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Organizational
Focusing - A Renaissance Of Profitability
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Written
by: Charles J. Latino
President
& Founder of Reliabiltiy Center, Inc. National Petroleum Refiners Association,
1988
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The United States of late has become an uncomfortable giant. Like Gulliver
in Lilliput in Gulliver?s Travels, we seem to be breaking free of some
of our traditional constraints and don?t quite trust our newly discovered
opportunities. |
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Until recently, it was good management to center on the bottom line ? to
make money. Management?s developed a machine orientation because these
were the assets that made the money. |
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Not realizing the consequences, we relegated most of our human resources
to the role of liabilities expensive. As a result, we denied ourselves
the use of creativity of the vast majority of our employees to share their
ideas, but the manufacturing systems already beset with the din of variability,
simply could not handle more noise. |
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Perhaps because of our equity finance system and its dependence on quarterly
earnings, we developed a short-term reactive perspective. Although
we could not "shout it out", our manufacturing philosophy was to fix the
problem and worry about paying later. After all, keeping the machinery
running was always top priority. |
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Some of the seeds of our current productivity problems were being sown
back in the early part of the century when we accepted the precepts of
modern management. For example, the concepts of "division of labor" and
"locus of control" served as well as we organized our industrial might
in the first half of this century, but eventually these concepts led to
giant hierarchical organizations that have enormous inertia. A prime example
is General Motors which was recently reported to have 52 organizational
levels. |
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The past 70 years are often described as the industrial age. I prefer to
call it the age of the machine. As Americans we love our machines.
But the machine is a hard and rigid issue. It contains only the flexibility
we, as humans, choose to build into it. Since we now live in a rapidly
changing environment where customer, investor and employee needs are in
a constant state of flux, it follows that the way we view machines and
people, as well as organizational concepts, must change if we are to meet
these needs and the opportunities they represent. |
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Because we have had the driving forces of awesome competition and the needs
of employees to introduce meaning into their work, America is once more
on the move. We are beginning to recognize employees as assets. Hopefully
some day standard accounting practices will mature enough to recognize
these assets. |
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Our orientations are shifting away from machinery to information. All modes
of employee involvement programs are being encouraged. Systems are becoming
more ordered and as they do, creativity is replacing the resultant potential
for boredom. |
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And more important, we are beginning to put a premium on foresight. We
are beginning to understand that early warning systems that tell of impending
deviations from plan or established norms are necessary if a business is
to be successful. |
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The result is that we are entering a new age that has been dubbed, "the
information age," but which I prefer to call, "the age of the individual"
as information without individuals to guide it, interpret it and use it
is meaningless. |
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Yes, Americans are on the move again, but many of our top executives are
too conservative to seek out the opportunities. They have had their trial
by fire. They have survived the turmoil caused by loss of markets because
of high cost and poorer quality than foreign competitors. Now that they
have survived, it seems that many are reluctant to strike out with the
boldness the times call for. Perhaps they need to be assured that we are
operationally sound and that our emerging good fortune does not sit on
the vagaries of trade constraints and dollar valuing. |
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The writer has spent over thirty years seeking the underlying principles
that would unquestionably provide our manufacturing as well as our service
industries with the opportunity for quantum leaps in productivity thereby
furnishing the confidence needed in our operational abilities. I want to
share with you the results of my observations to date. |
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One prerequisite is essential. Employees must be viewed and treated as
assets. This means all employees including wageroll, engineers, supervisors
and executives at all levels. This does not mean that incompetence, negative
behavior and unwillingness to become involved, if not committed, should
be tolerated. |
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The logic for establishing this prerequisite follows. Since technology
and machinery are relatively fixed at any one manufacturing location, and
since the demands of our customers, the United States government, and our
stockholders are in a constant state of change, then the people who work
for us, can provide flexibility and adaptation to our machinery and technology
to meet the challenge of change. |
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Evidence of the establishment of this prerequisite will be the absence
of census management to control cost. This can be displaced with functional
analysis to determine what functions should remain in a company or plant.
