COVID-19 the Global Pandemic has presented a further toughening of the Business conditions for the Businesses across the World. Already the Businesses in most of the countries had been suffering due to slow economies. Now this Crisis is going to really push the Businesses to the brink.
Let us examine the Leadership aspects of such a situation. What type of a Leadership is required in this situation? How do you guide your Business with a Clear Head? Let us examine some aspects of it.
Indians are generally not very Rule abiding citizens. We violate rules in just about every sphere of life. From Traffic to Income Tax. The Current crisis requires People to practice Social Distancing. The Prime Minister had given a call to the Citizens to practice a Janata Curfew on 22nd March’20 from 7 am to 9 pm. So far, the response had been very good. There may be some amount of underlying fear with the Indians about the virus. But Modi’s clear communication also helped in a big way. You can only see probably 5% of the normal crowds on the roads as reported by TV Channels. This is a very good example of good Leadership in Crisis.
Support the Government
All of us have our own Political affiliations. I do not have any particular Political affiliation. I support whoever is doing good work. I do not try to be burdening myself with one Party as against another one. I do not support everything that Modi does and same is the case with any other Parties. I believe we should support the Political Leaders in the Country as they are the people who are leading us. We are electing them. I may or may not have voted for the Party that is in power now. We may not like their ideology. We should protest about that in the right forums. We should try our best to influence them. But when it comes to Nation Leading, we should support the government in Power. This is very much needed to ensure Governments have fair chance of succeeding and doing something for us.
Leadership in Crisis
Right now, the Businesses are in a deep crisis. The Order cancellations / Holds are happening as you read this article. The Businesses are scrambling to tackle the situation. Every Company requires good and Clear Leadership now.
Every Leader will have to address at least two areas:
a) Taking care of your Employees in the current situation.
b) Taking care of your Business and giving the Leadership it requires.
First things first, you need to take care of your Employees immediately.
It is quite possible that you may be confused about where to begin and what decisions to take. Most of the Companies might not have had similar situations. So, there are no precedents.
Right now, all your employees would be filled with a certain fear and uncertainty. You need to address that first.
We need to work out the revised way of working for all the employees. Do not ignore this. Do not behave as if it is work as usual. Do not wait for the employees to start protesting. Be Proactive in this and address the fears.
Some of the following decisions may have to be taken:
- How will the Employees come to work? If they are coming in their own cars / Two wheelers the risk is lesser. But if they are using Public transport, then you need to provide them with alternatives. The number of Buses is cut down in many cities. The Buses that are there may be crowded. If they can work from home, it is a good solution. If they cannot, then you need to bring them from home. Do not hesitate in spending this money. The Employees only are going to help you come out of this crisis. No one else.
- What precautions to take? Take the help of Experts in training your Employees about the precautions to be taken by them and their families. There is overload of information on the net. Everyone is an expert now on the subject of Corona! Take the information from authentic sources.
- Introduce new practices at work. On the basis of what you learn from the Experts introduce new practices and behaviors at work. These practices may involve washing the hands more frequently, using hand sanitizers before after meetings, not shaking hands, having more remote meetings than face to face and so on.
- Do not be ‘Top down’ in these decisions. While you should definitely lead the progress in the area of Employees, it is better for you to involve more employees in deciding what all specific measures to be taken. Let not HR be the only function that will decide everything. We can avoid the ‘Not invented here’ syndrome and avoid negative fallout from employees. It is after all their working conditions that we are defining. Let them participate actively.
Try and reduce the risk of exposure to your Employees to zero. You may not arrive at all the measures in one day. But keep reviewing the progress every day. You have to make the Employees comfortable again. It is very important.
Address your Business
Many Businesses are suffering now. There may be cancellations of orders / Postponements. You need to lead your Company in this area too.
The Sales of March and at least the first quarter of next year will get affected. That is for sure. But you cannot accept a meek surrender to the situation.
If one door closes, surely there will be another Door that can open. Consider some of the following:
- Right now, the Hospitals will require a lot of Products to handle the spike in the activity. There can be big business waiting in terms of the Hospital equipment like X-Ray equipment, BP Apparatus and several other equipment, Support equipment like Air Compressors, Hospital clothing, Bed linen are all required in big numbers. The Hospitals are bound to be overburdened now. So, any products that help them to set up temporary hospitals quickly will be helpful. If you are not in this area, you may not want to get into this equipment now. But if these are related to your Businesses, then you can contribute a lot to the situation by producing more of all these.
- If you do not have anything to do with the Hospitals and their equipment, still you can look for opportunities to expand into. What can be the New Products that you can launch? What are those Products that you wanted to launch but not able to due to pressing commitments? Prioritize them now and bring out a bunch of New Products that will give you additional Sales once the current crisis diminishes.
- If you had been planning to get into New Markets, it is time to do the background work now. If you have to prepare some products for these new markets, this is the time to prepare. You may not be able to get your team to the new markets right now. But all the planning and background work can happen now.
- If you had been struggling to reduce the Costs, now this is the time to make progress on certain Projects with Task forces working on Cost reduction. Create an internal competition with Cost Reduction Brainstorming Sessions. Try to make big progress in the area of Cost. You can aim at re-engineering your Costs during this period of Crisis.
- If you had been planning to implement Skill Based Training, this is the right time for it. Define skills for various functions in your Company and start taking the help of E-Learning to skill up your Employees. E-Learning is the right tool for training Employees in this situation. It will not require employees to group in to one room. Your team should be able to deliver much more by the time Business comes back. Set up the Online Training school for your Staff and Workmen.
- If you had been planning to implement Industry 4.0 to improve efficiency on your shop floor, this is the time to implement Specific projects in Safety, Productivity, Quality Improvement and so on.
It is good to reorient your Goals for the year 20-21. You can prioritize areas business other than top line alone. As earlier said, you cannot meekly accept the going down of the Turnover in the next year. You should find alternative ways of growing. You should infact discover a few more areas of growth and overall emerge as stronger company from this disaster!
When I checked with a HR Head of a Company recently about how they are handling COVID19, his response was that probably there is some amount of overreaction and Social media hype about it. But looking at the rapid spread of the Infections, maybe he changed his mind by now. COVID19 is declared as a Pandemic by WHO and India declared it as ‘Notified Disaster’. I think we need to take it seriously to ensure we stay in control.
Why a response is needed from Corporates?
COVID-19 is currently coming from People who travelled abroad. Corporates contribute to a good proportion of the Foreign travel. Foreign travel either for Business or for pleasure by the Employees of the Corporates. If we include the Children of the Corporate Executives studying abroad, the Corporates contribute to a lot of Foreign travel. Hence, Corporates can play a very important role in controlling the spread.
Indian Companies are perennially in Crisis!
If you look at the Eisenhower Time Matrix, most of the Indian Corporates are perennially spending a lot of time in the Q1. ‘Urgent and Important’. There are too many Crisis and we keep handling the issues right at the brink. Not a good thing. But we keep doing it. Indian Corporates are experts in living at the edge of the Chaos. We don’t quite get into full time Chaos. But we keep going in and out of them just like experts!
My experience with the Indian Corporates is that when a Project is taken up, we ask for a lot of time. We fight for more time for the Project with the Boss. You would think the team would really do a great job by working on it systematically over the period of time taken. But most often I start getting calls from the team two days before the Deadline agreed. They would be asking for clarifications about the Project. They work very hard over those last few days and Complete the Project. It would never be a Perfect job. But it won’t be a bad job either. I am not saying 100% of Companies and 100% of the Executives work this way. Maybe you do it much better in your Company?
Because of this dubious ‘capability’ to work well in a Crisis, I expect the Indian Corporates to do a very good job.
But what is Critical is that they should identify it as a focus area and attend to it. A Clear Leadership is required for this Pandemic / Notified Disaster. Otherwise everyone will be busy with their existing Crisis situations and wait for COVID-19 to become ‘Urgent and Important’ !!
What are the areas for focus in this Disaster?
There can be at least 4 areas that a Corporate should address.
a) Your Employees: First focus area has to be your Employees. If you take care of your Employees, you are maintaining a big group of Healthy Citizens who can do more in this situation. Even if you do not do anything for the Society directly, maintaining your Business and contributing to the National GDP in this situation is a good enough contribution. Many companies are slipping on their growth right now.
b) Your Vendors: Second focus has to be on your Vendor Partners. If you are a Big company having several small vendors, then you can contribute a lot by helping these vendor partners to face the Challenge. It would also help you to keep the Production going without supply disruptions.
c) Your Customers: Then comes your Customers. If you are able to keep your Employee flock together and healthy, have uninterrupted supplies you can take care of your Customers. You would contribute to Economic growth in this challenging time.
d) Your City / Society: Then the City in which you are operating. If each corporate can contribute to taking care of part of the city that you are operating in, it can be a great help to the Government.
