Archive for the ‘Productivity culture’ Category

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Safety or Productivity?

In Productivity culture,The workforce,UK productivity,Uncategorized on June 5, 2011 by Tim Aikens

All too frequently we hear of major incidents where there has been loss of life, injury and considerable financial loss.  This week it was the turn of Chevron’s refinery in Wales. Last year we had the big blow out in the Gulf Of Mexico with BP.  These events often happen in the petrochemical industry – they also happen in many other industries where there is a big safety requirement – rail (Potters Bar), construction (Heathrow tunnel) to name a couple.

The reports emerge and there is often talk of ‘short cuts’ and process ignored.  Without taking a moral stance, my question is simply this.  Is good safety incompatible with high productivity?  From what we read it would sometimes seem that the answer is yes.  I believe the answer is absolutely not!   Good safety is good for business and good for productivity.

First take a look at these regular incidents.  If people were taking ‘short cuts’ then surely that is a sign that their processes were either inadequate or not optimised.  I don’t for a minute believe that anyone really encourages unsafe practice.  But most people want the job done.  So at this point the issue is one of process.  A lot of safety process is a ‘bolt on’. There is the work process and there is the safety process.  Rightly or wrongly they are sometimes seen as different and not an integral whole.  This presents a huge opportunity.  Firstly, to integrate the process.  Everything that is required for safe working needs to be fully integrated into a single ‘how we do this’ working practice.  When this is the case, safety becomes inherent and is much more likely to become part of the culture of an organisation instead of being an enforced extra.  In addition a single integrated process is much easier to optimise as part of a whole than as part of a separate process.

A dilemma that then arises is how exactly do you monitor a work process where the safety elements are integrated rather than as part of a separate process.  The answer to that is twofold.  Firstly, safety experts must be part of the process development.  Their expertise and the necessary requirements need to be built into the core process.  Secondly, ownership and oversight of the whole process should lie with the workforce not safety experts.  This will probably require supervisors to have a greater awareness of, expertise in and commitment to safety.  Surely this is no bad thing!

If we are to be really serious about safety and make the best of the overall process in terms of productivity, then those who do the work have to be accountable for the safety part of the process.  The safety experts need to be involved when a working process is set up.  They also need to be there to provide ongoing support and expertise, and they still need to have their functions of check and audit.

Much of this may not sound a lot different to today. It is! and it would make a big difference to performance both safety and business!

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Price up – bring cost down!

In Productivity and motivation,Productivity culture,UK productivity,Uncategorized on April 28, 2011 by Tim Aikens

The oil industry is fascinating for a number of reasons.  The ‘Upstream’ or Exploration and Production part of the industry has little control over the price it receives for each barrel sold. Oil is a commodity and so its price is largely determined by supply and demand.  In 1998 it fell as low as $10 a barrel. It has risen to over $140 and is currently about $125.  How do you manage in such a volatile price regime and what does this mean in terms of productivity?

This is where it gets interesting.  Whether $10 or $125 the industry – or at least the smart oil companies are always interested in doing more for less.  In the tough times they need to reduce cost just to generate some cash and hopefully a bit of profit.  In the good times it is all about getting more oil out of the ground to make more money whilst the price is high – for who knows when it could slump again.  The focus is not quite the same in both situations – the first one is on cost cutting – the second on efficiency and effectiveness.  However, from my experience of working in oil companies under both price regimes, the approach is fairly similar.  If you try to cut cost, you will almost inevitably improve efficiency and if you are focused on improving efficiency you will end up reducing cost.

It is because of this price volatility that the oil industry has had to be flexible and willing to change.  As an industry they still have some way to go, but they are working at it.

What makes them stand out is the determination to keep improving efficiency or cutting cost regardless of the cost/ profit environment.  This is not to say that no other industry does this.  On the contrary most successful organisations will have this mindset.  The real message is that every organisation has to be relentless in bringing cost down and improving the way it does things.  Even when business is good and you are getting a good price for your out put, seek to bring down price.  This comes full circle to one of my earlier blogs about productivity culture. If your organisation does not have it – then go out and develop it!

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Privatisation – good for productivity?

