Cost, Value, and Manufacturing

Does anyone else remember when Walmart was first breaking onto the scene as a competitor against K-Mart, they advertised “Proud to sell ‘Made in the USA’” merchandise?  Then shortly, Walmart faced its first scandal, being busted selling cheap junk boasting “Made in China” on the label.  The “pride” was pushed to the side, the “Made in the USA” disappeared, and the price was all Walmart was going to compete on, “Prices are falling.”  K-Mart is gone, Walmart is still selling, “Prices” are still “supposedly” falling, but where is questionable, quality is all but gone, and who has benefited?

I remember when my town got a Payless shoe store.  I plunked my money down for a nice pair of shoes; they lasted less than 30-days of wear; I was told, “You get what you pay for.”  The next pair of shoes I bought at Walmart turns out they were probably made on the same manufacturing line in China.  Payless sold them for $20.00; Walmart sold them for $30.00.  Neither lasted long enough for the new shoe smell to evaporate.  Payless Shoes is gone, Walmart is still here, the quality has not improved, and I am still asking, who has benefitted?

I purchased some tools the other day; I was mystified at the following label on the tag, “Made in the USA, of parts configured mostly in the USA but manufactured in other countries of origin.”  It turns out, if the assembly of parts is done inside the US, a finished product can be labeled as “Made in the USA.”  If some of the sub-assemblies occur outside the USA, the manufacturer might, or might not, be legally responsible to declare such, depending upon the industry, the finished goods, and the lawyers and labor unions involved.

Country of origin labeling is real sketchy, full of hungry lawyers and fascinating self-interest, as well as enough political grandstanding to satisfy forests of trees being slaughtered for centuries to come.  All in the name of, yes, you guessed it, transparency.  I am oversimplifying the problem here to make a point.  Your child’s pencils in school have to declare Made in China due to some lead poisoning issues in the yellow paint, but crayons can hide the country of origin because a lawyer said the transparency issue does not cause harm.  This convoluted logic is rampant throughout the entire mess of country of origin labeling.  Unfortunately, this is but the tip of the iceberg in manufacturing, cost, and value.

By the way, I guarantee, there are hordes of lawyers plotting ways and means of overturning country of origin labeling to hide or overturn legal decisions they find onerous, mainly to further remove any hint that “Made in China” could be traced to problems with poisoning to China.

Taking us to the first point in this article, when did America stop manufacturing?  Why did America stop manufacturing?  Why did stores stop selling American manufactured goods?  In Home Deport today, I made a point of looking for “Made Proudly in the USA” stickers on tools, products, and other items for sale.  There were no official statistics, no actual counts, just browsing shelves, looking for products, and I was not pleased.  Walmart has long been turned into a proud repository for Chinese manufacturing; to see anything other than “Made in China” on their shelves would be a significant accomplishment.

Having ventured into a Hobby Lobby recently, I was again amazed at the incredibly talented people worldwide and wondered again, “When did America stop manufacturing goods?”  Dollar Tree is another place where Made in China flourishes, and one has to wonder, “Why did stores stop selling American manufactured goods?”

Before anyone jumps to the conclusion that I am China-bashing or Big-Box Bashing, please note that I am sick to death of the excuses that “Manufacturing in America is too expensive to be profitable.”  I detest hearing excuses that “Manufacturers cannot find enough unskilled laborers to work the machines, without illegal labor.”  I am through listening to supposed experts declare that “Americans cannot compete with Chinese labor due to American expectations for benefits, job expectations, the cost of safety, etc.”  The other day some ignorant putz declared that the “American worker is just plain lazy compared to workers even in Europe, which is why Americans can never work fast enough to meet production goals.”

Bringing us to the cost and value topics of this article.  Long have cost accountants and operations managers had a professional love/hate relationship.  We love to hate each other for one reason; we do not see eye to eye on basic fundamental reality.  To a cost accountant, everything has a cost, but the difference between cost and value is not found in green money losses alone unless you are a cost accountant.

We have discussed the different types/colors of money previously.  Green money is cold hard cash, and cost accounting is only, ever, concerned with the end of the day totals of cold hard cash!  However, reality always has other types of money involved, relationships that cannot be qualified in monetary means, and humans are more than dollars and cents in a ledger.  Value is always different than cost.