There can be more angles to a Corporate’s Circle of influence. But let us start with these.
What can you do?
01. Recognize the Problem: First of all, we need to recognize this as a Serious Problem. We cannot be lost in our ‘Urgent New Product Projects’, ‘Customer Line stoppage issues’ and so on. Please look at handling the COVID-19 as in the same direction as attending to all the Business Emergencies that you have. You are only modifying your approach and attending to an underlying issue for every project in your Company. Special effort is required for Corporates to recognize it as Problem as we are used to responding in the last minute. This is one problem that you would not like to respond in the last minute.
Data says that just a month back there were just 4 cases of the Infection in Italy on 21st Feb’19. On 13th March, there were 15,000 with 1400 deaths! Containment is the critical action that you can take. There is right now no medicine for this Virus.
02. Learn about the Problem: It would help to learn about the Problem from Experts. You may not be generally in touch with these Experts. You may have to contact someone in WHO or AIIMS or any of the Private Corporate Hospitals where the knowledge may reside. Invite an Expert to your Company and let your teams understand the Problem and the precautions that we need to take.
03. Formulate Teams: Formulate teams to address the four groups of Stake holders that you want to address. Depending on the resources that you have, you can prioritize in the Stake holders. Have clear leaders for the teams and Objectives that they have to focus on.
04. What can be the Goals: Single biggest Goal is for everyone to stay healthy. But the Process goals have to be the New Behaviors that you want the Stake holders to Practice. Some of the new Behaviors can be as follows:
a. Spreading the knowledge about the Problem and the seriousness.
b. Not shaking hands. Practice Namaste instead.
c. Working in Shifts to reduce the density of the employees.
d. Using Video conference even for local meetings.
e. Maintaining some distance between you and your colleagues.
f. Avoiding non-essential travel.
There can be many more practices that you may define in your Company. This article is not meant to define a complete list of Best Practices anyway.
05. Create Champions for monitoring: Some of our Colleagues are naturally more disciplined and keen observers. Eg. Audit department colleagues, Quality Department colleagues and so on. Use their services to monitor the practices that you have defined. As these are new practices / behaviors that we are trying out, there are bound to be violations. These Champions have to identify the violations and keep talking to the Teams.
06. Quick Decisions: In a Crisis, there have to be quick decisions. There can be a small team of Senior people who can be authorized to take decisions as needed. The Teams have to be informed about this.
07. Communicate, Communicate and Communicate: Communication is another important aspect that is very critical in this situation. It would be quite okay to over communicate. Let the Problems and solutions be known to everyone in the Company. Maintain transparency. Especially in the light of Bad news. Whatever is construed as Bad news can be screened before relaying. This is to ensure spread of undue panic.
Through your efforts if you can keep your Employees healthy and also create Soldiers who can contribute to the immediate society around you, then you have done a great job!
You would have also trained your Team to handle a real Crisis before it really hits you hard!!
How are you responding to COVID-19? Please share so that Others can learn from you!
Act fast and Prevent the spreading of COVID-19!
In the past few years, I have been witnessing an aggressive approach to Customers from Companies who pride themselves as Customer focused Companies! I will be talking about few Companies specifically. But I am not saying that only these companies are adapting these aggressive approaches to customers. There may be many more. I am talking about these companies on the basis of my personal experience. Experience of others may be different.
I have been Banking with ICICI for about 25 Years. I have good amount of Deposits with them. I am a decent size Customer for them. I have Savings Accounts with them as well as Current accounts too. As I know the Bank for 25 years, I have a right to talk about them. Currently I am actively looking at shifting away from this Bank due to two reasons.
The Bank’s service is deteriorating fast. They were not helpful to me in some specific cases. They will quote their Process when I ask for help. The Staff of this Bank are remarkably unfocused on Customers’ Point of view. Most of the Staff are young and totally untrained on Customer Service.
a) In addition, they adapt a very aggressive approach towards Customers to get more business from them:
a. If I or my wife go to the Bank, the Staff will be all over us. Not to help us. But, to ask for Deposits, ask us to invest in Insurance and so on. 90% of the Visits are marked by Staff asking us to invest in some schemes.
b. If someone smiles at me, these days I am turning my face away as the second sentence would be about investing.
c. Whatever may be the agenda with which we go to Bank, they will harass us about investing. They will ask for Account numbers, look at our Deposits and then will go after us. Right now, a visit to ICICI Bank has become very unpleasant.
d. They also approach us on Phone. There are calls from their Call centers about various schemes. They also call from the Branch where we have accounts. They keep offering the same thing even though we said NO to it. They offer me Overdraft on the basis of my transactions. I said no to it. But they don’t care! They keep calling every week and offering the same! I am amazed by their insensitivity. I keep picking up the call as the number is a usual land line or Cell number. If it comes from the usual 14*** then I do not even pick up the call.
ICICI Bank may be giving their Employees a wonderful incentive to get the Business! Otherwise I can’t imagine the employees to be so proactive. Earlier it used to be the Marketing guys who have these targets. It looks like every Customer facing Executive is given Targets now! With this, they have turned every employee in to a Marketing executive. Is it good for ICICI? Whoever has taken this decision, has committed a big mistake. Now there is no Customer Service at the Bank. It is only Customer harassment! I am talking from personal experience!
I own a Volkswagen Vento. I bought this car in 2012. Since then I spent a good amount of money on this Car. Somehow my experience with Volkswagen had been very bad. But I can say I am suffering the wrong choices that I made with reference to choosing Diesel Car as well as the Brand.
But my experience with the Dealer of this Car in Coimbatore is very bad!
- The Bill for the Servicing is never small. I am suspicious of this Dealer as once they suggested changing Brake Pads when they have just changed it in the previous Service. Since then I am suspicious of their intentions! When I countered the Service Executive that the Brake Pads were just changed in the previous Service, he changed his tack. I never trust this Dealer after that.
- After Service, the Volkswagen (Being Customer Centric!!) asks for feedback. First the local Dealer will call. After that Volkswagen themselves call from Mumbai. Initially I took this seriously and gave genuine feedback. If you say you are happy, you are let go there. But if you say you had a problem, then the harassment is more. They will arbitrarily call you whenever they want and ask for more information. In the initial days, I took it seriously and gave them further feedback. For one Servicing, you have to answer 3 Calls if you told them that you were not happy with something. If you don’t pick up the call, they will go after you. I think the calls are made by a Software program. The program does not get tired of calling you till you pick up.
- Now in the initial days in all my innocence I looked for feedback or addressing my issue that is given in the feedback. There is never any action taken and there is never any feedback on my feedback.
- Since then I just stopped answering the calls. If they fool me by calling from different numbers, I just disconnect if they say ‘Volkswagen..’.
- Is this what Volkswagen wants? To harass their Customers?
With my experience of local Dealer and the Company I have decided that I will never ever buy a Volkswagen product and avoid all Companies that this Dealer represents!
I am not talking about the Dealer as he may be a Small company. I am hoping Volkswagen will learn from this case study.
I am trying to sell a Flat that I own in Coimbatore. I decided to put an advertisement in Quikr.
You can put a free advertisement in Quikr. But once you put it, you are chased by their Executives asking you to get into paid section. That is not the end.
Once you pay up, they keep bombarding you with calls to upgrade yourself!
After we suffered at their hands with the first advertisement, my wife became smart by the second one. She did not pick up the barrage of calls that they were making after inserting the second Advertisement.
Is this the way Quikr wants to treat its’ Customers? Is there no other way but to chase Customers and wear them out?
We got used to using Swiggy as many people have. Of late, there are many bad deliveries from Swiggy. When you order for Dosa it arrives without any accompaniments. Swiggy App has provision for taking feedback from Customer.
We keep giving feedback. Neither the Restaurant concerned nor Swiggy takes any action on the Feedback! Swiggy App though says ‘Aaargh !! Not acceptable !’ when you give feedback. You may fooled to think that they will really take some action!! Nothing will happen!
Swiggy thinks that we will never go away from them! We as a family are planning to prove them wrong!
There are several more examples. Ola Auto Drivers routinely ask for adding more money to what is shown by the Ola app. Otherwise they will refuse to come OR delay it so much that in a panic you accept their demand or you cancel the ride. If you cancel, sometimes you have to bear cancellation charges. We routinely rate these Drivers low. But no one acts on your feedback! More Drivers keep asking for extra money!
