wouldn’t you pursue a performance excellence framework and create your own Roadmap To Excellence?.
For more information….
Don Hoffert is President of Roadmap To Excellence LLC., a management consulting firm specializing in performance excellence” roadmap development and execution” systems that have led organizations toward winning state and national performance excellence awards.
He is a certified Baldrige Examiner, a Program Mgmt Professional, and a Lean SixSigma BlackBelt and and is a CEO roundtable moderator. Don can be contacted at: email@example.com or 612 298 7858.
Back to PWI Magazine - Summer 2011