Why Is High-Performance Culture So Important?
No amount of technical training and benefits can motivate and empower employees like human developmental training. The distinction is our emphasis on a High-Performance Culture rather than the traditional model that has dominated the business world.
Consider these facts as researched by The Center For Organizational Design:
- A Sherwin Williams auto paint plant boasts of 30 percent higher productivity, 45 percent lower costs, and 25 percent fewer employees for equivalent volume over a sister plant.
- A Digital Enfield plant yields equal volume to sister plants with half the people and half the space, while realizing a 2.5 times higher rate of first-time-perfect modules.
- A Corning mold machine shop realized 100% improvements in quality and delivery while reducing costs from 15% above to 15% below the competition.
- Rocky Mountain Labs reduced turnaround time from 28 to 14 days, reduced internal handoffs by 500%, thereby improving productivity by 50% and profits by 25%
- Tektronix Portables Division decreased inventory from $40 million to $15 million and reduced cycle time from 12 weeks to four weeks.
- Shenandoah Life Insurance Company reduced the employee-to-supervisor ratio from 7:1 to 37:1, yet service improved, and complaints and errors declined.
- American Transtech decreased headcount by 56 percent, increased sales volume by 46 percent, increased customer satisfaction, and had an average of 158 percent improvement in shareholder services.
These are just a few of literally hundreds of businesses that are achieving outstanding results in the United States. They are doing so by changing the way work is organized and empowering the people who do that work. This is known as the High- Performance work systems! However, before looking ahead, let’s look at where we have come.
The Traditional Paradigm
The traditional paradigm has dominated most modern businesses and is based on a set of principles and practices formally defined by Frederick Taylor in 1903 and known as “scientific management.” The principles of scientific management were beneficial a century ago when this country was moving from a rural society to an urban community based on mass production. With these changes in the structure of society and the way work was organized, it was necessary to create bureaucratic organizations to manage and control masses of untrained people. Taylor believed work could be accomplished by breaking it down into simple and repetitive tasks for workers and that management’s job was to control the means and speed of production. Some significant features of job design that came out of the industrial revolution are the following:
- Simple, narrowly defined jobs
- Division of labor that keeps different functions separate
- One best way to do a job
- Uniform and strictly enforced policies
- Management’s role in controlling the means and speed of work
Although this paradigm may have been useful in moving us to an industrial society, it does not fit with the complex and changing nature of the economy, market place, technologies, and people today. It is seriously flawed in two primary ways:
First, traditional organizations are structured around functions such as engineering, manufacturing, sales in a manufacturing company or customer service, accounting, billing in a service company. This creates work that is fragmented in such a way that people do not see or feel responsible for a “whole process.” They might over-identify with their jobs and fail to understand or care about the overall good of the company or customers they serve. This leads to poor communication, redundancies of effort, turf battles, delays in decision-making, and general inefficiency. It is most noticeable when:
- A piece of work is completed and “thrown over the wall” to another department
- When an urgent decision that directly impacts a customer is delayed for a couple of days because it needs someone else’s signature
- When work is inspected after it has been built
The former Soviet Union was the paragon of inefficiency and bureaucracy. It took five years for the government to approve construction of the first McDonald’s restaurant. Furthermore, to change a single ingredient in ketchup took numerous levels of government approval.
The second flaw of this traditional paradigm is the assumption that it is management’s job to control the work of employees. Management sets goals, make decisions, measures progress, evaluate performance.
Managers are the thinkers and planners, and employees are the doers. These organizations fail to tap the tremendous intelligence and creativity of their people. Power exists at the top. People on the “front lines” closest to the core processes have less authority to make decisions, solve problems, or significantly contribute to the mission and goals of the organization.
Most people do routine, repetitive, and somewhat unchallenging jobs without much sense that they make a difference in the overall direction or success of the business. Organizations structured this way are bureaucratic, rigid, unconcerned about quality, lacking innovation, unresponsive to customer needs, and generally unsatisfying places of employment.