Is this becoming a norm in India? You aggressively go after the Customers for Business using the Technology and connectivity that is available. But you don’t use the same technology for taking care of your Customers?
You give your Executives such an aggressive target that they go after the Customer as if it is a bounty hunt!
Whoever is designing the Customer service in these companies and many more are getting it totally wrong! Customers will respond and dump these companies!
Among these bad examples, there are a few good examples too.
Anandaas Restaurant, Coimbatore
This restaurant genuinely cares about its’ customers. The whole Owner family including the 80 year old Patriarch are in their Restaurants. Talking to the Customers while they are in the restaurant. There are always enough Executives around to talk to the Customers and keep servicing them. The restaurant is always innovative with their menu. They keep bringing special items on the weekends.
As the restaurant is a good one, the crowd is always heavy. But the restaurant’s service speed is very good. With this they try to minimize the waiting time of the Customer.
They are truly focused on the Customers. They don’t harass us with the phone calls for feedback! They make sure they give good service by interacting with us while at the Restaurant.
Invest into the relationship with the Customer
Companies need to shift their focus on to medium / long term. They need to invest into their relationship with the Customers. They should not treat the Customers as Cows that should be milked continuously without taking care of them.
The Targets to employees in the Companies have to be refocused. The focus should be more on the relationship and service to the Customers and less on the immediate results. They should believe that if they maintain good relationship with the customers, they customers will keep coming back to them for all their needs.
Look at everything from Customer point of view: Companies need to learn to look at everything from Customer Point of view. Improve your service to Customers on every touch point. Eg. ICICI Bank gave us trouble on several specific services. When I wanted to pay my Brother’s travel in foreign exchange (as he had come to conduct a Training program for my company), they harassed me a lot. Finally, I had to fight with the Executive concerned to get it done. This is just one example. Companies have to understand the Customer point of view. They may respectfully disagree. But they have to understand first.
Launch more services for the Customers: Measure yourself with the number of services that you launch for your Customers and how simple are the services that you already have for Customers. Eg. ICICI Bank shows a lot of aggression in terms of following up with the customers for more Business. I cannot see the same aggression in solving my problems.
Have personal touch: Amidst all the rules of your Company, still have personal touch with the Customers. Eg. I keep asking the Volkswagen Dealer that I am having bad experience with the Vento car. If he takes out the expense that I had with the Car and tries to explain to me as to why I have spent more money on my car, It will help me a lot. Right now he never listens to me on this. He is just worried about the current bill.
In Banks, today there are Customer Relationship Managers. You would think they have your interests at their heart! This is another designation for asking for more Deposits! I was very disappointed to be fooled!!
Companies should believe that their true service will bring them the Business. They need to believe in this fact.
I have spoken about few specific companies in this article. If anyone from these companies are reading this article and stung by the criticism, they are more than welcome to engage with me. But not for more Business!! I am willing to speak to them if someone senior approaches me and proves to me that they are willing to learn! Otherwise, don’t bother to call me!
I hope Companies would Learn the true definition of Customer Service!! Otherwise they will disappear from the Business map sooner than later!
We have been hearing about Industry 4.0 elements and the amazing change that it can bring in your Company.
It is heartening to see a few companies getting into this game and trying to improve their efficiencies. Many more companies should get started with the Industry 4.0.
Among companies that are getting in to trying Ind 4.0, there are at least two types. Those who are setting up new Factories. These companies are going in for across the factory implementation of Ind 4.0 and trying to define a new level of Manufacturing efficiency in the Company. Companies who are trying to do this are few right now. I am sure once there are a few case studies of Paradigm change in the industry, the momentum will pick up and more companies would attempt change in a bigger way.
Many Companies are trying to wet their feet. They are trying to do one Project that would give them a feel for the Cost / Benefit. Many are trying out in the area of collecting more data from a Machine and trying to predict its’ Breakdown / Performance.
As we support Companies with the Industry 4.0 applications, we at IMA are able to see multiple applications and we are able to get a feel for the big change that Ind 4.0 can deliver. Can Ind 4.0 be the motivation for the Indian Manufacturing to turn to improving their Productivities and Efficiency?
I am presenting here a bunch of areas where you can make a beginning. There are very few Companies and very few People who have really done something in the area of Ind 4.0 in India. But there are some good resources that can help you start off. Everyone will learn together. The provider and the receiver of the Service.
01. Assembly Lines: Companies are looking at ‘No fault forward’ Lines. Their goal in these lines is ‘Zero PPM’. Gone are the days when we say 99 ppm is our target. Now companies are trying to achieve Zero PPM! Assembly lines are getting designed that can deliver the Zero PPM. As many of the CTQs (Critical to Quality parameters) as possible are getting checked online. The Quality data is getting captured at each station with the help of Bar codes / RFID. Assembly stations are remembering the Operators who are working at each of the stations. These Stations also capture the information related to various losses at each of the stations. The Managers review the Lines using the data that is coming from this individual equipment. The Line keeps sending updates about the Production, Quality etc to the relevant people in the Management.
02. Machine shop: The Machine Loading Plan is being done with the help of a Software. The E-Machine Kanban is scheduling the Production across the machines in the machine shop. This itself can give a huge benefit to many companies. The Machine shops keep losing a lot of capacity due to the Scheduling issues. In addition, the Companies are monitoring the Cutter life with the help of sensors to avoid Rejections before they change the cutters. Many more individual applications are being tried out.
03. Predictive Maintenance: Another area many companies are trying out is in the area of Predictive Maintenance. The existing data from a machine itself can give several insights. In addition, more sensors are put to collect data on the condition of the machines like Vibration / temp of a motor to predict the condition and act before a break down happens. Companies are striving to create Digital Twins of their machineries and predict the performance of the machines.
04. Online Quality Management: The Offline Quality Plans are getting online. Companies are trying to collect data on the Quality of the Process & the Product and act on the Quality issues online. The Data on Quality parameters may be picked up from the machines online or sometimes the Quality data may be checked by the Supervisor. The Quality checks can be made by everyone in the Factory and not just the hapless Quality Inspector! As the Data on Quality is available online, a lot of analysis is possible to understand the process / people.
05. Sub-contractor Integration: A Company that has many Sub-contractors can integrate these Sub-contracting locations as if it is one big Shop floor. Schedule the Sub-Contractors close to the Point and Time of need that goes along with the Demand Planning of the Company. The online information about the Status of the Machinery, resources in the Sub-contracting locations can be available for the Company. The rescheduling of the parts can happen online on the basis of the condition of the machines at the sub-contracting locations. You can monitor the Preventive maintenance schedules at your Sub-contracting locations. You can help your Sub-contractors to plan the Maintenance schedules. Once you treat them as one big group of machines in your Shop floor, you can do a lot more.
06. Supplier Integration: You can schedule your multiple suppliers for a Part on the basis of their Quality and Delivery on a dynamic basis. You don’t have to wait for the Supplier rating and correcting the Share of Business at the end of the year / half year. You can act in a more dynamic manner. The Dispatches from your Suppliers can be controlled online by issuing the E-Kanban Cards close to the Time of need. You can monitor the Final inspection of your Parts at the Supplier end online. You can monitor the ‘Approved Inspectors’ at your Supplier place online. Depending on the cooperation of your Suppliers and the need, you can monitor the Quality of Process at your Supplier end. You can give feedback on the Quality of their supplies to the Shop floor teams at suppliers directly from your shop floor.
07. Dealer Integration: You can go forward with your integration of Business Partners and integrate your Dealers into your network. You can have the online information about the Products that are moving in the market and keep adjusting your Production Plans. You do not have to wait for the Sales team to give you schedules. You can understand the Consumption pattern of your Customers more online using the connectivity.
08. Skill Development: You can make BIG changes in the way you train your Employees. You can train them on Micro Topics using Micro Learning modules on a continuous basis. You can use E-Learning for this. With a good E-Learning developing partner, you can improve the Skills of your Employees at a much more depth than the conventional training. Eg. If Lean implementation is your priority, you can train your Engineers on ‘Time and Method study’ after which they can carry out the projects in the shop floor. You can use the Partner to certify your employees on Skills and Results. This perhaps is one of the areas where you can get BIG results and transform the way you run business. Skills have not been at the Centre of the Business in India for too long.
09. Problem Solving: You can bring the Problem Solving in your Company online. The Problems can be allotted to the employees and the various stages of solving the problems can be brought online. The Employees can be taught to work in a systematic way for Problem Solving using an App.
