Management in the Not for Profit Organization

Lean Implementation + Politics = ?

 

The Lean approach to manufacturing is being adopted by more organizations all the time.  It is no longer viewed as something useful primarily in factories.  Everything from government to sales teams are finding they can benefit from defining their value streams and eliminating unnecessary processes.

 

One sensitive area in Lean implementation surrounds employees’ concerns that they will be deemed as useless as the eliminated processes.  The usual way of addressing this is to provide a guarantee that no employees will lose their jobs as a result of the introduction of Lean.  After all, the focus of Lean is to make people more productive, not get rid of them.  This is not to say there will never be layoffs for other reasons.  For example a major economic downturn can lead to layoffs anytime, whether Lean is being applied or not.  In order to make it clear that job elimination is not caused by the implementation of Lean, it is common practice to execute layoffs before Lean is introduced.  Here is the way the Lean Enterprise Institute phrased it:

"Deal with excess people at the outset, and then promise that no one will lose their job in the future due to the introduction of lean techniques"

This makes a lot of sense.  If we do not remove people before the introduction of Lean then people will assume they were eliminated due to Lean.  Thus resistance to the use of Lean approaches will be invited.  This resistance can take many forms, among which are: doing things half-heartedly, open defiance, subtle sabotage, etc.  If people do not feel safe then their lack of security will be foremost on their minds – not learning to think Lean.

 

So it is clear - if there are people to get rid of, we do it first - before we begin introducing Lean. 

 

Ummmmmm……..

Hmmmm…

Wait a minute.

 

If we haven’t worked out our value streams yet, how do we know who to get rid of?

 

And what happens if we eliminate people who are critical to figuring out which processes & activities are of value and which are not? 

 

If we cannot base our decisions about who to eliminate upon knowledge of our value streams, what else might those decisions be based on?

 

Now suppose an organization is rife with corporate politics.  What do you imagine will motivate layoff decisions?

 

 

The fact is, if there is a sense that there are excess human resources and political infighting has already been occurring, then things go from bad to worse when it looks like positions are going to be eliminated.  That is, all too often corporate politics serves as the fulcrum upon which the decisions about who to let go are hinged.  In this scenario opinions about which persons or units are too unproductive to keep are based upon who heard what from whom.  And in the frequently surreptitious world of office politicos those communications are usually sneaky whisper campaigns rather than honest, open appraisals that can stand the light of day.

 

A quick review of internet articles about implementing Lean will find quite a few articles that identify speed bumps or hazards in the process, not the least of which are organizational politics and habits that resist the introduction of Lean approaches.  This is because most of the posts and articles seem to be written by consultants who specialize in Lean implementation projects.  They, of course, focus on what gets in their way.  Not one search by this writer yielded any articles about how organizational politics and habits contribute to the misapplication of Lean.  In other words, while it was not too hard to find people cautioning about things that block attempts to introduce Lean, none were found about the tendency for a business process improvement initiative such as Lean to be co-opted or corrupted.

 

Let’s face it, politics are everywhere and they are not always bad.  They only become bad when their goals are not aligned with the best interests of their organizations. (Marks, 1)  In every case this writer has ever seen, if the political goals were not geared to help the organization then they were focused on enhancing the power of individuals at the expense of the organization.  When Lean is dropped into that kind of morass one should not be surprised if mirage projects arise.

 

“The project organisation structure should be capable of helping those within it to obtain the information they need to make selections from the possibilities available by identifying the true (rational) project as opposed to the mirage (emotional) project.  Unfortunately, this is not always the case as projects fail due to the structure’s inability (or unwillingness in severe cases of gatekeeping) to produce the required information, or its tendency to produce too much information (much of which may be erroneous) which then makes it difficult to extract that which is relevant.”  (Moore, 8)

 

In such cases the acknowledged rational project is the implementation of Lean.  But mirage projects such as getting rid of one’s enemies, acquiring more power, or preserving fiefdoms take precedence even though the existence of these projects is not openly acknowledged.

