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Improving Organizational Performance: A discussion with Corporate Review

  
  
  

Corporate Review Meets with Carpedia International to Learn About Improving Organizational Performance

April 15, 2015 - Boca Raton, Florida -- Many executives struggle to move their organization to a higher level of performance in a reasonable period of time. Carpedia International believes that they can help organizations achieve measurable and sustainable growth. Tune in to watch Carpedia International segment airing on the Fox Business Network (as pd. prog) on April 18, 2015 at 4:30pm EST. Check your local listings for airtimes.

Carpedia is a consulting firm that provides executives with resources to help them find ways to move their company forward. The company works onsite with the client’s management teams to discuss exactly what the company would like to accomplish and the timeline that they would like to use to achieve it. Carpedia will then help the client develop tactical ideas and techniques to meet these goals.

measurable sustainable profit improvement

Although many companies are hotbeds of new ideas and make operational changes regularly, when it comes to the broad scope that many companies are looking for, they begin to struggle. Carpedia has the experience and skills needed to help get people working together across various systems and departments to achieve change on a company wide level. This process can be time consuming and difficult, particularly when one considers the changes in outlook and behavior that is often required from everyone in the organization.

“Company-wide changes can be enormously difficult for organizations, but failure to do so can hold these businesses back from achieving their potential. When we learned about how Carpedia International helps companies make the operational changes they desire and move forward in their industry, we wanted to get them on the show to share their ideas with our audience,” says JL Haber, the Vice President of Programming for Corporate Review.

Carpedia International offers clients a distinct advantage because of their individualized approach for each company. They do not rely on formulas or predetermined mechanisms. Instead they will form a strategy from meeting with the company and guiding them towards their goals.

Those interested in learning more about Carpedia International and the work they do with company efficiency should watch this latest episode of Corporate Review. Tune in to watch Carpedia International segment airing on the Fox Business Network (as pd. prog) on April 18, 2015 at 4:30pm EST. Check your local listings for airtimes.

About Corporate Review

Corporate Review is an award winning business and health program that is independently produced by MMP (USA), Inc. The show provides its viewers an in depth opportunity to find solutions to the industry problems from some of the top business leaders from across the world. With more than 5,000 companies participating on over 500 shows, Corporate Review continues to be the premier and targeted outlet for the latest business and health stories. Corporate Review airs on cable networks to over 100 million potential television households.

For specific market-by-market air dates and times, please email Moniqueh@mmpusa.com. For more information, please visit www.corporatereview.tv.

Green and red time opportunity

  
  
  

How to improve businessWhen we look for opportunity, we categorize time into green and red components. Green time is the current productive part of a process, while red time is the non-productive waste. Green time typically takes up 50-60% of a process, which means red time usually takes up between 40-50%. It surprises most managers to learn how much time falls into this red component. This is in part because people often equate productive time with effort, but the two aren't necessarily related. Non-productive time can take as much or more effort than productive time. It's also a little misleading because this somehow implies that a process could or should be 100% green. But some red (or non-productive) time, is actually required to allow some flexibility of operations. Other factors can also have an impact, such as machine versus people-driven processes or union verses non-union environments. Even so-called world-class processes generally have 10 to 15% red time due to real-life variability.

Improving either the green or red components of a process requires different types of problem solving. Improvements to green time require changing the process as it is designed. This was called "re-engineering" until the term fell out of favor and is now more popularly referred to as "innovation". Improvements to red time require eliminating or reducing waste that is inherent in the process. This is where "lean" and its numerous variants are commonly applied.

The hunt for opportunities

  
  
  

opportunity analysis improve productivity"Opportunity" is one of those euphemisms we use instead of "problems." It's arguably a better word, because most operating problems are, in fact opportunities for an organization to improve. Before we take on a project for a client, we do what we call an "opportunity analysis," which is like a financial and operational due-diligence. A key purpose of the analysis is to identify opportunities that exist in the current process and, more generally, the magnitude of the total opportunity. But given the complex nature of many organizations, where do we look for opportunity?

To help structure our thinking, we break down organizations (or specific functions or processes) into four separate, but interrelated areas: product, process, management systems, and organizational behavior. Within each of these four areas there are a number of things we look for, and a range of studies we can apply. One of the things we've learned over the years is that although organizations are complex and can differ significantly from one another (even within the same industry), there are a number of operating problems (i.e. opportunities) that are quite common.

In this era of hyper-competition, managers are constantly being asked to improve the productivity or effectiveness of their area of responsibility. This series is designed to provide insight into some of the more common opportunities we see across many diverse types of organizations and industry sectors. While not everything will be applicable to all organizations, we are sure you will find many ideas that can help you in the never-ending hunt for opportunity.

 

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In search of opportunities

  
  
  

Observation #52

performance improvement opportunityOpportunities exist everywhere in organizations, because businesses are constantly changing in both subtle and not-so-subtle ways. We spend a lot of time observing organizations of all shapes and sizes, and it is truly fascinating to see how they operate. Hospitals, wineries, hotels, transportation firms, production plants: they are all remarkably complex. So while opportunities may exist, they are often not obvious. Unfortunately, competitive reality demands that companies never stop improving their performance and, in turn, that managers never stop looking for opportunity. But where and how do you look for these opportunities?