10. Promoting Learning in your Manufacturing Process: Today the Quality Plans are put, and the Quality Plans are not getting updated with the learnings from the manufacturing fast enough. If you have a Process from which you are collecting a lot of data online, then you can let the Quality Plan learn from what is happening on the ground. You need to keep recording the Quality of the Product that is produced online or close to being online. Then, the Process parameters are captured as well as the result of the Process condition. From this, the Quality plan can learn using Artificial Intelligence much like how your Google maps app and several other apps learn from your usage of them.
There can be many more areas where the Ind 4.0 elements can be used. Some of them may sound like ‘Hey, we could do this earlier too’. Does it matter if you haven’t done it earlier?
Let us use this current wave of interest in Digitalization to improve Efficiency on your shop floor and that of your Partners to give better service to the Customer and improve our competitiveness in the market.
But there are a few MUSTs for you to get on to this journey.
Come to a Basic level of efficiency: If your Company has never visited the Lean principles, you have never heard of Kanban and other Best practices, then you have some work to do before you go on to the Digitalization. Many companies did not move to use the Best practices so far. If current Digitalization wave is interesting you, that is good news. You just create a Phase 1 where you implement the Best Practices. The results that you can get from the efficiency improvement can pay for your investment in the Digitalization!! Let us turn the adversity of ‘low efficiency’ into a virtue to pay for your Ind 4.0 efforts!! There are very few companies in India that can say that they are very efficient! There may be huge scope for improvement in their own shop or in the shop floor of Partners or in the Market place. Exploit this inefficiency to pay for your big efforts in Ind 4.0.
01. Have a BIG target for your Ind 4.0 efforts: Only a big target will help you adapt the Best practices using the technology. For 10% / 15% improvement in Productivity, you don’t need Technology. Aim at doubling your Productivity / efficiency. Then, there can be a challenge for you to find technology that will take you to next orbit. Disrupt your Company with technology. Don’t try to cut vegetables with Bahubali’s sword !!
02. Train your Teams: Please remember however much the Managing Director may know about Industry 4.0, you can’t implement it without an urge of your team. You need to educate your team about what the possibilities are. Current level of knowledge of the Engineers / Managers in the Industry is quite bad. Let the thinking happen across your Company and aim at making the Ind 4.0 implementation an Organization wide initiative and not just the fad of the top man/team.
When are you starting off on your Transformation journey?
In Indian Manufacturing Companies, lot of follow-up is needed to get things done. You can’t just assume that if you have agreed with your team about certain actions, all of them will just happen. You also may not get information that the actions are not happening. When you eventually check with the team, you may have a surprise!
My experience is that this is prevalent in companies where the Business Systems are not well established, and the Teams are also less trained. In addition to this, in Indian Companies the growth is higher than what happens in Companies in Western world. So, there is something new happening frequently.
I have seen many Indians who worked in Western Countries for a long time, struggle to get adjusted to the Indian environment where they just don’t get a grip on the situation. They suddenly have become less effective!
Business Reviews are a good tool that can help in getting things done in Indian Manufacturing Companies.
What is a Business Review?
The informal meetings that happen in companies to discuss one specific topic cannot be called as Business Reviews.
I would call it a Business Review if a Boss is reviewing the KPIs (Key Performance Indicators) of his team in a formal manner.
The Team should present the KPIs in a systematic manner showing the:
- Status of KPI – typically with the help of a Graph.
- Data to illustrate the details about the KPI.
- Corrective action and Preventive Action if the target is not achieved.
Only if all these are presented, I would call it as a Business Review.
When you present all this, you are reviewing the Status of your KPIs on the basis of Data, understanding the current status and then you are communicating to your Boss about the Status in detail.
This helps your Boss to understand the status of your KPIs and it helps him to understand your position on each of these KPIs. This is a formal Communication. Then, your Boss can add value as needed.
If these reviews are not there, the formal Communication is not there at all.
Managers keep following up with each other on a daily basis on various topics. A Production Manager is constantly talking to Purchase Manager for Materials and with Sales Manager about Dispatches. These are just follow-ups and cannot be considered as a Business Reviews.
Who all should Review?
In most of the Indian Manufacturing Companies, the only Review that happens is by the Managing Director once in a month.
But this is simply not enough. The Business Reviews should happen at all levels. A Production Manager should review his Team of Engineers in all shifts. The Production Manager, Quality Manager, Purchase Manager etc have to be reviewed by the Operations Head.
A Regional Sales Manager should review his team of Executives. All the Regional Managers should be reviewed by the National Sales Head.
When a Review happens at one level, people at that level are taking responsibility for their KPIs, review them and present them to their Bosses. This ensures that the Team takes responsibility for actions at their level. In the absence of these reviews all the Problems will get pushed to the meeting with the Managing Director. Then unconsciously everything gets pushed to the top.
Absence of these Reviews is one single biggest cause for why everything gets pushed to the top in Indian Companies.
How should a Business Review be conducted?
01. Formal Presentation in Power point or Excel is a must. This ensures that the presenter prepares before the Review meeting. Everyone should present Graph, Data, CAPA (Corrective action and Preventive Action) wherever the targets are not achieved.
02. Deep Data: The Presentation should have lot of Data. Data only should speak about the status of the KPI. Not emotions. Managers should be encouraged to practice Data based Decision making.
03. Communication tool: Business Review is a Communication tool and the Boss should use it as such. The Boss and subordinate should agree on the status of the KPI and what should be done to improve it.
04. Review Team or Review Individual? Is it better to have full team at the Review or should the Review be with individuals? It is preferable to conduct the meeting with the whole team. This is the occasion when everyone in the team listens to everyone else. They need to understand the problems of each other. If used well by the Leader, this is where the Team building can happen.
05. Don’t throw surprises: You should not throw surprises at your colleagues in these Review meetings. If there are any data that will surprise your colleagues or your Boss, it is better to talk to them before the meeting rather than throw a surprise at them in the meeting.
06. Don’t get technical: These Business Reviews are Management reviews. One should avoid getting too deep into the Technical issues. There can be separate Technical reviews for those issues. If performance of Promotional schemes has to be reviewed, there can be separate reviews for this. If you club this with your KPI reviews, then you spend too much time on these topics, and you will lose the Top view of the Company/ Function’s performance.
07. Don’t make it unpleasant: Even if the results are not good, do not make the Business reviews unpleasant. If you make them too critical and unpleasant, then these reviews can produce negative effect. You have to take care that your team goes out with more Motivation than what they have come in with. You need to inspire your team to go beyond their normal potential to produce a wonderful result!
08. No upward Delegation please: The Leaders should be aware of the upward delegation that can happen in these meetings. If there are problems that need to be solved, then the problems have to be with appropriate people. The Problems should not be taken over by the Boss. Boss can help the team to arrive at solutions. But, he need not take responsibility for the Solution.
09. Length of Review: The Business Reviews can get lengthy in the initial stages. But the length of review should not go beyond a point. Then it can become unpleasant. If there are too many problems that need to be solved, one should prioritize and take up the top 2 or 3 problems. One should not attempt solving everything in one Review.
10. Higher Purpose: The higher purpose of the Business Review is to help the team to work out a way in which the Targets for the KPIs can be achieved. The methodology for achieving the KPI Targets will be arrived at over a period of time. When you do that , the Business results can become more consistent.
What should happen between two reviews?
Between two Business Reviews, follow up should happen on points agreed in the Review. The follow up should be done by the Boss and in some situations, you may have a Business Excellence coordinator who will do the follow up. The actions should happen between the reviews. Otherwise you may not have any results from your Reviews.
The Teams and the Boss are required to do thorough preparation before the Review meeting. When a Team member prepares all the data for his/her KPIs and writes his/her CAPA, it means a proper review has already taken place. This is the most important aspect. Every Senior person should review his/her own KPIs formally. Then the Boss can add more value to the Subordinate’s learnings.
Skip Level Reviews
A Boss should normally review the team that reports to him directly. But sometimes the Boss may decide to do Skip Level reviews. This is perfectly alright as long as he has taken his team in to confidence.
Every Quarterly review can be with the entire team including skip level.
How to Kill / Reduce the Business Reviews?
When you start Business Reviews at all levels, the team may feel there are too many reviews. You should introduce Reviews only on the basis of need. If some results are not coming consistently, a Boss would see the need for Reviews. But the frequency of these Business Reviews should reduce over a period of time.
As the Results become more consistent, the Company should put Standard Operating Procedures for the specific Activities and then reduce the Business Review frequency.
Benefits of Business Reviews: Regular and Scientific Business Reviews should help you to ensure Business Results in a consistent manner. The motivation of the Team members can improve with this.
As a family we do not use the Ration Card much. So, we did not care to apply for it and take it. But a few months back when we decided to take the Ration card as it can be a good address proof. My memories of taking Ration card earlier many years back are not very good. We had to go through a long procedure for it and deal with many Tables in the Food and Civil Supplies department.
