May 2009

Todd Herman

"Drive out fear, so that everyone may work effectively for the company." – W. Edwards Deming

This quote from Dr. Deming certainly fits our time. We are all experiencing many fears, mainly centered around the economy, and its effects on our lives. For retirees living on investments or pensions, there is much uncertainty and angst. For those of us still working, fear has reached a level I have never seen in my nearly 26 year career.

I found it odd this quality management pioneer would elevate such a "soft" concept to one of his 14 key points for transforming business effectiveness. Then, I began thinking about the role fear plays in several of what Dr. Deming calls "The Seven Deadly Wastes."

One bit of background. Long ago, I realized the three broad measures of business processes – quality, cost, and cycle time – are equivalent. Simply stated, a change in any one of these unavoidably affects the other two – all three are inextricably linked. Read More on How to Cut Costs and Improve Quality

Constancy of Purpose

Dr. Deming's first "deadly waste"is Lack of constancy of purpose. Suppose a company's chief executive routinely manages by intimidation and fear. In such a company, employees never know what to expect – so they guess about what is important to this leader. "Quality" is most simply defined as "conformance to expectations." Guessing reduces quality because you cannot meet expectations the first time – thus, rework is incurred, lengthening cycle time and increasing cost.

Short-Term Profits

A second "deadly waste" is Emphasis on short-term profits. Imagine a mid-sized construction-related company reducing costs by laying off most of its sales representatives – however, no offsetting technology tools or business process improvements were introduced to support the remaining sales force. Thus, the quality and quantity of interactions with customers and prospects is severely diminished and causing, for example, longer cycle times to prepare a sales quote.

A Company's Visible Figures

One other "deadly waste" is Running a company on visible figures alone. Consider another all-too-common scenario – a large manufacturing company continuing to lay off hundreds of domestic employees, and announcing plans to shutter a US plant to move jobs to lower-cost countries. With offshore operations, this company has indeed reduced its most visible figure, its product costs. The less visible trade offs? The company will take a short-term hit to quality and cost until offshore employees meet quality and productivity standards. It will also permanently incur longer cycle times to fulfill a customer order and higher carrying cost while goods are in transit.

Given the fear inherent in each of these examples – fear of getting chewed out, fear of being fired, or fear of positions being offshored – what can you as a manager do to drive out fear in your area, so your staff can work effectively? What I have learned from clients and personal experience boils down to this – give your staff hope, while still realistically describing the situation.

Ways to Reduce Fear in Your Company

  • If you are overly optimistic, you risk being perceived as "out of touch" and not credible, thus losing respect.
  • If you are realistic in describing a situation, but then fail to provide hope, you compound the problem by leaving employees guessing, allowing them to imagine a "worst case scenario."

Gallup consultants Tom Rath and Barry Conchie share several excellent comments on hope in their book, Strengths-Based Leadership: Great Leaders, Teams, and Why People Follow:

  • "...it appears that followers want stability in the moment and hope for the future."
  • "Hope gives followers something to look forward to, and it helps them see a way through chaos and complexity. Knowing that things can and will be better in the future is a powerful motivator. When hope is absent, people lose confidence, disengage, and often feel helpless."

Some techniques to instill hope and limit fear:

  • Communicate, communicate, communicate – over-communicate to mute the siren song of fear.
  • Be clear, concise, honest, and sincere.
  • Share what you do know, and admit what you don't.
  • Answer questions accurately, commit to followup on questions which cannot be answered immediately, and then honor your commitment.

Followers need hope to drive out fear – and the best managers instill hope in their staff, because they know hopeful employees produce better results.

"Leaders are dealers in hope." – Napoleon Bonaparte

Sincerely,

Todd L. Herman

Todd L. Herman


Client Project Update:

I am pleased to provide you with an update on our client projects. Projects we have completed over this period are...

Speeding Large-Scale Data Editing

Developed Microsoft Access functionality to improve users' productivity in editing record sets in SQL Server databases, creating specialized functions to enable spreadsheet-like large-scale operations, increasing efficiency over the default record-by-record editing.

System Modifications for New Offshore Plant

Worked with client personnel to research and resolve post-implementation issues for systems modifications to support a new offshore plant, providing quick issue resolution as this business-critical plant moved from pilot-production mode to full-scale production.

Managing ERP System Implementation

Provided systems knowledge and project management to help this client implement an ERP system, allowing key users to focus on implementation tasks, and helping ensure tasks are done accurately and completely.

Devising Metrics & Dashboard

Helped this medical services company devise a series of metrics to track progress in reducing and resolving denied or rejected claims, and then implement these metrics via an intranet dashboard, defining steps and focusing attention on actions to improve accounts receivable aging.

Quoting System Rollout

Trained employees in multiple locations on this Lotus Notes-based collaborative quoting system, ensuring the inside and outside sales force quickly implement and use process and technology improvements.

Transactions & Reporting

Implemented various automated accounting transactions and related management reports, equipping this insurance company with management information to better assess and manage the risks and profitability of its various lines of business.

Business Analytics to Support Contract Negotiations

Analyzed insurer payment data for both in-network and out-of-network claims, allowing this health services provider to better negotiate contractual allowances and thus improve its profitability.

Future projects we are planning include...

Unifying Applications for Call Center

Develop and rollout a call center application to incorporate several standalone applications into it, providing managers improved tools to manage workload and monitor employee effectiveness, and allowing executives to devise tactics to more quickly collect accounts receivable.

Interim Director of Finance

Serve as interim Director of Finance for this industry association, providing guidance on both high-level and day-to-day issues, allowing work to continue during this organization's busiest period.

Securing Systems for Offsite Access

Enhance an application to allow contract collections agents to securely access patient billing and collection histories, enabling these highly specialized offsite agents to work accounts as part of this client's overall collections strategy.

System Changes for New Distribution System

Analyze current system modules, review proposed process and inventory flow for a new offshore distribution center, specify the necessary systems modifications, and develop comprehensive test scenarios, enabling this manufacturing company to accommodate new distribution methods and multiple new points of US entry, while preserving its existing systems investments.

Enhancing Sales Rep Productivity

Enhance a Lotus Notes-based collaborative quoting system to quickly check product prices, inventory availability, contract pricing for specific projects, and purchase history for specific customers, improving the productivity of inside and outside sales representatives for this construction-services company.

Integrating Third Party Processor Systems

Incorporate the business systems of a third party processing firm into our client's existing middleware system's screening, processing, and integrating modules, allowing outsourced processing to automatically produce accounting transactions for our client.

Business Analytics Increase Government Revenues

Develop sophisticated matching and screening routines to rigorously analyze multiple data sources, allowing governmental entities to comprehensively search for additional revenue opportunities.