As functions should remain in a company or plant. As functions are no longer
needed or can be contracted our more economically, steps can be taken to
determine the competencies that incumbents have and then reduce census
based on the contribution individuals can make to the organization. This
analysis should also include investments in employee training and situation
exposures. |
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Further evidence would be sincere and successful company efforts to involve
employees at all levels in problem solving experiences, to allow more latitude
of judgment on the shop floor, control room, etc., and sound training programs
whose goals are to increase the value of the human asset. |
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We have seen the concepts of Total Quality Control, Just in Time, Material
Requirements Planning, Computer Integrated Manufacturing, Total Productive
Maintenance and the Reliability Approach introduced into the manufacturing
scene over the past few years. These concepts, in their various forms,
are the vehicles of change in America today. |
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As an explanation of these tools of change, suffice to say that each is
based on approaching zero for what is considered negative elements of manufacturing.
For example, Total Quality Control attempts to achieve zero defects in
manufactured product. Just in Time and Material Requirement Planning approaches
try to achieve zero inventory positions. Likewise, Computer Integrated
Manufacturing strives for zero touch labor while total Productive Maintenance
and the Reliability Approach have as their goal zero failures. |
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Reviewing the anatomy of each of the vehicles of change, when successfully
applied, we find they are manifestations when successfully applied, we
find they are manifestations of three underlying principles, namely, Priority,
Proaction and Focus. When all three principles are successfully applied,
the following benefits have been observed. |
5% to10% increases uptime
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40% to 60% decreases
in resource needs
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600% to 1000% return
on investment
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These truly astonishing benefits are the result of forming a partnership
with the people who produce our products and services. This is the hardest
management job we will ever face. It is relatively easy to rigidly control
and regiment a workforce. To harness its true potential will call everyone
participating are too great to not conquer this new territory. |
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The first principle is the enabling principle without which the other principles
cannot endure. Management must step forward and establish that proaction
and focus will be the core priorities upon which their manufacturing
and service operations will stand. To a large extent this is happening,
but under different labels. For example, when management embarks on and
gives priority to a Total Quality Control Program, they are focusing their
organizations and asking them to proact. However, the labels need to be
redefined. |
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For priorities to be meaningful they must be committed to writing and have
the signature of the executive establishing the priority. Proaction and
focus are particularly suited to executive priority as they are principles
and hence policy issues whose successful application will unquestionably
foster the fortunes of the enterprise. |
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Priorities must be advertised. The vehicles that can be used are company
posters, manuals, newsletters, letters to employees and any other media
being used by the company including its own advertising to its customers. |
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Priorities must be reinforced. For example, proaction can be reinforced
by asking, when off-standard conditions such as machine failure occur,
why wasn?t the failure results mitigated by proaction? |
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Mechanisms must be set up for rewarding people who follow priorities and
achieve results, and finally, there should be celebration as achievements
manifest themselves. |
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Each of the principles described are all encompassing as they provide an
organization with focus. When executive management establish priority,
they are also initiating focus on the issues they are prioritizing. Likewise
when proaction is utilized, it is a focusing priority. |
Proaction is best described
as the antithesis of reaction. Most industries understand that their enterprises
are not healthy if they constantly find themselves reacting to off-standard
situations. If we work to reduce spending because of severe budget deviation,
we are reacting. If we must expand resources to repair a machine that has
a production line down, then we are reacting. If we must recycle product
because of quality defects found before warehousing, then we are reacting.
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Proaction
is the ability to:
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Make
decisions regarding the future.
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When we utilize instruments to vibration monitor rotating and reciprocating
equipment, report on the rate of material loss in our tanks and piping
systems, gage beltwear, read temperature deterioration?s in our electrical,
insulation and roofing systems, we are predicting the future health of
our machinery. |
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When we employ statistical trending techniques to monitor our processes
and our businesses, we are predicting the future of our production, quality
and business parameters. |
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And yet all elements of a business are run by, interpreted by and corrected
by people. Indeed, people are the vital element of any business but we
seldom see a commitment to use available technology to predict the behavior
of employees. |
| Employees form the vital
key to productivity because they: |
Provide the vital bridge between technology that is often fixed an any
one facility and the environment that the technology must serve. As the
needs of customers and client change, as government regulations change,
as community demands change, indeed, as the very ethical fiber of business
changes, people are needed to adopt manufacturing systems, procedures and
technologies to meet these challenges.
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Provide the judgment and intuition necessary to run manufacturing entities.
