Transactional Lean

If you haven’t worked in operations or quality, Lean Six Sigma can be a daunting prospect.  How does a manufacturing style apply to HR?  What’s it all about?  What does it mean for you and your job?

The good news is that LSS can be applied in the transactional world with great results.  As part of a new effort to focus on education and tool sharing, I’d like to open with an overview of value and waste, the two primary components of any process.

What is Value?

We start with looking to separate “valuable” activities from waste.  How do we define value?  We don’t.  The customer does.  But an easy way to think about it is to imagine your customer’s reaction if your activity appeared on an invoice.  For example, your customer, a hiring manager, says “find me a great mechanical engineer!”  Let’s break down some of the activities in that process…

Value Added Activities:

  • define the right parameters for the job search
  • reviewing resumes
  • presenting well qualified candidates

These are important things that the manager wants to have take place.  The two days that passed prior to starting the search while waiting for an approval by my manager on a form that outlines HR’s responsibility in this task is not.  And no customer would willingly pay for that time.

Seeking Waste

When we start looking for improvement opportunities, we start with the classical definitions of waste.  You can find these in all workplaces, all work types, and all parts of the organization.  There are traditionally seven wastes:

Overprocessing – Working on a task or product beyond the customer’s specifications

Waiting – idle hands

Motion – having to turn, twist, lean or stand in order to complete your task

Inventory – as Taiichi Ohno famously said, inventory is death.  Any time you have inventory, your money is tied up sitting on a shelf.

Transportation – walking from place to place or, more common, moving work-in-progress from place to place so it can be completed

Defects – mistakes, rework, or unusable final products

Overproduction – making more units than needed to satisfy customer needs

And, a special bonus eighth waste:

Underused people – whether it be idle time, lack of work or just not realizing the potential of your team members

Once you understand your process and have identified the waste, the next step is to understand which activities are truly not “value added” and work to streamline the activity, integrate or automate the process, or eliminate the waste wherever possible.  As an example, here is a typical transactional event from everyday life, fast food pickup.  This is, of course, an example of a process gone wrong.

  1. Arrive at restaurant (Elapsed time – 0:00)
  2. Wait 5 minutes in drive-through line (Elapsed time – 5:00)
  3. Wait on cashier to be ready for order while cashier accepts payment from another customer (Elapsed time – 5:30)
  4. Place order (Elapsed time – 6:00)
  5. Cashier reads order back (Elapsed time – 6:30)
  6. Wait in line to reach drive through window (Elapsed time – 8:00)
  7. Pay for order (Elapsed time – 8:30)
  8. Receive change (Elapsed time – 9:00)
  9. Wait for food (Elapsed time – 11:00)
  10. Receive food (Elapsed time – 11:30)
  11. Check order; If mistake found, park, return order, wait for correction (Elapsed time – 12:00, more if mistake is found)

Now, here’s an example of a revised process with a few minor changes and the impact:

  1. Arrive at restaurant (Elapsed time – 0:00)
  2. Wait 3 minutes in drive-through line (Elapsed time – 3:00)
  3. Place order (Elapsed time – 3:30)
  4. Wait in line to reach drive through window (Elapsed time – 4:30)
  5. Pay for order (Elapsed time – 5:00)
  6. Receive change (Elapsed time – 5:15)
  7. Move to second window (Elapsed time – 6:00)
  8. Receive food (Elapsed time – 6:30)
  9. Check order; If mistake found, park, return order, wait for correction (Elapsed time – 7:00, with fewer mistakes overall )

Notice the overall time has been reduced from twelve minutes to seven, an improvement of more than 40%.

What is that improvement worth to the business?

Intuitively we know that the improvement is significant, but the changes we suggest will have a cost to implement, so how do we quantify the value of the improvement?  Here are where good metrics and valuations come into play.  How much is a 40% improvement worth?  Assuming a twelve minute cycle, you will be finishing five transactions per hour.  If each transaction has an average sale total of $10, we are producing $50 of revenue per hour.  Assuming twelve hour days for a full year, that equates to $18,250 in revenue per year.

If we reduce the cycle time to seven minutes, our hourly transactions jumps to just over eight.  (We will round down for simplicity.)  This brings our yearly revenue to $28,800, an improvement of nearly 60%.  Simple answers, powerful results.  The times in this example are clearly a “worst case” scenario for a restaurant, and are intended to show how you can apply Lean thinking in the transactional world.

What’s coming up in 2011?

This overview should set the stage for this year’s focus on on tools and learning.  Moving forward, expect to see more about how to use and when to apply the very simple but powerful tools that LSS can provide.

HR Technology Doesn’t Matter To Me

Shouldn’t matter to you either.

Now I know this is an odd thing to hear from someone who just gushed about the great HR Tech conference, and who has more than just a little geek in him.  But I believe there is a very simple order of operation when it comes to developing the HR practice.