With all these bad memories, I set out to visit the Government Department in Coimbatore (where I live). When I reached the office, I went to the first Babu (or Samy in Coimbatore) and enquired about the procedure for Ration Card application. He looked at me funnily and told me that there was no need for me to come to the office. He said ‘I cannot do much to help you. You have to apply online’. He zipped out his Smart phone and searched for ‘How to apply for Ration card in Tamilnadu’. Then he showed me the following screen.
I felt very archaic and ignorant. He told me to call him if I get stuck with the technology! That is a definite new for me about a Government employee!
I came home and completed the Online application procedure. Within about 4-5 weeks the Ration card (Smart card) came home! Now this was a wonderful experience!! No running around the Government offices, no dealing with the ‘hungry’ Babus/Samys. You just deal everything online. Government seems to be progressing in the Digitalization agenda?
Come to think of it, there are many more facilities all of us have been enjoying. Let us talk about a few.
IRCTC: Indian Railway website which all of us use to book the Railway tickets. I know this had been around for years! But it has taken away a huge burden off our shoulders. I still remember the hours that I used to spend in the Que in the Railway stations as and when we decide to travel somewhere. We would have got used to the online booking comfort. But it saved hours for Millions of Railway travelers.
Now you can not only book tickets online, but order food from important stations on the way to your destination. Food will be delivered from those Restaurants at your Seat!
Railways made some progress. Isn’t it?
Online Tax payments: All the online Tax payments that we are doing now involved a few years back standing in the Bank, filling up challan to pay the Taxes.
You can apply for your Water connection online whether you are individual or a Company.
If you are going on a Holiday, you can book the Government Accommodations online.
Your Children can even read their Textbooks for free online!
There are more than 100 services that are listed on the Tamilnadu Government website. Each of these links actually lead to more than one service.
Government is driving Digitalization aggressively for the past decade. It is only gathering more speed now. I am sure all of you know many more examples of wonderful services that are helping the public at large.
We are also witnessing a big change in our daily lives.
Uber and Ola have revolutionized the way we look at transportation. There are many families that are relooking at the need for a second / third car in the family.
Swiggy, Zomato and others have revolutionized the way we dine. There are many more families that are depending on outside food than ever.
Google maps have revolutionized the way we go around and find places.
As we speak hundreds of Apps are changing the way all of us exercise, how we communicate with others and so on.
We are truly living in a world that is FAST changing.
How is Digitalization in your Company?
Now if we look at the extent of Digitalization in Indian Manufacturing Companies, do we see a similar drastic change happening?
May be a handful of companies have made good progress in terms of using the Technology.
But largely my observation is that Indian Manufacturing Companies seem to be too slow in adapting the Technology. Government (Both Central and State) are way ahead of the Industry. We keep saying that Government is too slow, and Ministers are ignorant of Technology and everything else! But they seem to be doing much better!!
Many companies are still dealing with age old ERPs. Most of them would not be using the features of these old ERPs itself properly. Most of the controls in the ERPs are bypassed.
Some Companies would have tried implementing an SAP in their company. But 90% of these companies have made a mess of implementing the SAP and using it very sub optimally.
Most of the Companies do not have any other software beyond the SAP / ERP. Production planning may be done manually if it is done!
Most of the Information is generated only in Excel sheets and Power points.
The Machines that have PLCs with lot of capabilities are lying unutilized.
Usage of IT
Information Technology can be used by Companies at three levels.
01. Using IT to handle routine: Basic ERP System: Every company needs to use the ERP effectively. As all of us know there are several modules that can be used to improve efficiency in the organization. The implementation of an ERP should not be treated as just a Software implementation. It is much bigger than that. It is a re-engineering of the routine in the Company. It should be treated as such and a Company should have clear number goal about what needs to improve after the Implementation of the ERP.
With the implementation of the ERP system, a Company should have a good process in:
- Budgetary Control
- Annual Budgeting
- Production Planning
- Supplier Portal
- Dealer Portal
- Sales order processing
- Quality System
And so on.
The Routine work in the Company should be controlled by the ERP and this should
Help the Company to improve its’ efficiency of doing this routine.
I would say a company has to aim at improving the White-Collar Productivity by
At least 50% after implementing the ERP. Otherwise you are not using it effectively.
If an ERP implementation is achieving this objective, I would say you are using the
ERP reasonably well. Otherwise, why bother to spend the money?
02. Using IT to improve efficiency: Companies can do very well to use several tools that are available today to improve the efficiency in the work.
They can use CRM (Customer relationship management) software to improve the efficiency of their Sales force. Many companies keep restarting the efforts of Marketing whenever a senior person leaves. There is hardly any continuity.
For identifying the Product / Parts / Raw material they can use Barcodes. Again, a small percentage of companies are using. But the scope for using Barcodes across the industry is huge! The technology has advanced beyond Barcodes and some companies are talking about using RFID technology.
Companies can use E-Learning to train their employees much more effectively and repetitively. They can cut their Costs also in a big way.
Companies can use Problem Solving software to control the Problem solving and record the Knowledge that is generated.
Companies can use Software in New Product Development to design the Product and improve the consistency and speed of Design.
IT solutions can be used in many areas and generate more efficiency. Each application should have a Target of improving the efficiency and it should deliver a measurable result to the Company.
03. Using IT to build a Competitive edge: IT is being used to build Competitive edge to the Company. Today there are many online trade apps. IT is playing a huge role in these companies. It is not just an enabler of Business. IT is the Business!
You can look for using IoT, Ind 4.0 elements to give higher value to the Customer.
Today many Capital equipment Companies are looking to use GPS tracking to give a higher value to the Customer in terms of knowing about the usage of the Capital equipment, knowing about the maintenance schedule of the Equipment and so on.
Logistics companies are getting hugely benefitted with the Online tracking of their vehicles. They are able to keep track of the ‘Most economic route’, ‘Speed of the vehicle’ , ‘Mileage of the vehicle’ and so on using the online Apps that are available.
Every company has to find their own mix of solutions that will give them a Competitive edge over their Competitor.
Companies have to start using Information Technology, Ind 4.0 etc and start re-engineering their Businesses!
Governments are doing a decent job in promoting this agenda!
Indian Manufacturing has a lot to catch up!!
Many of these companies can stop calling the Government inefficient and start improving!
Every Manufacturing Company is required to deliver good results every Quarter. Without this, the Bankers will not have confidence in the Company’s performance. In today’s Economic situation as everyone would have experienced, the Bankers are very careful in lending money. While Big Scams may happen, the Ordinary company is struggling to get their Discounting Limits expanded when there is genuinely a Turnover increase! The Ordinary Banking employee seem to have become very cautious! The Pressure is not only from the Bankers, the Investors also are watching the Companies much more carefully. No one wants to put their money in a Company that may not be looking strong.
Companies need to manage their Operations very closely to ensure they get maximum out of the Resources that they are investing.
While this is the situation of rising expectation and rising Caution on the part of Bankers, Investors regarding money and Investment, the Companies do not seem to be still managing their Profits closely.
There is always a big gap between the Seriousness with which the Board looks at the P&L Statement and how the rest of the Company looks at the Quarterly / Monthly P&L Statements. Many Companies may not be still having the Monthly P&L. Even in Companies where the Monthly P&L is prepared, Employees in these companies may not have any idea about the Profit of the Company or how the Financial situation of the Company is. Traditionally a good proportion of Indian Companies do not share the P&L with employees.
This gap between the Board of Directors and the rest of the Company is not good in following ways:
- Employees, including Senior Employees simply do not know the Financial situation of the Company.
- Operations Head may not know the effect of the Operational inefficiency on the P&L.
- Sales team may not know the effect of their Receivables Collection on the Working Capital.
- Engineering Team may not know the effect of their Capital Investments on the Debt situation of the Company and how it is affecting the Profit.
- Due to this ignorance, the Operational team may want more investment, not putting in efforts to improve the efficiency fast enough.
- While the Board of Directors are worried about the Financial situation of the Company, there is no guarantee that the actions are happening on the ground to address this situation.
- Actually, the Operational team may be pulling in the opposite direction. An Operations Head may be arguing for higher investment, he may not be focusing on the reduction of Raw Material Cost as he may see some other priority.
- A Sales head may be arguing for giving higher Credit days to the Customers.
- A Purchase head may not see the need to go for serious Cost reduction as he is busy in implementing an ERP or busy with some other priority.
This can turn the situation in to a quite serious one as the Company is in trouble. But not able to respond with agility! This is where the Companies will start going deeper into inefficiency and Losses.