 

Here are some examples:

 

A large nonprofit organization underwent considerable turnover among its leadership, first by a large number of middle managers leaving due to incompetent upper management; then by upper management’s removal by the board of directors following a series of quality & regulatory problems that ensued when the middle managers departed.  Some of leaders who remained were promoted, including one recently hired upper manager who was appointed the new CEO.

 

The new CEO took over with the concept of Lean in mind and began laying the most basic groundwork by touring the organization’s many facilities and asking “Why?”  Why do you do this?  Why do you do that?  This is sound practice in getting high level clues as to how un-Lean your organization might be. 

 

So many personnel changes had taken place that most locations did not have people who knew why processes existed, much less what could be lost if a process changed.  However, there was one director who knew the “whys of the hows”.  This director had come up through the ranks and had acquired masterful knowledge of all relevant regulations, contracts, and accreditation standards in 20 years with the organization.  So when the CEO asked “Why?” this director had the answers.  The CEO, who had become accustomed to marking processes for later removal with the introduction of Lean, began to see the director as obstructionist.  Politically there had arisen at least two camps:  one that took pride in the accomplishments of the organization to that point, and the other that viewed the structure & processes that existed before the takeover of the new CEO as fat and wasteful.  The knowledgeable director was assigned into the “wrong” camp by those in the CEO’s inner circle.  The director’s position was eliminated roughly a year later – about the time of the formal introduction of Lean at the upper management levels.

 

Consequences?  Of course.  There were soon some major incidents in areas that had once been overseen by the vanquished director – incidents that were deemed critical by customers.  Indeed, one key customer organization still has not regained enough faith to resume prior levels of purchases now, several years later. 

 

There is also the example of a large nonprofit company in a medical field that decided it would eliminate one entire level of management in order to “flatten” before implementing Lean.  A very few persons at that level would be moved up, several would be moved down, and the remainder would be moved out.  These managers were at the level that dealt with issues hands-on every day.  It was at their level that policy and strategy intersected with real-life action.  They were the ones who faced the benefits and negative consequences of all approaches being directed from the top floors of the organization.

 

Unfortunately, the tumult that resulted from “pancaking” that stratum of the organization interfered with the transmission of knowledge necessary to define value streams.  Many errors were made in the ensuing implementation of Lean resulting in losses of enrollment, providers, and good managers.

 

What does politics have to do with this?  Well shortly after the identified level of management was eliminated it was realized that too many people had been cut and there was far too much work to go around.  But instead of reinstituting the eliminated level of management, the senior leaders added new positions to the level that had been above the now missing group. 

Did it cost them more money than the initial structure?  Of course it did. 

Did they fill some of those new, higher positions with people related to senior leaders?  You betcha.

 

Did it work better than what they had in the first place?  No, it was worse and is becoming even more problematic as the weeks go by because the remaining high quality managers are leaving.  Many suspect that this nonprofit with a long illustrious history will be a minor subsidiary of another organization via acquisition within five years.

 

The Role of Lean

 

Is Lean to blame for the episodes described above?  Of course not.  Well, not entirely.  It can be of value in large organizations and should not be looked upon in a negative light.  (Marks, 1)

 

The fact is that the process of implementing Lean contains the Catch-22 described above.  That is, if one eliminates people & positions during its implementation then necessary cooperation will become nearly impossible to assure.  On the other hand if people are eliminated before Lean, one is likely to miss the components of key value streams.  Furthermore, the cognitive dissonance created by this underlying contradiction provides an insidiously fertile soil in which political intrigue can take root and grow.

 

So why is no one else writing about this?  How can we have missed the elephant in the room for so long?  (Beckford, 1)  Are we really that unaware?  Or are we of the belief that if we ignore it long enough, it will just go away?

