Ten Guidelines for Higher ROI from Continuous Improvement Initiatives

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When Your Lean Transformation Isn’t Getting Results

Posted by: Cheryl Jekiel | No Comments

The following is an excerpt from my book, “Lean HR: Redesigning HR Processes for a Culture of Continuous Improvement” – Second Edition, out this spring, intended to help organizations partner with HR to reach the full potential of a lean transformation.

“Almost as a rule, leadership teams are aware that lean is capable of delivering much better results than they are getting from it, but they have little idea of how to achieve the potential lean benefits.

Just as there are several common practices of lean leaders, there are several common barriers or roadblocks that often keep organizations from getting better results from their lean initiatives. Each of the five barriers listed here provide insight into the nature of the dissatisfaction and some of the causes. What is important, beyond understanding what the barriers are and why they exist, is to become aware of how HR can help remove them.

One of those barriers is the short sightedness of a cost-saving focus.

Many people view lean as a cost-saving activity. Indeed, most organizations that implement lean projects measure them by how much money is saved. Worse, they view the specific savings from projects as the total financial value of lean work.

With a focus on cost savings, they overlook the fact that the employees who worked on the project also built a set of skills while doing the work. Not recognizing the value of these new skills ensures that they will not be fully valued or utilized in the future. As employees develop lean skills, they become increasingly capable of delivering more improvements in the future. Similarly, leaders learn new, more effective ways to lead employees, increasing their ability to lead in a lean enterprise.

This long-term, intangible value of lean project work is often overlooked. However, this begs the question: Why do organizations take such a limited view of lean? The cost-saving viewpoint prevails for a number of reasons:

It’s the easiest way to measure the value. Saving money by making improvement to a specific area is an easy concept to grasp. For example, it’s easy to calculate cost reductions achieved by reducing production line start-up time: Take the time savings and multiply by reduced labor cost, and the sum is a tangible dollar amount saved. Compare this to calculating—or even acknowledging—the intangible value inherent in the learning and experience gained by the employees who made the improvement. Most people, even those who have pretty extensive experience with lean projects, have little or no appreciation of these intangible benefits, let alone a way to measure them.

It’s the way most senior leaders are held accountable by the shareholders, the board, and the CEO. Business results are primarily measured by the bottom line—profit and loss. But leading only with money and cost-saving in mind establishes a short-term mentality that focuses on the results of the day, the month, or the quarter. While this view has its own justification that makes sense, it can blind businesspeople to the truer value of lean work.

It’s the easiest measure to improve. It’s human nature for people to want to take the easy road or the simple way. Even when people are given clear instructions on how to do something better, they tend to take the path of least resistance. Change is hard. Improvement is hard. Fully utilizing the skills and abilities of your people is hard. Making more money more quickly is good. However, you’ll never get the full value of a lean transformation unless you are prepared to do the hard work of lean long term.”

Learn about the other barriers to successful lean transformations in the book, out this spring.

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