Simple explanation; a hammer costs your great-grandfather $1.00.  With that hammer, your great-grandfather built a home and a cradle.  That cradle rocked your grandfather, father, and you to sleep.  Upon reaching the age of accountability, each, in turn, was taught how to swing a hammer, driving nails, and learning carpentry.  That hammer holds four generations of value, beyond the cost of $1.00.  Green money costs, that hammer has depreciated in value until it is worthless to the company and should be scrapped for a new hammer; but the value of that hammer is not measured in dollars and cents.  Thus the disconnect between operations and cost accounting.

What does all of this have to do with retail establishments, manufacturing in America, and “Made in China?”  What is the value of manufacturing in America; self-sufficiency in the time of trouble, pride of accomplishment, value in production, and upward economic mobility of dreams for employees. Why does America need retail establishments that will sell “Made in America;” to remind Americans who we are, why we are neighbors and provide an outlet for manufacturing in America to compete.

Ask yourself, why did President Bill Clinton pave the way for China to join the World Trade Organization and actively push to move manufacturing to China?  Why did President Richard Nixon push so hard to “Open China?”  What has been the cost, and where is the value in either or both of these decisions?  Sufficient time has passed to evaluate both of these decisions without political rhetoric and bombastic bloviations from either political extreme.  Both presidents possessed more reasons and desires than they admitted while in office for these decisions and actions; the consequences are the focus, and you can judge the consequences yourself.

Consider cost versus value, consider the toll on hometowns across America where factories lay idle, homes lay vacant, streets lay silent, and poverty is so thick generations of destitution have lived and died in its shadow.  Consider how some towns have tried to restructure themselves and succeeded, others have failed, some shipped their children to schools far away, others have turned their towns into “sleeper communities” for cities 2-6 hours away.  You decide!  Think!  Investigate!  Talk to people laid off by unions and forgotten.  Then remember when politicians discuss taxes, labor union special interest projects, and social spending.  Remember the next time you, a citizen with a brain, are reduced to “Human Infrastructure.”

© Copyright 2021 – M. Dave Salisbury
The author holds no claims for the art used herein, the pictures were obtained in the public domain, and the intellectual property belongs to those who created the images.  Quoted materials remain the property of the original author.

The Role of Quality – The Only Path to Improving Productivity

LookWarehouse or call center, manufacturing or non-profit, service industry or product sales, the role of quality continues to be misunderstood.  Sometimes, it appears that quality is intentionally misunderstood.  Often it seems as if quality and compliance are synonymous, even though quality is a small part of compliance.  Some businesses call quality “Quality Assurance,” “Quality Control,” or the “Quality Department.”  Regardless of the name, quality is the only path to improving productivity; however, productivity is measured.Inspiring Quotes on Quality - Fortune of Africa Swaziland

I have worked with businesses that used quality as a stick to beat employees and ultimately fire them.  This is an absolute abuse of quality and the quality people!  Worse, it hinders productivity because everyone becomes worried about meeting quality demands and not meeting customer expectations.  The employees who meet “quality” in these organizations are depressed, morale is pathetic, and the brand suffers significantly.  What really hurts, everything costs too much takes too long, and the company is not competitive, flexible, viable, or even worth mentioning.

What is Quality?

Bobblehead DollQuality is a process of striving to improve.  Interestingly, people inherently know when they have received quality or not.  Be it a person, a company, a community, a state, a government, etc., how one approaches quality as a process for improvement defines that person, company, community, state, etc.  Some companies think, “We have a quality department, we are meeting quality metrics, we are doing just fine in quality.”  To which I reply, in my best imitation of Colonel Potter from M*A*S*H 4077, “HORSE HOCKEY!”Quality Quotes (40 wallpapers) - Quotefancy

Why; because that company cannot define what drives the metrics being reported.  That company has a quality department but not a quality attitude, quality focus, and quality determination.  It cannot be stressed enough if your people are not quality first; you are losing between 33% and 50% of your potential!  Worse, the loss of potential is always hard to pin precisely to a direct problem when the problem is lodged in something as amorphous as “quality.”Chinese Crisis

Recognizing Quality Value

Let’s do the numbers together.  A manufacturing plant, a call center, and a warehouse are examples A, B, and C, respectively.