People.  Process.  Technology.

In that order, and in that order of importance.

You cannot build your technology strategy until you know the process you are trying to support and improve.  And you can’t effectively implement or improve your processes until you understand the needs of the people who will be using them.

That said, there is a fine line that has to be navigated between understanding your audience and being a slave to their whims.  Vague feelings of concern or the ever present scope creep are your enemy.  You will need to pull out the stick and make command decisions on occasion.  But the technology itself shouldn’t be the driver.

Once you know what your people need, and what the process needs, choosing your technology answer should be relatively easy.  Don’t underestimate it, but don’t be afraid of it, either.

Engaging Leaders in Project Management

When you oversee a large number of projects, one of the most telling, and yet blindingly simple, metrics you can track is closure rate. For every project you successfully complete, how many die on the vine? If you’re using a defined methodology (DMAIC, PDCA, stage gates, etc.) you can drill down further and see what your fallout rate is at each point.

The next step is to ask why. It’s likely a systematic issue, as I’ve encountered repeatedly in the past.  And the system that falls apart most often is ownership.  The song goes something like this…

“Betty, you are a high potential, high performer.  We’d like you to get some project management/Lean Six Sigma/TQM/cross functional experience.  Please find a project that would interest you!”

***Time passes***

“Betty, you are a high potential, high performer, and we’re going to promote you!  Your project?  Oh…um…well, no worries.  We’ll find someone else to run it.”

***Time passes***

“Hey, whatever happened to Betty’s project?  Did anyone finish that?”

We look to our developing leaders to make a difference and drive projects.  In reality, though, the only way to really deliver value from a project is to have someone at a high level who cares about the result to make sure it is achieved.  In that spirit, here are a few simple methods I’ve found to help get those leaders engaged…

The leadership team picks the projects

Ideally, projects are driven by strategy.  As your business objectives are drilled into action, you should have a clear line that tells you how each project aligns to overall goals.  Each one should have a defined deliverable, and failure to execute should mean the risk of failing to meet the business goals.  If this puts a leader’s bonus at risk, so much the better.

Projects look for team leaders, not the other way around

Project leaders are chosen AFTER the projects.  Unless you create a project that is so good it can’t be turned down, you shouldn’t have to dig up development opportunities.  Being choosen to lead a mission critical project team should be an honor and a reward, not a burden.

Part of being a project leader is exposure to the leadership team

Project leaders report on progress to their leadership team.  Obstacles are openly discussed, and the team breaks them down together.  Open reporting and discussion breeds engagement with leaders, with then breeds expectation of results.

Leading a project should not be something you do alongside your “day job”

Just like any other quality/management system, these projects should be part of how you do your job, how you make it better, and how you deliver your results, not extra work on top.  When it becomes a second job, you start to lose your best team leaders.

If you are a team leader, make sure your projects are coming from the right place.  If its too late for that, then spend some time marketing the potential impact and make someone on that leadership team care about your project.

Metric Waste

I’ve been working on a project to create standard processes for the global HR community with my organization for the last two years or so. One of the questions that always comes up is around measurement. How do you measure adoption rate of the processes? How do you know when people aren’t using them? And what are you going to do about it if someone doesn’t want to use them?

We’ve developed a self-assessment to see if a location is aware of the processes and if they are using them, as well as gather their feedback. But we are after more than compliance, we are after the usefulness of the processes and improvement opportunities. We can record adoption rates from there, if we really want to, but it’s all based on self-reporting, which we all know can be spotty at best.

More to the point, though, the question is why would we care? Because we would only want to invest the time and effort into measuring and reporting if it was important. Isn’t it important to know if our process are being used? More and more, I’m convinced the answer is no.

Standard processes are, in most cases, a building block toward something else. In our case, they are pre-work for an HRMS and self-service implementation. We will build upon the basic framework with regional/country adaptations that outline the changes needed for local laws, and then build out the technology and tools on top of that. The use of the standard processes is, to me, secondary. If it were the end goal, then it would certainly warrant reporting. But as an intermediate step, I’m not so sure.

As I’ve said before, new processes/tools/widgets are only going to be successful if they are better than the old version (or at least are perceived by the user to be better). If our long term deliverable, including those systems and tools, aren’t better than the manual way of doing work, we will have failed, and no one will use them. If we do present a new system that is an improvement, people will flock to it. And then the measurement of that interim point isn’t as important.

Trying to measure the success of an intermediate step is, I think, a distraction. Feedback is good, of course, but should be gathered in the context of preparing for the next step. More importantly, trying to measure usage of a manual process would be far more resource intensive than it is worth. And once you know that, why would you spend any more time working on it?

If we are building a system to the needs of the user, it should be their feedback (or lack thereof) that should matter. So keep your communication lines open, listen to them, and give them what they need.

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