In Productivity culture,Public sector,The board,The workforce,UK productivity on February 28, 2011 by Tim Aikens

There has been a lot of press recently about rises in water prices.  One of the Thatcher era’s ‘big successes’ was the privatisation of utilities – water, gas, electricity and telecommunications.  Of these water is the only one to have maintained a monopoly.  Water prices for the average household have gone up in real terms by about 45%  since 1989 (source; Ofwat).  Leakage is till at some 19% of supply!  Compared to the price of many other things, water has become increasingly expensive and yet the commodity has changed little as far as I can taste! (note I am talking about the cost of water, not sewage or drainage)

So is this a case of privatisation not working or are the water companies simply catching up after decades of underinvestment?  OR – does their monopoly position allow them to get away with inherently poor performance despite the existence of Ofwat?  This is not going to be a rant about privatisation or Margaret Thatcher, but simply to ask the question is privatisation necessarily good for productivity and the objective of delivering More for Less?  Another privatised utility that has had problems is Railtrack – the privatised organisation set up to manage the UK’s rail infrastructure.  Network Rail was set up to take over the remnant of Railtrack after it’s failure.  Network Rail is now desperate to introduce large efficiencies in its business.

There are some interesting similarities.  Two utility organisations, set up as private businesses yet not delivering real cost efficiencies.  They are both monopolies.  You have no choice over who provides your water and the train operating companies have no choice over who supplies track and services!  Despite government regulation neither have delivered. There are other similarities. Both have long thin infrastructure (pipes and rail tracks) with points of focus (waterworks and stations).  Both have a legacy of underinvestment.  Both like to think they have delivered a lot – but my water tastes no different and the journey time to my home town of Norwich is little different than it was in 1960!

I have talked in the past of a ‘productivity culture’.  Post privatisation, both management and the workforce stayed essentially the same.  If the people don’t change (either physically or emotionally) the culture won’t change.  If processes don’t change the outcomes won’t either.  Network Rail is being forced by budget cuts to deliver some big efficiencies.  This is an external driver acting on the organisation.  No such driver exists within water (Ofwat seems to rule with a very gentle hand).

The obvious conclusion that privatisation to a monopoly delivers little benefit will be of no surprise to students of economics .  The problem is that they can reap the benefits of a PLC and still behave like a public utility!  Things need to be the other way around,  perform like a PLC, but have the constraints of a public utility.

So what to do?  All the usual suspects come to mind:

  • have a formal and real focus on productivity (with clear, stretching, targets and objectives)
  • change the people or change the people (be both committed and ruthless)
  • processes will need to change and innovation will be vital (difficult without the previous two)
  • without real leadership in the area of productivity little will change!

Network Rail have a lot to do.  The driver for them is financial stricture.  It remains to be seen if their management and workforce can deliver.  The utilities don’t need to worry unless Ofwat really decides to use its teeth.  As well as measuring all the good stuff on water quality and availability, Ofwat needs to get back to basics.  What is the cost of a unit of water and just how efficiently is it being delivered?

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Life is a waiting game!

In Productivity culture,Productivity mindset,UK productivity on December 1, 2010 by Tim Aikens

Whether at work or play, we all spend a remarkable amount of time waiting for something or someone.  This creates ‘dead time’.  Think of a few examples. At home, waiting for the kettle to boil, waiting for the pasta to finish cooking, hanging around because the kids are not ready despite countless exhortations that you needed to leave at 10:00 a.m. sharp . . . . and so on!  Then at work we see that same thing.  Waiting for a large document to print, waiting in a meeting for someone important to turn up (have you ever calculated the cost of waiting for a meeting to start, it can be a lot of money).  When drilling an oil well they call it NPT – Non Productive Time.  With some oil rigs costing around $1 million a day you can understand  why they are keen to minimise  NPT.  Surprisingly there are not too many business areas where there is a significant focus on NPT.  Manufacturing industries are often keen on NPT.  The capital invested and lost production usually means a lot of lost revenue. But what about service industries or the public sector?