Let us look at a few Best Practices with which a Company can set a System for Agile Financial Performance Management in the Company.
01. Educate the Team starting with Senior Team: My experience is that even Senior People at Functional Head level too may not be knowing how to read a P&L, Balance Sheet. They may not know how to link the Activities that they are involved into the P&L. A Sales Head may not be able to link the delay in getting Price increase from Customers (Post Raw material Price increases) to the Profit of the Company.
The Education should not be just on the General Concepts of Finance, P&L and Balance Sheet.
Every Company should identify the Critical Activities that are driving the Cost In the Company and highlight it to the Team.
Eg. A New Product Process may be ending up in higher Raw Material Cost for the New Products. This may be okay for the initial period when the volumes are low. But in many Companies, this higher price for low volumes will continue even when the Prices go up. This process may be flagged.
02. Create Focus on the Critical Processes: Every Company needs to create focus on a few major Processes in the Company that are important in determining the Profit of the Company. Some examples are as follows:
a. Sales and Production: I have seen many Companies who simply keep losing a lot of opportunities in terms of boosting their Top line. The Production team should always be at least 20% ahead of the Sales team in terms of Capacity to produce (Not just Production capacity, the ability of the Production team to hit higher Production after tackling all their Losses). If they are not ahead of the Sales team, then the Company would be losing Growth opportunities. I know quite a few companies who are losing the Top line as they are living with some problems for a long time.
b. Cost of Poor Quality: Production / Quality Teams do not realise that the Cost of Poor Quality straight away hit the P&L. The Customers returns may be high, the Export Customers may be debiting Penal charges for bad Quality, the Dispatches may be going by Premium freight as the Lot was rejected. The focus on these costs has to be sharp.
c. Premium Freight: Many Companies incur a lot of wastage in this area. If the Production is not efficient, then the Company may be spending a lot on Premium freight for dispatches. If the Sales forecasting Is not okay, the Company may spend a lot on Premium freight for getting Raw material and Parts into the Company.
d. Manpower Cost and Productivity: The recruitment of Staff has come under a lot of focus and the Indian Companies have definitely reduced the recruitment in the past few years. But still the recruitment of Blue-collar Workforce is happening without good control in many Companies. There are huge opportunities in improving Blue Collar and White-collar Productivity in Indian Manufacturing Companies. We are sitting on huge opportunity in this area.
e. Investment: The Operations teams and Engineering Teams still do not have full understanding of how the investment that they recommend is affecting the Company’s financial situation. We are again sitting on huge opportunities in improving Capital Investment Productivity.
f. Receivables: Indian Customers generally do not pay unless rigorous follow up is there from the Supplier. Of course, there are a few companies that may have good discipline in taking care of the Suppliers. But they are few. A company needs to have rigorous Receivables follow up system.
These are few areas. Companies may have more focus areas relevant to them.
03. Plant Wise/ Division wise Profitability: The Plant / Division Heads have to be made responsible for P&L. Some Companies already have it while many do not have it. The Plant Head and his team have to be held responsible for the P&L. The Plant should have a System of holding different HODs responsible for the P&L Line items.
The Annual Budgeting Process is an important one. The Teams should be involved in Planning the Expenses of the Plant. Each HOD should be clear about what expenses he is responsible for. When he does the Budgeting for the Expense, he will understand how the Expense is building up. A Good Annual Budgeting Process will ensure that the HODs and their teams understand the Expense very well.
Managing these Expenses should become a KPI for the relevant HODs.
04. Setting up a good Budgetary Control System: A Good Budgetary control system should be set up in the Company that will help the Employees to exercise the tools to control the Expenses. A Production head should have a Control for Raw Material and Parts issue at Quantity level on a daily basis. This will ensure a practical control on the Consumption. He should know how much quantity of Consumables he is consuming and what quantity is okay. A Good Budgetary Control System will take a few years to develop. But it has to start. Company has to create focus on this. The Finance team has to play a big role in making this happen.
05. Regular Reviews: Regular P&L Reviews have to take place with the teams. The Finance team should initiate them and the Leaders have to conduct them. The HODs should be asked to present the data and a Corrective Action and Preventive Action if the expense goes out of Budget. These regular reviews create a focus on the Budgetary Control.
06. Cost reduction: An Active Cost Reduction exercise should be happening in the Company and any Cost overruns have to be compensated by the Cost reduction Projects. A good Cost reduction system should be there in the Company.
This way the P&L focus can be taken deep into the Organization.
One concern that some people may have is that if there is too much of P&L focus in the Manufacturing Plants, the Plant teams may not focus on the Customer Service and they may become too money oriented.
We are doing Business with Customers to make money. To make money the Customers have to be definitely kept happy. But if we are not able to make money from the Business, then there is something seriously wrong with our approach. We have to make our Businesses profitable while making the Customers happy.
How good and deep is the system to manage Profits in your Company?
The Indian Economy is undergoing a tough phase. Top line growth and Bottom line existence are coming under threat. Companies need to raise their game in using their teams to the next level. Traditionally Indian companies have not been focusing on developing the People. It is time to realize that without developing the team, we will keep having BIG teams of lowly skilled team members contributing sub-optimally. Let me discuss a few examples that I observed in Companies to stress the importance of focusing on Competencies of Team members.
Shyam is the Materials Manager of Exwhy Limited an Autoparts company. The Company’s Raw Materials Inventories hover around 55 Days most of the year. Shyam is simply clueless about how he can control the Inventories. There are no methodologies in the Company for controlling Inventories. Shyam is simply unaware of practices like Kanban, Supermarkets and other Inventory Control Methods. Every month the blame for high inventories is put on lack of Forecasting of Demand and Inventories continue to be very high eating away the Profits of the Company. In addition, the Company keeps losing out on Top line due to Material shortages.
Ram is the Machine shop head. There are 55 Machines in the Machine shop. The Production Scheduling in the Machine shop is very inefficient, and Machines keep idling for significant amount of time. The Company has high Variety and low volume. There is absolutely no focus on the SMED. Ram is not aware of any of these Techniques. He had been in the Company for 12 years and wields a lot of clout with the Senior people in the Company. Company keeps losing out on the Utilization of Machine shop which is around 52% in good months!
Som is the Materials head of the Company. The Company’s Manufacturing involves a lot of Assembly activity. The Assembly just does not work as per the Production plan released by the PPC. Everyday there are many Schedule changes due to Material shortages. The Company is not able to supply on time to its’ Customers. Their Ontime delivery is around 40%. Company is losing out on Market opportunities in a big way. Som is simply not aware of how to eliminate these Material shortages. To give a good solution for this Som needs to have knowledge of Kitting, Kanban, Production Planning concepts, Supplier Development, Some Leadership Qualities to bring the teams across the functions together for solution.
Peter is the Sales and Marketing Head of the Company. Due to the tough Economic situation, the Demand for Company’s Products is low. But there are opportunities in the market for New Product introductions. The Company is very inefficient at New Product Development and launching the Product into the Market. They keep taking very long time to do this and inevitably they keep losing 2-3 years of Sales in the process. Peter needs a combination of Competencies to drive this better in the Company. He needs to learn how to collect VOC (Voice of Customer) properly, coordinating a faster Product Development, Managing the Launch Process, learning how to select the Segment where he wants to operate in the market and so on. Peter lacks most of these Competencies. Company keeps suffering due to this.
I can quote a number of Examples like this where the Companies are having huge inefficiencies as their teams are not having the Competencies required to resolve the situations on the ground. Many a times these situations require a combination of Functional and Leadership Capabilities. Normally there is no help available to the teams. Management keeps sending the teams to some General training programs and keep struggling to measure the Training effectiveness!
What is the Solution?
When we look at the Solutions that Companies have to attend to this, not many companies have any solution at all! They keep suffering continuously! Companies keep losing top line and bottom-line opportunities.
Time has come when many companies cannot afford to ignore this any longer. If these inefficiencies are not addressed, now the Companies will start to fail in the market. They may even close down in next few years. Some Companies are recognizing the need to change and starting to address while many more are simply clueless what the problem is.
What needs to be done?
I recommend that Companies start focusing on the Competencies of its’ Team and recognize the importance of Processes in their Companies. They need to develop a methodology for People Development that becomes a continuous process in their Company.
I am not talking about a one-time training. I am talking about developing a Process in the company that will help you maintain the Competencies of your team and keep improving it as the Business situation demands.
Developing people cannot be done on a standalone basis.