Example A: Employee A has been trained on making a part; he has never been told how his parts affect the finished product and is sometimes sloppy in creating pieces.  But, because he is within set standards, his sloppy work can be cleaned up at another station, so Employee A does not want to improve quality.  Producing 200 parts made per day, with anywhere between 5 and 75 pieces, needing additional work; Employee A has an overall cost to the company above and beyond expected costs.  Regardless if Employee A increases his productivity to 250 to 300 pieces per day, his defects remain potential lost.Blue Money Burning

Example B:  XX Team has 15 agents; each agent is expected to handle 80-100 calls per day.  But the quality metrics are so stringent; the team can only meet 35-40 calls per day on average.  However, the business processes to complete work, and meet the quality standards, handicap any single agent from meeting the 80-100 calls per day.  Does the company look at the agents or their business processes and quality standards?  The business will demand higher productivity and never realize that the churn increase is from burned-out good employees walking away!blue-money

Example C:  Inbound product receivers, outbound product shippers, and quality are the three departments in a warehouse.  Inbound, they do not consider themselves part of a quality initiative; their productivity is driven by how many items get properly stowed per day.  Outbound is where the company focuses as this is where the customer satisfaction is directly observed; how much an outbound picks and prepares for shipping is productivity.  Quality is considered someone else’s job as a quality department counts for compliance to SOX and other legislation.  Inbound and outbound employees know their positions, and because they are not quality, they can create quality problems intentionally or not, and someone else will always take care of the problem.  Dirty part locations with inventory from other areas don’t matter; quality will fix it.  Torn or damaged product in a location, it doesn’t matter quality will fix it.  In this case, 2/3rds of the employee potential for improving quality is AWOL!

TOP 25 POOR QUALITY QUOTES | A-Z QuotesNow, someone might think, these are hypotheticals, not real businesses.  Those examples are directly from my experience.  Yes, these examples are slightly oversimplified for brevity; however, not having a whole company quality culture hinders productivity.  This is a truth inescapable.

Co-Equal but not Co-Valuable

kpiProductivity, however measured in your company for goods or services, should be a co-equal part of quality.  Yet, if equality cannot be achieved, err on the side of increased quality until productivity catches up.  The value of productivity is measured in green money, cash.  The value of quality is measured in blue money, potential.  Bringing up my favorite axiom, “Burn enough blue money, and cash evaporates, and no one can trace where the cash went!”

Returning to Example A, the employee does not know, has not been trained, and is unaware that their actions are directly costing the company.  Since there is a quality person to check and “fix” the mistakes, the loss of potential is immeasurable until the business leaders have to increase the manufacturing price to account for the added work in quality to correct the errors.  Hence, when all metrics are equal between quality and productivity, err on the side of quality, and productivity will catch up.

Exclamation MarkWant a secret; it does not work in reverse!  Erring on the side of increased productivity increases costs elsewhere, burns potential, and ruins company bottom-lines.  Quality cannot “catch up” to productivity — an example best witnessed in manufacturing and warehouses.  The potential costs between manufacturing or multiple handling of products carry a potential cost, with no means of recovery.  Thus, it remains imperative to understand the roles of productivity and quality defined early, and placed in the proper order, to avoid significant cash hits to the bottom line.

Quality – A Culture, Not Just a Department!

cropped-2012-08-13-07-37-28-1.jpgA quality culture is an extension of the individual’s professionalism, always striving to be better.  Not faster, not slower, but better every day.  Training is a dynamic part of quality, and learning something new should be encouraged.  Yet, training, especially in call centers, always seems to take a back seat to operations and productivity.  All because productivity is not correctly understood and placed in its proper role.  Training and quality are potential or blue money expenses where the return on investment will be unknown.  Why; because quality and training place tools into the hands of employees, who then go on to build or destroy based upon the examples of leadership.

Quality Image Quotation #4 - Sualci QuotesQuality should be felt in every conversation, in every process, in every program, in every interaction.  As the most important customer in a business is other employees, the quality program is the most important activity and process for enhancing the business’s goals, aspirations, and daily production rates.  A culture of quality will then have the ground to grow and room to expand.  But, a quality culture will not grow overnight, nor will it grow without causing stagnant processes to change.

Knowledge Check!Consider a seed.  To grow, that seed has to be destroyed completely; but no one ever mourns the loss of the seed for the potential fruit to be born from that seed growing.  The same is true for a quality culture growing; the culture will destroy the seeds of stagnation, the apathy of indifference, and the processes and procedures that are not valuable to the new quality culture.  Will you allow a quality culture to grow?