Many organisations are aware of the cost of having to wait. GP practices do not like it if you turn up late or not at all. It costs them money.  But what about the opposite?  How much money is wasted because you go into your GP appointment and are kept waiting 20 minutes or your customer keeps you waiting half an hour?  Is this something we should live with as part of the cost of doing business or should we seek to do something?

I believe we both can and  need to do something.  In an earlier blog I wrote about a ‘culture of productivity’ and this is a related issue.  In a consulting company I used to work for we had a very bad meeting culture.  They often started late, took far too long and the outcomes were often poor.  After introducing and enforcing a few simple rules things changed very quickly.  Meetings started at the appointed time – regardless of whether the boss turned up, there was an agenda and they finished on time. People soon learned to be on time and have an agenda!  It saved a lot of money and productivity improved.  That is one simple example.

Another change that needs to happen is the mindset about waiting.  Two key things need to change.  Firstly how can you avoid the waiting.  The meeting example above is one way of tackling a problem.  Thinking about what you need to do and when is actually important, but people spend little time on it.  The key is often planning!  You see this on construction sites. Four men standing around a hole in the ground for 30 minutes because the welder has not turned up – well plan ahead.  In some cases you cannot avoid the wait. You have a big print job.  You don’t need to stand over the printer whilst all 30 copies of 60 pages print. Make a coffee (it saves time later) or do an overnight print.  The overall point is to plan your time and make sure everyone in the organisation plans theirs.  One of my biggest frustrations is the London tube.  When they are refurbishing an escalator, it is naturally closed and boarded off, but frequently there is nothing happening! Why the wait, why no activity?  Better planning would save much of the time.  In a petrochemical plant a similar shutdown is planned to the smallest detail so there is no waiting time.

Waiting time costs money – its best avoided!

Articles

Asset Productivity

In Productivity culture,Public sector,UK productivity,Uncategorized on October 21, 2010 by Tim Aikens

Much of the time we think of productivity in human terms. How much can we get out of a manhour?  In the car industry this translates into how many cars are produced per man year of effort.  In other industries – often very capital intensive, there is a focus on the productivity or utilisation of the assets.  In the airline industry for example there is always great pressure to keep planes in the air. When they sit on the ground they don’t earn revenue (and usually incur some fairly expensive parking costs)!  In retail stores, businesses look at revenue per square foot of space.  It’s all about asset utilisation or productivity.  So what can other sectors learn from this?

Well, I believe there are quite a few areas where asset productivity has not yet been fully appreciated.  Here are a few examples.  London is very expensive when it comes to office space (and a lot of other things!), so quite naturally planning space is important and architects find ways of cramming the workers in, but still providing a modicum of comfort.  Move  further out, space becomes cheaper and the allocation of space per head grows.  I’m not suggesting that everyone should operate at London densities, but there is probably a lot of money wasted because the productivity of the available space is lower than it needs to be!  How good is your space planning?

Here is another example.  One of the major costs in large construction projects is plant hire.  How often do you go past a big site and see expensive diggers, cranes and the like sitting idle?  How much might this be costing?  If you rent expensive kit by the day, but only work one shift, the kit sits idle overnight. In some cases it may well be more cost-effective and productive to run a night shift to make the best use of the equipment (recognising that night shifts are usually more expensive than a day shift).

Perhaps one area where poor asset productivity affects many of us is in major (or even minor) road works. The concept of lane rental for motorway works helps to  drive up productivity. The idea is that the contractor has to ‘rent’ the lane(s) they are working on.  The longer they take to do the work, the more ‘rent’ they pay and less profit they make.  Yet in many cases you see swathes of motorway work with little if anything happening. In urban areas, big holes in the ground sit there for weeks with little or no activity. As well as costing the council money the cost in terms of lost time to the traveling public is huge!  Both councils and contractors need to raise their game to increase the asset productivity of both the roads and the equipment being used.  Plan the work and work the plan!  The final ‘insult’ to the road works ‘injury’ is where successive utilities organisations dig up the same piece of road in quick succession. Sadly it still happens all too often.

So how much do you really think about asset productivity as well as people productivity?  In the process industries, planning to minimise downtime of an asset for repair or maintenance is second nature.  There is a lot of scope for other industries, businesses and indeed the public sector to learn from this!