Following is the Process that I recommend:
01. Define the Competencies required: As a onetime activity it is required to work out the Competencies that are required for your Team. Be ruthless in linking these Competencies to your Business needs. If you say your Team requires ‘Planning’ Capability you should be able to define a ‘Business Context envelope’ around this Competency. What problem will it solve if your Production Manager learns about ‘Planning’? What improvement in Business Result can you see by teaching him about ‘Planning’? You need to define the Functional and Leadership Competencies required.
02. Select the Annual Agenda: When you work out the Competencies required you may work out a longer list of Competencies. Any team can develop in 2-3 Competencies in a year. Nothing more. Do not attempt to make your Team competent in just about every Competency in one year. It won’t happen. Go step by step. Select the Annual agenda in line with the Business Agenda.
A Company that is trying to improve Sales will have to focus on developing the Competencies of teams towards this. If New Product Development is inefficient, then prioritize the Competencies related to this area in every Function. Let the focus be clear.
If you train the Team in these Competencies, you should be able to see improvement in Business Results.
At the end of the year, you should be able to improve the New Product Development Process in your Company and get the Products out in shorter lead time and with better Quality. Your Customers should be able to feel the difference.
By keeping it close to your Business Agenda, you just eliminate the problem of measuring ‘Training effectiveness’. It is a silly discussion. Why do we train our Teams in such a way that we can’t measure the effectiveness of Training?
03. Define Micro Skills: Do not end with defining Competencies alone. Define Micro Skills that your Team needs to deliver better Results.
Eg. In the above example of improving New Product Development process in your company, the Team needs to learn about ‘Quality Function Deployment’. Team needs to learn about ‘Collecting Voice of Customer’ or ‘Working out a Validation plan’ that can capture most of the problems. These are Micro Skills that will give you better Business Results!
04. Appoint a Business Coach: It would be very helpful if you can get a Business Coach for your Team. This Business Coach should be someone who worked in the industry and who can talk your Business language. Engaging just Trainers who do not have deep Business perspective simply will not help.
This Business Coach should be able to understand the Business side and Leadership Side of developing your Team.
You should engage this Coach for longer periods to get best Benefits.
05. Methodology of Training: You need to have a strong methodology for the Training. One needs to recognize the fact that teaching the Concepts is only very small part of Training and Development of your Team.
a) Defining Micro Skills as explained above.
b) Prepare the Team by giving them feedback about the current status on these Micro Skills. Create a ‘need to learn’.
c) Develop E-Learning Modules for the Micro Skills. These will remain with you for training / Re-training of your team.
The E-Learning modules will address the Concepts as well as Practical application stories in the company.
Eg. While addressing the Micro Skill of ‘Taking Voice of Customer’ from the Customers in the market, you may address the different types of Customers that your Company has and Problems in taking VOC from them. Here, already there will be experience in the Company about types of problems. The E-Learning module will capture these examples and advice about how to handle it.
d) Apply the Micro learning on a weekly basis. Encourage the team to learn for 2 hours every week. You can declare Weekly Learning hours in each Function when the team would learn the E-Learning modules.
e) Define the Certification Criteria for each Micro Skill and implement it. Eg. For the New Product Development skills discussed above, the Certification criteria may be as follows:
i) Learning the Concepts – Level 1 Certification.
ii) Level 1 and doing the activity under guidance (Eg. Actually, collecting the VOC) – Level 2 certification.
iii) Level 2 + Improving the VOC for a specific Project – Level 3 Certification.
This way you would certify the Team members on the basis of actual results.
Implement the Certification Criteria. The Business Coach should certify so that the focus Is clearly on meeting the criteria.
f) Continuous feedback: The feedback to the team can be given from at least two sources. 360 Degree Feedback from a group of people with whom the Team member interacts regularly. Feedback can also come from the Micro Results that are expected. Eg. When the Team member learns about ‘Time and Motion study’, we can see if he is able to do a study on his own without guidance.
g) Business Reviews: The Business Coach should accompany the Company’s Leaders in the Business Reviews. He will be the observer who would look at the application of the Micro Skills for improvement in the Business results. The Supervisors of the Team can interact with the Business Coach to give him feedback about the Business Coaching. This will ensure the Business Coach is in the right direction.
h) Link to results: The whole process should be measured with Business Results in a close manner. It will keep improving the process itself. The results expected should be defined at a Micro Level. Results can be Process results and Business results.
This way the Business Coach can help you establish a methodology for People development in your Company and bring the focus on to Competencies of the Team.
How focused are you on the Competencies of your Team?
I have been dealing with several Mid-Sized / Small Sized Companies (Not Micro) as part of my work earlier as a fulltime employee and now as a Business Coach for the past 7 years. I have been dealing with the Head of the Company in all the cases. I have seen the Head of the Company dealing with his Company / his top team in different ways. Some had been very effective some not so effective and some more have very confused way of dealing.
These are the Companies who would have crossed about Rs 50-75 Crores when the Owner is feeling the need for Professionals to come into his Company and help him grow the Company. The type of companies that I am talking about have a Topline from Rs 50 Crores right up to about Rs 2,000 Crores. The Companies that I have seen have similar issues in all these sizes. This had been my experience.
Let us look at the role that the Managing Director can play in these companies. How can he/she lead the company firmly while not becoming the one and only Power in the Company.
I see that the Managing Directors are playing some of the following roles in these companies:
01. The Do All: In many Companies the MD is firmly in charge and is controlling / trying to control just about everything in the Company. He would know how many visitors reported at Security yesterday! The Top team look to the MD for Direction in everything. You would hear the MD say that his Top team is absolutely ineffective! Some of these companies would have put together the Organization structure that is needed for a nice Delegation. But Delegation just does not happen due to various reasons.
02. Semi-organized chaos: There are some companies where the control is given to the layer next to the Managing Director. But the Company is not directed firmly by anyone. The responsibilities seem to be slipping into the cracks between various people in the senior team. Critical slip ups are avoided as the Senior team is attentive but not taking full control. These companies do grow. But they do not achieve their potential and if Business conditions get tougher, we don’t know whether they can face up the situation.
03. Family team in control: In some of these companies the Family is omni present. They occupy all the critical roles. A Family works in very different way compared to the Professional team. There can be lot of shooting from hip as they all have a lot of authority without the capability(sometimes). The Managing Director is loosely controlling the Family members. There is no structure for this control. This Type of Company would typically take sudden turns and changes in direction in the way Business is run!
04. Delegated but not able to scale: There are some companies where the MD recruited a good senior team, is able to delegate well to them. The Professionals are more or less running the Company. The MD is busy in several other things and the Company is not achieving its’ potential for top line and Bottom line.
As you can see in the above description, the Companies have different Organization structures.
Managing Director and CEO
In some companies the MD recruited a CEO who is supposed to take care of the Business. The CEO would have a team of Functional Leaders reporting to him/her. But several of the Functional Leaders may also be in touch with the MD directly. I can see the MD struggling to give up his control and strengthen the CEO. This is not very easy. In this structure, the MD showing his intention to give up control. It depends on the CEO and the MD whether this can become a success.
Managing Director and Top Team
Some Companies who have an active Managing Director who is controlling on a daily basis and he has a top team of Functional Leaders. The MD may want his team to take control. It is more difficult for this to happen in a structure like this. The Managing Director is wired to control everything in this type of structure. He is too close to action to give up control. Someone is needed to coordinate with all the Functions. If there is no administrative head, the MD becomes the default head.
Managing Director and Family members as Functional Heads
There are some companies where one Family member is the Head of each function. These companies would be having more structural problems. A Family member as a Functional head may not be very ideal as he/she would have lot of power and they would keep taking decisions that would have far reaching consequences. When this happens without much control at the center, an organization can suffer.
What is an ideal role for a Managing Director in these Companies?
An MD should put a good Organization structure in place where there is a team of Professionals for each Function. It would be best for the MD to appoint a CEO who would control the Business. This gives the MD an Investor’s perspective. If he manages the Business himself, there is no one who can look at the Investor’s perspective.
From my experience I identify 5 things that a Managing Director should do and One thing that he/she should not do.
Let us talk about what he/she should not do.
Don’t get involved in the Routine
It is ideal for the MD to leave the Routine to the Professional Team. The regular Sales / Operational Targets should be left to the Professional Team. Achieving the Annual Business Plan should be the domain of the Professional Team. MD should learn to be away from this Routine. Sometimes the Team may fail. But that is part of the game. The Performance Management System in the Company should ensure that the success / failure is squarely placed with the Professional team. I have seen some very structured way of doing this and some unstructured ways that still achieve this result as the MD simply keeps away from this temptation.
If an MD is hands on and controlling the Routine, then he/she can become the Obstacle for the Company’s growth. He would be acting couple of levels below his level and no one would play his role in the Company.