To answer the "where" part of this question, we ask ourselves four questions:

  1. Are there any gaps between what your product or service provides and what customers (or users) actually want?
  2. Can the process be made faster, more reliable or with less cost, without impacting quality?
  3. Are the management-system tools effective and used properly by managers?
  4. What do managers actually do with their time and is it what the organization needs?

The "how" part can be a little trickier. When you spend as much time as we do looking for improvement opportunities, you start to create mental checklists of both what you should be looking for and where you're likely to find them.

 

What are specific management behaviors?

  
  
  

Observation #51

management behaviorsIn the previous Observation, we discussed how everyone agrees that management behavior is a critical issue in organizations. However, the meaning of the term itself is often a little fuzzy. What behaviors are we actually talking about? If we look at the specific behaviors that most organizations would like their managers to possess, we can group them into four broad categories, which aptly reflect Deming's PDCA model: plan, do, check, act.

Plan (planning behaviors)

  • Strategic planning
  • Sales and operations planning (S&OP)
  • Improving performance
  • Managing change
  • Communicating

Do (execution behaviors)

  • Scheduling
  • Assigning work
  • Communicating expectations
  • Following up and actively listening
  • Giving performance feedback

Check (analytical behaviors)

  • Monitoring activity volume
  • Tracking key performance indicators
  • Identifying variances to plan
  • Improving processes
  • Problem solving for root causes

Act (improvement behaviors)

  • Prototyping possible solutions
  • Making decisions
  • Persuading others
  • Training to improve skills
  • Coaching for improved performance

We use this list when studying and observing managers, evaluating skill levels, and for training and development programs.  

What does changing management behavior really mean?

  
  
  

Observation #50

management styles and behaviorsWe often say it's tough to change management behavior. Universally, executives nod their heads in agreement. But when we all say it, what do we actually mean? What specific behaviors are we all talking about? What does changing management behavior really mean?

Like all of us, managers tend to repeat the same behaviors over many years, and in time those behaviors become deeply entrenched. Behaviors help form individual management styles and are the basis of familiar, comfortable work routines. Changing management behavior means getting managers to actually act differently from what they have done in the past. This could be setting clear daily expectations for staff, following up on planned work, actively listening or giving feedback. While these behaviors may seem very basic, they are not always common practice.  Interestingly, they're actually more common in production environments than they are in office environments. When a behavior isn’t performed by a manager currently, it will be hard for him or her to start doing it in the future. Furthermore, not only does the manager not know how to do it, employees don't know how to respond to it.

Another aspect of changing management behavior is to modify the "style" of management that people use. We are strong believers in an active management style that is controlled, collaborative, and focused on results. On the other hand, we are not fans of management styles where an aggressive manager bullies subordinates, or a manager feels the need to flatter someone in order to get something done. We also are not fans of what we call "passive management" styles, e.g., where managers shy away from issues and avoid confronting poor performance. Nor are we fans  of the management style where a  manager asks an employee to do something but is apologetic and does not accept responsibility for giving the assignment -- or blames it on the company.

It's a lot easier to modify specific behaviors than it is to modify a person's management style. Behaviors are usually the result of doing something over and over again, which can often be tweaked or adjusted. Management styles tend to reflect both the social style of an individual and the culture of an organization. Some organizations are aggressive and some are passive; this often mirrors the styles of key executives. On their way up through the ranks, executives tend to hire and promote similar kinds of people, which over time creates a corporate management style. It's one of the reasons why corporate mergers can be so difficult: two similar businesses can have very different management styles.

Management styles can -- and do -- change over time, but from a practical perspective it's far easier to focus on modifying specific management behaviors.

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The problem with management training

  
  
  

Observation #49

is management training beneficial?In the relatively early days of our company, a few partners took a high-speed driving course on an old Formula 1 race track just outside Montreal. The conversation over dinner on the first night was not about how interesting or exciting it was to drive open-wheel race cars -- it was about how good the actual training approach was. In a nutshell, the instructors broke down racing into two things: driving in a straight line and driving around corners. To be a good driver, we had to master these two skills.

The instructors broke down each of these skills into specific steps. For example, driving around corners consisted of breaking on a straightaway, turning at a steady speed to the apex, then accelerating to the corner exit. They would teach one skill in the classroom and then take us out to the track to practice. Gradually we learned how to combine the skills.

Good athletic coaches use a similar technique to teach athletes where to position themselves and what to do while their often chaotic environment swirls around them.

The problem we have found with most management training programs is that they don't use this approach. They tend to overload managers with PowerPoint slides that tell them, in technical terms, what they should do and what to expect. They rarely break down management skills and get managers to practise those skills in pieces before trying to put them all together. One of the results is that many managers know what to do, but they don't always know how to do it. There is a lot of training about problem solving for example, but it's largely academic. It may instruct managers to identify the problem and look for root causes. But how exactly does a manager do that? Where and how do they learn about a variance? How do they look for root causes? What studies do they need to do? How do they do those studies? Who should be involved? What should they be trying to achieve? These are the questions that management training needs to address to be helpful.