If judgment was not needed in the interpretation of data, instrument reading,
process and machinery noise, we could dispense with people, but we know
that is not possible.
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Seldom, if ever, are purely rational decisions made in our plants and refineries.
Our employees at every level utilize the vast store of knowledge they have
in their subconscious to at least check to see if a decision feels right
and if it doesn?t, it is usually further checked. In fact, studies reveal
this mechanism is a vital part of decision making as most determinations
are largely intuitive with a façade of rationality for selling or
defensive purposes.
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Formulate problems and opportunities as they take in raw data and transform
it into decisions. The only reason for making a decision is to solve a
problem or seek out an opportunity.
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Can be creative, innovative and effect unique solutions to problems and
needs. Unfortunately, this ability is often expensed in industry by the
way we design, alienate and train employees.
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Operate our machine, whether it is a 40,000 hp turbogenerator or the office
copy machine.
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To proact and hence to focus we must first recognize employees as assets.
We must accept their role in industry as creators as well as doers. And
we must train them for their expanded role. As I mentioned before, some
of this is beginning to happen but we are not moving fast enough. To utilize
employees as assets, we must seize opportunities and avoid demeaning practices.
For example: |
If machinery speeds or throughputs are to be significantly increased, management
should review cultural factors to determine if the plant society can handle
the new technology.
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If management is planning to place wage reduction demands on the table,
the effects of such reductions on employees and a study of how to negate
adverse effects should be performed.
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If overhead has to be reduced, instead of offering attractive early retirement
packages that deny people worth for their competencies, function analysis
and competency analysis should be performed.
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This writer submits that the reason industry does not proact to people
resource issues while they do to machinery and process problems is that
the softer issues of people are harder to understand and cope with. |
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From a psychological standpoint, proaction has never been our way because
reaction offers more human rewards. When employees react: |
They become involved in excitement and action.
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They can see the fruits of their labor usually relatively fast, hence they
get necessary feedback.
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They are often recognized for their efforts. Plant managers love to write
letters praising people for responding to emergency conditions.
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They feel a sense of security because they know they are needed.
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| Contrast these benefits
to the individual with the benefits derived from proacting: |
People can become bored as order replaces chaos. Note! The remedy here
is the time introduction of involvement programs that utilize the creativity
of employees.
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Employees are seldom recognized for avoiding problems. I have yet to see
a letter by a plant manager lauding efforts to avoid problems and instead
to work on opportunities.
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Employees often feel insecure because they have no visible proof they are
needed. |
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The reader should know that proaction to human behavior can be accomplished
and that there exists a potpourri of tools to help accomplish this result.
A small sample follows: |
| Human
Information Gathering Tools |
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Morphological Analysis
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Delphi Approaches
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Interview Techniques
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Questionnaires
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Brainstorming
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Synectics
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Nominal Group Techniques
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| Analysis
Job Aids: |
Flowcharting
Decision Tables
Computer Simulation Modeling
Definition Matrices
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| Proaction
Tools: |
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Human Factors Engineering
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Socio-Technical Analysis
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Force Field Analysis
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Cultural Surveys
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Needs Assessments
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Modeling
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This list is presented not for explanation of each technique as each can
be the subject of its own paper, but to make the reader, who may be unfamiliar
with this area of study, aware that resources do exist. The reader should
know that these tools are every bit as viable as the vibration monitoring
equipment, statistical process charts, or thermography scans they may be
using for their machines and processes. |
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Finally, a third principle of Focus is focus itself. Consider that
a large number of companies are currently performing machine failure predictions
and a fair number of companies have introduced total quality control and
involvement programs and yet the results range from poor to good but seldom
outstanding. |
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The question is, why are these companies that are doing all the right things
not achieving quantum improvements? This writer believes the missing element
is focus. |
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We find that facility managers usually have a clear idea of direction.