What the MD should Do?
01. Strategic Business Plan focus: The MD should definitely be in control of where the Company heading to. He should coordinate the work for getting the Vision, Mission and the Medium-term goals done. He should play a big role in working out the Strategy of the Company and the Strategic Initiatives to put the Strategy in place. This does not mean he should not take the role of top team into this activity. He should encourage the forming of the Strategic Business Plan by the top team. But he is responsible to get this done. He should ensure that the Top team is not lost on the routine and they keep focus on the Strategic initiatives.
02. Set up Business Systems: The MD should play a good role in setting up the Business Systems in the Company. Business Systems is the process with which a Company would achieve its’ Medium term / Annual Goals. The MD should not get swayed with everything that he/she comes across in the Industry. I have seen MDs who get interested in all the latest buzz words and want to implement in their Companies without an overall understanding. They have to take up the role of setting Business Systems more seriously. They need to learn the systems that are running well in other Companies across the world. They need to develop a larger vision for the Business systems in their companies.
They should not look at this responsibility as a one time one. They need to set up the Business Systems and keep improving them forever. It is not a one-time responsibility.
An MD should get into the small details in the Company to set up a good System in the Company. This is an opportunity for him/her to know how routine is happening in the Company.
03. Product and Process Technology: MD has to be in control of the Product of the Company and how it would keep developing ahead of Customer requirements and Competition. He should ensure that the Company’s Products are at the top end. He also has to pay attention to the Process with which the Products are being manufactured. If you are doing it in the same way as every other Competitor is doing, then your Competitive edge may soon disappear. He may look for Technology and Technical associations towards this end as required.
04. Using Industry 4.0: In Manufacturing some phenomenal changes are happening world over with the usage of Industry 4.0 elements. It is quite possible to redefine your Business using this technology. A Managing Director should help his Company to rediscover itself with the help of this technology over a period of time. A Company should do it before its’ competitors do it. An MD has to learn towards this.
05. People Development: An MD should focus on developing a good Team and ensuring this team is continuously learning towards the Business Goals. Most of the Indian Companies are not focused on the Skills of the employees. For continuous progress of a Company it is very essential for a Company to have a good Team and a system for developing the Skills of the team. It is possible to develop a good Learning System in the Company using Micro Learning Concepts and E-Learning. An MD should enable this system in the company. The day to day execution may be taken up by the HR function.
It is very important for an MD to play his/her role well. Operating either at a very high level where he/she can’t see anything on the ground or operating in the small daily detail will make this crucial role in the Company ineffective!
How are you operating in your Company?
In the last few Quarters the Economy has become tougher and every Company is struggling to find Growth of Top line and Bottom lines are disappearing or thinning out for many companies. In this situation, the Companies need to operate with good efficiency. Without this they would waste the resources and perform sub-optimally. No Company can tolerate Sub-optimal performance. The Current condition of the Economy adds to this need. Going forward the Competitive situation will become tougher and tougher for companies. World over the Manufacturing Companies are going to go forward aggressively in terms of improving their productivities with the use of Industry 4.0 elements. Indian Companies will have to rise their performance levels. For this there is a need to install a good Performance Management System in a Company.
I am always surprised to see the absence of this in many Companies. The focus on Performance is missing and therefore the Employees keep getting rewarded for Sub-optimal performance. If a Company does not attend to this, this can become the biggest drain on the energy of the Company.
From my experience, I would suggest certain elements in a good Performance Management System.
01. Performance Planning: The Performance of a Company and its’ employees has to be Planned well. Normally this is done with a System of KPIs for all the Employees. A concept of Deploying Goals from Senior level to Junior level has to be used. This will ensure the alignment of Goals from top to Bottom in the Organization. The Company has to ensure:
a. Diagnosing the Performance of the Last year to learn from mistakes.
b. Appropriate KPIs to all employees.
c. Targets for all KPIs in line with the Company Goals.
d. Deploying the Targets and means to achieve the Goals to the team members.
e. Detailed Action Plans to achieve the Targets in the year. This will ensure that the Employees pays attention to the Resources needed and also the ways and means to achieve the Targets.
02. On Going feedback: There should be a System of Regular Formal Business Reviews at all levels in a Company. I have seen that in many Companies the Senior Level reviews regularly and they are involved in all types of Reviews. There is no ownership of middle level for their teams. This is not acceptable. The Review meetings at all levels are one way to push the responsibility to appropriate levels. When they review the performance of their Teams and take responsibility to their performance, the feedback will happen regularly and at all levels.
03. Employee input: The Formal Business Reviews should give a chance for the Employees to put in their point of view in a formal manner. A good process has to be put for this. The Employees should work out their performance with respect to their KPIs. They should bring in their Point of view in the form of structured ‘Corrective Action and Preventive Action’ (CAPA). When an Employee writes the CAPA and presents to the Boss, he/she is putting in their point of view. The Boss can encourage this and help them to improve it from time to time. Many companies take the input from more junior employees with the help of a Town Hall type of meeting once every few months. Having good avenues to take the input from Employees is critical to the effectiveness of a Performance Management System.
04. Performance Appraisal. While throughout the year the Employees voice will be heard and they will be given feedback, formal Performance appraisal is needed. Employees have to be appraised on the basis of the various criteria that are agreed with them. A Good Performance appraisal system will have following elements:
a) What has to be achieved: The Employees will have KPIs and Targets to each of the KPIs. They will have to show the results for these KPIs.
b) How it has to be achieved: Usually a Company would define the process using which the employees have to achieve these targets. This will comprise of:
i) Preparing Detailed action plans,
ii) Monitoring the Performance in a visual manner.
iii) Regular Formal Business Reviews.
iv) Writing effective Corrective action and Preventive Action.
v) Using a Proper Problem-Solving methodology for Problem solving.
And so on.
c) What is required to achieve it: What Skills and Competencies are required for Employees to achieve these Targets. Functional and Behavioral Competencies are identified that the Employees need to learn. There should be a good system of developing these Competencies in the Company.
Usually the Performance appraisal system would give weightage to all the above. Normally the weightage for the section (a) may be 50% and other two sections together will have balance 50% weightage.
Some Companies may introduce more elements in the PAS as follows:
- Cross functional Team working to solve some big problems for the Company.
- Developing their team.
Rating: The Employees are classified into different categories like a) Excellent b) Good c) Satisfactory d) Below Satisfactory. The number of ratings may be 3-5 depending on preference of the Company.
05. Performance Appraisal Interview: Companies should promote a formal Performance appraisal interview that will have some of the following Best practices:
a. A formal Meeting is needed between the Boss and Subordinate.
b. HR representative must join.
c. Prepare elaborately for the meeting.
d. How to handle a defensive subordinate
e. Recognize that defensive behavior is normal.
f. Never attack a person’s defenses.
g. Postpone action.
h. Recognize your own limitations.
i. Maintain notes throughout the year.
j. How to give tough feedback to a subordinate
i. Do it in a manner that lets the person maintain his or her dignity and sense of worth.
ii. Criticize in private and do it constructively.
iii. Avoid once-a-year “Yearend lectures” by giving feedback on a daily basis, so that the formal review contains no surprises.
iv. Give Plus first and then give Development areas.
v. Criticism should be objective and free of any personal biases on your part.
06. Training and Development: The T&D agenda is worked out right at the beginning of the year. This may happen after the review of the last year’s performance of the employee. Using Technology, you can now totally re-engineer the Training & Development. You can work out the Training agenda for employees on the basis of their agenda in terms of KPIs and Targets. This Training agenda is worked out in terms of Micro Skills that the employees need to achieve the KPI Targets for that year. These Micro Skills are addressed with Micro Training modules using E-Learning technology. The training happens thru out the year and it is done at a Micro level that the employee can use to straight away perform better. Typically, every Employee would spend 2 hours per week for Learning. This makes it 12 Working days per employee which is even better than the World class standard.
07. Rewards: The reward system can address the following:
a. Recognition of employees’ performance. Employees would get increments / incentives based on the rating that they receive.
b. Employees would be recognized as ‘Best Employees’ based on certain transparent criteria.
c. Recognizing every drop. Some companies recognize the small contributions of the employees
d. Kaizen / Suggestion schemes: Many companies encourage the employee participation.
It is important to have different ways of recognizing the performance of an employee. If there is only one way and that is given at the end of the year in terms of increment, then the Employees would build too much expectations from the Appraisal and all of them will never be happy with whatever rewards that you may give.
This way the Performance Management System should be a well-Engineered system in a Company. This System has to be continuously improved to suit the changing Business scenario!
How do you manage Performance of your Team?