The driving course left an indelible impression and made us go back and change the design of our training programs. We've still never achieved the clarity of the original course, but they are certainly more useful as a result of that experience.

A specific target is better than a range

  
  
  

Observation #48

true value of opportunityWhen we work for a company, we always do our due diligence upfront to pinpoint a specific improvement target for the project. Well, almost always. Sometimes we estimate the potential improvement based on our experience, and to be extra cautious we use a range, rather than a specific number. We peg the expected target number in the middle of the range. This is usually a mistake.

The problem with ranges is that there is often a strong gravitational force pulling the objectives of the initiative towards the lower end of the range. The range itself suggests that anything within the range is OK, otherwise the range would be different. Psychologically, this results in the midpoint becoming the effective maximum, and the "negotiated" objective falling somewhere between the midpoint and the low end of the range. This is really not surprising, and it’s the same phenomenon that plagues budgets every year. Despite the financial incentives that are sometimes introduced to encourage people to maximize the "reach," when it comes to performance improvement it's simply not in the best interests of managers to reach too far. From the perspective of the manager tasked with getting the results, it's a good idea to manage expectations, and over-delivering is always viewed in a better light than under-delivering. As well, in this world of continuous improvement performance, gains are expected each and every year, so why wouldn't you hedge? If you throw too much into this year, it will probably just mean that next year's "reach" will disappoint.

All of which is why giving ranges is a bad idea. It's better to spend time upfront and properly assess the true value of opportunity that exists within a process or function, and then target a specific percentage of that opportunity. This provides logic and clarity in terms of what the requirement should be. Over time, the actual realized success rate of the improvement project will establish what the right percentage should be. If, for some reason, you have to use a range, it's better to keep it fairly narrow. 

 

 

How many managers does an organization need?

  
  
  

Observation #47

Span of Control analysisSometimes we do a study that we call the "Span of Control" analysis, where we look at how many subordinates report directly to each manager in an organization. It's a more difficult study than it sounds, because the way organizational charts are drawn is not always how they really are. Reporting lines are sometimes blurry and titles can be misleading (e.g., some managers aren't really managers). The numbers alone don’t reveal the full story, but the study does help one learn a lot about the organization.

The question of how many managers an organization needs is a by-product of how many people each manager should have reporting to them. This is an important decision because it ultimately dictates the number of managers, the levels of management, number of divisions, business units and so on. Every manager, in turn, creates additional incremental costs (e.g., travel, meetings, equipment, space, reports, etc.). All these things heavily influence the fixed overhead cost base. During a recession, there is usually a general thinning of management positions (through combining departments and delayering), but this is not always a good business decision. We've seen many cases where companies stripped out managers and supervisors only to see productivity subsequently suffer as a result.

The number of managers that an organization needs is a function of the management approach and style of the organization. As such, it can vary by industry – and even by company within the industry. Many organizations use span-of-control rules of thumb to determine how many managers they need, but this approach can become ineffective as job functions and technologies change. The right number should be analytically determined, similar to any situation where you correlate activity and time. Managers do specific "management" tasks (e.g., plan, train, administrate, review) as well as general in-process work. What an organization wants its managers to do determines how many managers they actually need.

The difficulty and importance of managing "shoulder periods"

  
  
  

Observation #46

Many industries experience "shoulder periods." These are the time periods leading up to and away from the peak volumes. Figuring out how to manage these periods can be a difficult task for managers, but it’s also very important for realizing performance improvement gains.

When managers or performance-improvement teams try to "streamline" resource requirements (e.g., labor, equipment, space, etc.), they do this by figuring out what they have to do (activities); how much time it takes (time standard); and how often they have to do it (volume). Usually the biggest variable is volume. If the business has any kind of seasonality or variability, which of course many do, an average volume based on the total year could be too high one-half the time, and too low the other half. So companies build resource and production plans in order to forecast volume and determine their resource needs as they operate throughout the year.

performance improvement gains during shoulder periodsVariability is tough to manage. If your peak volumes are in October and November, when do you add staff and when do you reduce staff? Or can you do this at all? What if the skills required are not easy to find? If you ignore the variability and carry a fixed staffing level, your productivity will be high for two months and naturally drop during the other 10 months. Will attrition take care of any of this imbalance? If you cut hours or lay off staff, will they go to competitors or get other jobs? What if you can't find enough qualified people when you need them and then miss your volumes and damage your service reputation? These are all very difficult questions that managers have to answer.

We've used "months" as a peak time period, but to make this issue even more complicated many functional areas have shoulder periods throughout the month (e.g., accounting), throughout the week (e.g., medical labs), or even throughout the day (e.g., restaurants). If you don't manage these shoulder periods carefully, it's very easy to see the productivity gained during peak periods offset by the productivity lost at other times.




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