They know the goals. But as we progress one level below, this clarity begins
to get muddy. We seldom find the second level in an organization in total
agreement with the goals of their superiors. At still lower levels it often
reaches a robotic stage where employees only know their specific job and
nothing else. |
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In effect we find that employees generally do not or cannot identify their
specific contributions with the goals of the organizations. This is akin
to a symphony orchestra whose players do not know their score, although
each performer knows how to play his or her instrument. The result is in
the manufacturing environment as well as the music hall is too often noise,
not music. |
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We have been setting goals and objectives for years. We have had tools
such as Management by Objectives techniques to aid us. Why then is it so
difficult to achieve? |
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Let?s first review the process that this writer recommends, although any
process that accomplishes the desired end result, is of course, acceptable. |
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As a first step, there must be a clear definition of the facility manager?s
goals. A premise must be established here that all goals are measurable,
both subjective as well as objective goals. Many goal setters shy away
from goals that do not specify numbers. This mental set should be avoided
as it is too limiting. As engineers and statistics buffs know, nominal
and ordinal measurement scales can be as effective as interval and ratio
scales. |
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The next step is to determine functions that will be needed to achieve
each of the goals. For example, if an increase of availability is the goal,
then functions for prediction, root cause failure analysis and part inspections
would be established. |
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For each function a list of performance criteria would be developed. After
this is done and only after it is done would the "how" be addressed. |
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The function criteria at any organizational level would be the basis for
the establishment of sub-function at the next subordinate level. |
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As each level makes their contributions to the goals of their superiors,
negotiations are usually needed to adjust goals to realistic proportions.
These negotiations must be handled through impartial facilitators. |
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It is the writer?s observation that focus is not achieved for the following
reasons: |
Existing systems have become too politicized. For example, the practice
of a subordinate negotiating with a superior that may himself or herself
been pressured is not clear thinking. To have a successful negotiation,
both parties must have leverage and the ability to use it.
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As existing systems become tied to salaried and bonus plans, energies that
should have been directed to goal achievement are too often dissipated
in finding ways to develop safe goals to protect one?s earning power. Observation
is that this practice may be more prevalent in corporate offices than at
manufacturing levels.
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It is too simple a task to set goals. Many department managers feel that
they are expected to accomplish the goal setting and the thought of using
an outside facilitator would not be acceptable to superiors.
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It takes time to define each person?s part in goal accomplishment and the
time does not exist. Here we understand why priority has to be one of the
principles of focus.
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It depletes too much energy. In many of the larger corporations the complex
process of budgeting leaves little energy for the refinement of goal establishment.
Indeed, it is usually considered that by the end of the budgeting cycle
goals are established.
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Psychological barriers. Although managers understand that their superiors
do not expect them to be experts respecting the complexities of all machinery,
they do feel they are expected to understand employee needs and reasons
for behavior. Relegating any part of employee issues to consultants, whether
in-house or out, is often not acceptable.
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Territorial considerations are also a barrier to goal setting. Human resource
departments are set up as the place where all human issues are to be directed.
In reality, these folks are inundated with mechanical issues of salary
and wage administration, handling of employee benefits, labor negotiations
and disputes, insurance problems and the like. They have little time to
handle the engineering psychological needs of the enterprise.
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Returning to the analogy of the symphony orchestra, we need to make music.
It is really not good enough to compete on the basis of favorable dollar
valuing and trade constraints. Granted a proper trade balance needs to
be achieved and maintained, but most of us cannot control international
finance and trade practices. What we can do is realize our potential to
manufacture products and provide services that provide our companies with
the incentive for growth. This means not accepting mediocrity when we can
achieve greatness.
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In summary, the underlying principles of Priority,
Proaction
and Focus will achieve the quantum leaps in productivity needed
to restore American industry to undisputed economic leadership in the world. |
| Questions: |
Question: You stated
that in you focus area, you were not saying that operators should do craftsmen
work or craftsmen should do operators work. Can you define your position
on that considering the buzzword of total productive maintenance?
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Latino: I divide craft
work into three categories and maybe an explanation of this will help.
One is the work that actually requires skill. This is true of anybody?s
job, even our jobs if we are engineers or whatever. Then there is the second
type of work in which there is an overlap with other crafts. If you run
tubing for an instrument line or you run tubing to trace a pipe, it is
still tubing.
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Finally, there is the unskilled work, which is the pushing, the tugging,
and so forth. We find that the craft work is really the minority of the
work. I think that, particularly in unskilled areas, operators should help
craftsmen and vice versa if they can. That is the only place, never in
the skills of either side of that issue.
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contact:
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P.O. Box 1421
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Fax: (804) 452-2119
Website: http://www.reliability.com
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