 

Maybe we think the CEO knows enough about the value stream to make everyone else extraneous?

Maybe we consultants are so arrogant that we think we can deduce in one or two interviews what it took local managers years to understand?

Or maybe it’s just too much to have to think about.  Why should we consider the effect of such a contradiction?  Does it really matter if it is a weakness that can be dramatically exacerbated by other co-existing problems such as political infighting?

 

Besides, if the CEO is with us who can be against us?  (BTW- the CEO pays our consulting bill!)

 

OK, that’s enough sarcasm for a little while.  The truth is that there are many ethical consultants who will diplomatically confront a CEO or whoever is responsible for eliminating any internal influence that is corrupting the implementation of a business process improvement strategy.  And if confronting the issue does not ameliorate it, those good consultants will step out of that job.

 

Besides, Lean is just one of the more recently seen precipitants for cutting people.  Politics have been a key factor in losing needed knowledge resources for eons.  Just think of all the companies who have rolled merrily along after cutting their sources of knowledge and judgment without having any idea that they are missing key things.  In one example witnessed by this writer first hand 20 years ago, regulators took the CEO of a large nonprofit aside and told him they were tired of being used as his quality assurance department (in other words, the lack of compliance would have been caught internally if quality systems had not been gutted by eliminating key knowledge workers).  They then shut down admissions to one of his key business units – a medical facility.

 

In short, when we cut people we lose information and judgment.  Without those resources we invite the possibility that we will make significant errors and not even know enough to realize it.

 

 

Conclusion: Dos and Don’ts When Downsizing for Lean

 

The first and foremost thing to do is to acknowledge the internal conflict in getting rid of people you might wish you could get information from.  Everything else flows from the realization that you might be screwing up your ability to define your value streams.

 

Second, manipulate things, not people.  Treat people with respect.  Don’t wring every bit of info from them that you think is important, and then lay them off.  Remember, before you lay down your value streams, you don’t know what’s really important – so you don’t know when you’ve wrung out all you need from individuals.  Besides, they’re human beings who deserve better than to be drained and then cast aside like a used paper cup.

 

Third, understand that there are likely to be political undercurrents of which you are not aware.

 

Fourth, make it clear that everyone is there to attain organizational objectives.  All will do worse if some are acting at cross purposes with organizational strategy.  Constantly check the alignment of people’s actions with corporate strategy and objectives and get rid of those who make their parochial interests preeminent.

 

Fifth, recognize the fact that if you have too many people on the payroll it is not the fault of Lean.  In fact, Lean might make your “excess” people so productive that you don’t want to cut them.

 

Sixth, and perhaps most important:  I’ve heard it said that Lean is a growth model, not a cutting model.  The way it accomplishes that is by operationalizing a true market orientation.  Sensitivity to what customers need and want drives everything.  So we’d better find out what customers think about those whom we are about to cut.

 

Last but not least, understand that politics will always be present.  It’s the nature of the human condition.  We only need to call it out for confrontation when it takes on the negative characteristics described elsewhere in this article.  Some of the specific things to watch for are:  keeping secrets, lying, talking about one another instead of to one another, the use of personal insults, and other such toxic interpersonal behavior.

 

 

Beckford, Mark. “Corporate Politics: The Elephant in the Room.” Disruptive Leadership. 9/17/2008. found at http://www.disruptiveleadership.com/2008/09/17/corporate-politics-the-elephant-in-the-room/

Lean Enterprise Institute. "Lean Action Plan." www.lean.org/. found at http://www.lean.org/WhatsLean/GettingStarted.cfm

Marks, David.  “Lean Startups & Big Companies: Challenges and Recommendations.” You Can Change It Later, the blog of David Marks. 2/9/2012. found at http://davidmarks.co/2012/02/09/lean-startup-big-company/

Moore, David R. Project Management, Designing Effective Organisational Structures in Construction. Blackwell Science Limited: Oxford, UK 2002