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First line supervision – the key holders

In Productivity culture,UK productivity,Uncategorized on May 20, 2010 by Tim Aikens

During my career I have worked on a number of engagements designed to make a dramatic improvement in performance. Without exception, they have always had input from first line supervisors and this input has been pivotal to the success of the engagement.  Like NCOs in the army, they are the bedrock on which corporate performance is founded.  They take the instructions handed down and guide their execution, often using their extensive experience to adjust and refine so that the result is good.

However, the environment they find themselves in in the corporate world is often not conducive to innovation, experiment and change.  The rules, requirements and other strictures of the organisation contrive to constrain them to doing things the ‘company way’.  It is only when someone in management realises that they ‘have to change’ and that they need the supervisors’ help that they get their opportunity.  And this is usually where I have entered the story as the consultant engaged to help.

After some training and sometimes quite a lot of resistance the supervisors are let loose with a degree of freedom they have rarely had.  What happens?  All sorts of things emerge. Good ideas for doing things differently; explanations of why the old ways never worked; changes that would bring big reward with little or no investment; and for some, the realisation that survival means reducing the staffing numbers and that this is therefore a good thing to do.

What is the trigger? What has been done to energize this group of people to make dramatic and beneficial changes? I think there are three main reasons:

  • Removing the shackles, by allowing challenge and free thinking without the possible side effects of censorship or sanction. Many managers are surprised by the actual or implicit restrictions imposed on first line supervisors that deny them from making the most of their talents.
  • Recognising the talent that front line supervisors have.  They are often restricted in what they can do and their managers can sometimes interpret that as a limitation of their talent.  This is rarely the case. On many engagements I have worked on, one of the best moments has been getting the supervisors to present the key results and watch the look of amazement on senior managements’ faces!
  • Provide the framework within which the front line supervisors can demonstrate their worth.  At the supervisory  level most businesses are set up to deliver the status quo not to deliver dramatic change.  This is where a consultant can introduce an approach that allows creativity and change to happen!

Next time your organisation wants to make some dramatic changes, make sure you engage the first line supervisors!

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Middle managers – Saints or sinners

In Productivity culture,UK productivity,Uncategorized on May 10, 2010 by Tim Aikens

The senior team is all on board, desperate to make a real change in productivity and performance.  But of course they do not manage the ‘workforce’ – all those people who add value, deal with customers and are generally responsible for generating revenue.  There is this layer usually referred to as ‘middle management’ who take the strategies and visions from the top and turn them into real plans and actions to make  money for the business!

In my years of working as a management consultant I have often been in that middle place with a client, working to get middle management engaged and driving initiatives through.  Here lies the dilemma, you never know what you are going to get.  There will almost certainly be some who are keen to get on and change, whilst there will nearly always be some or a few middle managers who have no appetite for change.  The good ones can be great and the poor ones can derail the whole effort quite easily.

The role of the leader is to work through this, to identify the laggards and encourage the enthusiasts.  I have a saying that I sometimes have to use with clients – ‘change the people or change the people’!  In other words if someone has the wrong attitude or is blocking change, then either that attitude has to change or the person needs to be changed –  through moving them to a different role, or in extremis removing them from their job altogether.

I have seen enthusiasts do a great job in making big changes, even though they were actually working themselves out of a job. I have seen others determined to block any move for change who have had to be moved out of the organisation altogether.  What does this mean for a senior manager trying to put a large productivity programme in place?

Three key tips!

Look out for and use the enthusiasts to manage the programme going forward.  They will have both the energy and desire to move quickly and effectively.  Secondly, make it very clear to everyone the attitude that will be expected in future from all middle managers and that this attitude will be a major aspect of performance assessment.  If you don’t have the right attitude towards change and/or productivity, don’t expect a large bonus, or promotion!  Finally, communicate.  Make the expectations you have of middle management very clear to everyone in the organisation.  Being in the middle can be a nice hiding place. Failure to deliver is ‘top management’s fault’ or ‘it’s the workforce’.  These are tough words, but it is this group of people in the middle that will either take the business forward or hold it back.

Where are you in this process, are your middle managers all enthusiasts or laggards, saints or sinners?