Last month we discussed how during a downturn key stakeholders -- including those closest to the point of action -- could re-evaluate business processes and practices and make changes that will build capacity, increase quality, and ultimately drive profit. To make this work, it's especially critical to support those who most understand the process in generating the solution. But they can't do that without people being willing to share data critical to not only good business process redesign but to basic everyday decisions that can make or lose the company money, and avoid the "If only I had known" situation.
Most large companies throw away millions of dollars every year simply because local decision-makers didn't "get the memo." One Fortune 200 manufacturing firm was bidding on a nearly billion-dollar contract. To drive down the cost of the end product, the production manager asked an outside supplier to bid on materials a sister division had been supplying. When the prices came back, the outside supplier's bid was over a million dollars per year less than the sister division's bid. The production management team thought the comparison was a no-brainer, rolled the bid from the outside supplier into their proposal, and passed along the savings to their customer.
You would think they would be up for some sort of recognition award for that kind of initiative and commitment to the business -- maybe a $500 check or a dinner for two at a nice restaurant. But when they marched into the vice president's office and proudly announced their triumph, their prize didn't look anything like what they had dreamed up. The VP enlightened them that the company had decided to retain the ability to produce certain other components that this sister division made because those parts would soon become obsolete. The new supplier was taking enough business away from the sister division that the division would disappear along with the other critical parts it produced. The VP reined in the management team and ordered them to keep the business at the sister division. Instead of being an opportunity to drive down costs and win more business, the team's million-dollar decision ended up being a million dollar write-down of the contract even before they had started. Had the corporate strategy simply been communicated to those needing to make critical business decisions, the company might have avoided the blunder.
Another large manufacturer sent a division general manager to negotiate terms of a multimillion-dollar contract with a customer. Because this was a 24/7 operation dependent on commodity materials, the manufacturer had established a deadline for closing the contract to prevent production from being interrupted. Because of its own long funding approval process, the customer requested a 30-day extension on the deadline, and the general manager agreed. When he returned to the plant, however, the general manager's production and supply chain teams informed him that the initial deadline was the best they could support. The extension removed them from queue with several commodity suppliers preventing critical material deliveries from being made in time to support continuous production. Had the general manager learned the facts about the deadline and the consequences of extending, he could have avoided hundreds of thousands of dollars of lost production costs.
Stresses in today's market present opportunities to take a hard look at current workplace communication practices. Leaders should include in that examination how business information does or doesn't move directly from the source to other employees. If we want employees to create breakthroughs for the business, or just make good decisions in their daily responsibilities, we need to make them part of the business by broadening the information that gets shared. Imagine what could have been different in the businesses described above if the right information made it into the hands of those making the decisions...and those aren't always people with titles.
Businesses can beef up their responses to marketplace challenges by unclogging or installing multi-directional information channels to make sure critical information is moving throughout their organizations to local levels and vice versa. They'll be more successful with this if they create direct channels to employees instead of relying on information to trickle down from senior leaders through management layers to core employees. Leaders, from CEO to front-line supervisor, should approach all information as a means to empower others to improve profitability and customer loyalty. A good measure of how well it's working is whether or not they hear, "If only I had known!"
Trying it on for fit:
Here are some things to consider in spreading knowledge and capacity throughout the workplace:
You provide meaningful information when that information can be used to make better decisions and improve business results. A few key areas include knowledge of the marketplace and the organization's place in it, production and service costs, core processes and methods, interdependencies between departments and business units, and critical production performance measures. A simple XYZ Company 101 class is a great start.
Actively promote effective communications to improve business results.
- If you are a senior leader, find ways to communicate updates to these fundamental topics through direct channels to core employees. Use regular and frequent methods to do so like employee newsletters, face-to-face meetings and video broadcasts with live Q&A, assigned core team representative meetings, or some combination of methods. Become a credible source of information to the workforce by exhibiting high levels of transparency and trust through communications. Weekly or monthly straight talk with specific and detailed content (no manipulation) is essential.
- If you are a local manager, keep communication open with corporate staff and those in other divisions. Find ways to share with managers in related departments or business units, and encourage them to do likewise. Educate your team members as described for senior leaders and make them part of decisions that affect them, particularly as they relate to improving the business. The manager's role should be to pass his or her expertise to team members.
- If you are a core employee, communicate with others your ideas and efforts to improve profitability. Include in the discussions those impacted, and technical experts when appropriate, testing your ideas with them before implementing. Find ways to collaborate to improve the customer's experience and increase business profitability.