Unfortunately, in spite of such limitations, the traditional paradigm continues to dominate the practices of most businesses throughout this country today.
Solutions to this have been Total Quality Management (TQM), Kaizen, Six Sigma, and most recently, Agile and Lean Manufacturing. There is plenty of evidence to show how these have contributed to improving the bottom line. Each of these claims employee involvement as the means to engage and challenge employees “to make a difference.” While boasting about real successes, leaders tend to blocked every time they challenge the organization structures, i.e., the “fiefdoms.” In particular, they cannot get by the barbed wire set in place by mid-level managers. It’s more than turf.
The High-Performance Paradigm
There has emerged in recent years an exciting new paradigm known as High-Performance work systems (HPWS). HPWS is changing the way we think about people and how work is organized. A High-Performance organization could be defined as an organization in which each person is a contributing partner to the business.
High-performance work environments require deep respect and trust in people. People are neither viewed as extensions of machines, objects to be manipulated nor costs to be controlled. Instead, leadership sees employees as thinking and feeling human beings who bring enormous energy, creativity, and talent to their work. Most people want jobs that are meaningful and allow them autonomy to make decisions and contribute to the company in significant ways.
Effective organizations are those moving beyond attempting to control people to trusting and empowering them with the resources, information, tools, skills, and support to manage their work processes and create products and services of unprecedented quality. Moreover, they cross-organizational schisms to make it happen.
Of course, lots of companies espouse a philosophy that values people and yet are not experiencing the kinds of performance described at the start of this article. That is because they are not designed to do so. Only a holistic, systemic view of the organization in which all aspects of the organization are aligned behind that philosophy will realize the real value of their people.
In High-Performance organizations, people understand the business, committed to getting results and organized into self-contained, multi-functional, and customer-focused business units or teams. They take full responsibility for making decisions, solving problems, and continuously improving the quality of their work. Everyone involved with a particular core process is members of the same team and empowered with full authority for the success of a whole product, service, or significant segment of work. Roles and responsibilities are much broader and more meaningful in scope than in a traditional organization. The team is responsible for setting goals, coordinating and scheduling work, interfacing with the customer, training, making decisions and problem solving, monitoring quality, and even measuring performance and making hiring and selection decisions. T
he role of management moves from controlling workers and solving day-to-day problems to facilitators and coaches. They define outcomes, manage boundaries, interface with other departments and, in general, ensure that the team has the resources, training, information, and support they need to carry out the job.
Perhaps this movement could be summarized by five basic principles:
- People are the organization’s most excellent resource and need to be trusted and empowered.
- Work must be designed so that people are allowed to do “whole and meaningful” tasks that integrate all work aspects into a singular and total system.
- Cross-functional teams are the natural work units of High-Performance companies and are responsible for managing all of the tasks and processes to accomplish business goals.
- The role of management must change from controlling workers to providing resources and training as well as managing the environment so teams of workers can be most effective.
- Mid-level managers become “change agents.”
If you keep doing what you’ve been doing…
Research and experience indicate that companies organized by principles of High Performance consistently outperform their more-traditional counterparts. A recent review of 100 companies that have recently redesigned their work environments consistent with these principles showed an average improvement in productivity of 37%. Pretty remarkable!
There is an old truism that “if you do what you’ve always done, you’ll get what you always got.” Most leaders, owners, or managers have not yet tapped the full potential of their workforce. They won’t do so by doing more or even better what they’ve done in the past. Only through a redesign of work and the structure of the organization can outstanding improvements in productivity and quality be realized. Only when we recognize the value of mid-level managers will this happen.
The good news is that over the last several years, a proven methodology has evolved to assist businesses in making the transition from a traditional to the High-Performance paradigm. It is known as “socio-technical systems theory” and used in all types of organizations – manufacturing and service, large and small, whole companies or sub-units.