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

NO MORE BS: Understanding Money – Shifting the Paradigm on Money

LookDo you understand money?  Honestly, is how money is created, used, and tracked understandable or a complete mystery?  I have advocated for economics to be taught in high school to understand the actions of government since I was in high school.  I was forced to take a class to write checks, balance a checkbook, and other simple economic topics in US Army Basic Training.  I thought I knew how money worked after this class, but only later realized I knew enough to get into trouble with money, but not enough to fix the problems I had gotten myself into.  I was mid-way through my MBA when I finally took a class on money, economics, and how money works.

I have asked other adults and high school students what they think about money and remain aghast that basic economics is not taught in K-12 education.  There is no reason for fiscal illiteracy in America; yet, fiscal illiteracy is evident in the politicians elected, the lobbyists pushing agendas, and how American politicians of all levels understand money.  The following is a brief attempt to clear some of the confusion regarding money.

Green money is cash.

Dane-GeldGreen money is the dollars and cents in a bank account or your pocket and is quickly spent.  Green money is often called liquid money or liquid assets, liquid because the holder is presumed the owner, owns it, and can spend it freely any way he wishes.  Possession is nine-tenths of the law where liquid assets are concerned.  One of the first lessons most of us learned growing up was if you wanted to buy something and your pocket was empty, you went without.  Liquid assets are cash, green money and are available to be spent in any way the holder chooses.

Non-liquid assets are considered green money due to their sale; this is why a house, a car, a boat, and other such items are considered assets, investments, and opens the door to depreciation or money loss where an asset is concerned.  The sale of the asset provides the opportunity to turn a non-liquid asset into a liquid asset.  However, since the asset is often employed as collateral for a loan, the sale of that asset means the loan holder is paid first from the sale.  If the resale value is insufficient to cover the full loan owed, the loan, which is red money, can still be collected; this process is why red money is so important to understand.

Red money is debt.

Government Largess 3Historically, if a debt could not be paid, the debtor’s blood was allowed to be spilled; hence debt is red money.  Red money always comes with a penalty called interest.  Interest is green money turned red to return the profit to those who lent the initial funds or principle.  That debt, be it a loan, a credit card, or another debt model, remains a burden to the borrower, continues to accumulate interest, and can be called due at any moment in time.  While some laws protect the borrower from excessive interest rates, it remains essential to know about and be cognizant of the interest rate trap.  The legalese on a contract to launch a debt is important to understand, especially where prepayment penalties, late payments, and the ability to call the note due are concerned.

The interest rate trap comes in several forms.  While in the US Navy, stationed in Norfolk, Virginia, a sailor buddy bought a beautiful car for $4000 with a 45% interest rate.  He put $1500 in green money down, so the full loan amount, principal, and interest, for 60-months were $7805.49, including the sales tax.  Later that month, when the car was stolen, the insurance company valued the vehicle at only $1000, leaving the sailor to pay $6805.49 immediately.  This is one type of interest rate trap; another comes from Payday Loans.  Borrow your next paycheck today, get the money today, and pay your paycheck back during the next 36-months at an interest rate between 30-60%.  By the time the payday loan is paid off, more than four separate paychecks will have been paid to cover a single paycheck loan, provided all the payments have been made on time and as quickly as possible.

Welfare State BeginsWhile paying off this loan, you lose your job.  You can lose your car because your car is sometimes used as collateral for your payday loan.  If the resale value is insufficient, you lose your car, you lost your job, and now you still owe a considerable sum that gains interest.  Red money is dangerous; like Damocles’ sword, the danger hangs by a tiny thread above the borrower; one wrong move and the sword falls.  Debt, red money can be helpful; but, careful planning and budgeting are required before entering into debt obligations.  Always it is better to save and budget green money or obtain investors before contemplating debt.

Black money is dead money.

Consider the person who takes green money and places those dollars and cents under a mattress or coffee can in their home.  The cash is out of circulation, is not valuable enough to collect, and no one is benefiting from the money through interest.  Black money can be created in other ways that will be explored later in this article.

Potential Money – Blue Money

blue-moneyThe next type of money is blue money, also referred to as potential money.  Consider a hammer. The hammer might cost $20.00 in green money to buy and bring home.  In the hands of a trained construction worker, a $20.00 hammer, over the course of the hammer’s useful working life, has the potential to earn thousands of dollars in green money for the construction worker.  In the hands of an inexperienced worker, the hammer has the potential to cost thousands of dollars in green money through waste, destruction, and learning.  Training a person to improve their performance might cost $300 in green money; but, if that employee can improve his performance on the job, potentially millions of dollars can come into the company because of the training provided.

Money is created when it is borrowed, and interest is paid on the loan.  For example, Jack has an extra $500 (green money).  He gives this money to his friend Joe in the form of a loan (red money).  Joe takes the loan, adds to his business potential (blue money), and through increased profits, can pay Jack his $500 loan plus the interest of $300.  Hence, $300 (green money) is created as profits for Jack.  While a simple analogy, do the types of money become more apparent?

Welfare State EndsJoe’s loan to Jack showed on Joe’s books as red money until the loan and interest were paid.  During this time, Joe was also making green money, or profits sufficient to pay his workforce, his other obligations, and still retain adequate to pay himself.  Small business owners are not paid until everyone else is paid.  It is not uncommon for small business owners to be scraping by on the smallest margins because all their non-liquid assets are locked up in loans to keep the business afloat.  When poor business practices begin risking inventory and equipment and shareholder investments are added into the equation, is it any wonder why small businesses struggle.

quote-mans-inhumanityMoney is also created when saved in the various saving tools offered by banks.  The diligent saver can save $40 a week until he or she is 65 years of age and potentially have millions in the bank for retirement.  Why, because the bank will pay interest to the saver from the interest collected on the loans the bank makes with the green money invested from the savings account.  Many different savings tools can be considered non-liquid assets because of the agreements made between the saver and the bank.  Generally, the longer the bank’s contract to hold the savings money, the higher the interest rate paid as the bank can schedule payments and loan the same dollars more efficiently when the saver’s funds are expected to be in the bank for a more extended period.

quote-mans-inhumanity-2Often Federal treasury departments of governments create money by printing more or larger bills.  The problem with printing more money is one of surplus, which begins to increase interest rates and decrease the value of the green money held by citizens participating in the economy.  Consider that if the only way to create money is to work money through lending, improving business, etc., and then printing only makes it harder to put money to work.  Too much money on the market creates negatives; negatives include lower dollar value, which makes items cost more and increases interest rates, making borrowing costs rise, and inflation begins to increase prices for goods in the economy.  More importantly, except for necessities, producers’ willingness to spend money stops; these are typical cause-and-effect actions.  A long enough period of decreased desire to spend money and an economic downturn is initiated.

Blue Money BurningState, City, County, Town, municipal governments are even more pernicious with their plots and plans.  On the local government level, money cannot be printed.  Hence, debt is entered into, and municipal bonds are sold to create money in the private sector, which is then paid to the government in increased taxes, but the money lent to the local government was already spent.  One truth discovered about government, when taxes are increased, money is asked of the voters to borrow.  The truth is, the government body asking for more has already spent the increase, spent the budget, and usually spent twice as much as they are asking the voters to allocate.  Consider special elections for increasing taxes; the money being asked for has been spent, the budget was spent, and now the voters are asked to pay for the special election cost to decide if the local government can spend some more money.  The increase being asked very often has been spent three to four times before the election is considered to ask for permission to enter larger amounts of debt in the public’s name.

Poor fiscal planning increases debt by decreasing the value of the original municipal bonds.  The government has to borrow more to get relatively close to the value of the first municipal bond sold.  Note, municipal bonds are considered a debt to the local government and as green money non-liquid assets to the purchaser; municipal bonds can be bought and sold on the private market.  Government focuses upon the holder of the most bonds; because elected leaders are focused upon the holders of the most bonds, citizens bear no weight in being heard.  Money talks!

Detective 4In several different locales, municipal bonds can be held as unseen debt or black money, also referred to as unfunded liabilities, kept on other books, not currently open to the public.  The monies owed are not considered red money because there is no plan by those in power to pay these debts; thus, the city’s debt could be significantly higher than reported.  Unfunded liabilities never have a plan for repayment by those in power.  Unfunded liabilities can be a mixture of many different debts (employee retirement, some municipal bond types, unpaid bills to local service providers, etc.).  The common denominator remains, there is no plan or money to repay this debt.  Thus, black money is created because there are no plans or money to meet these obligations.  The taxpayer remains on the hook for the principal and the interest of those unfunded liabilities.  Unfunded liabilities are hopes of current politicians on future prosperity, and sometimes, depending upon laws, unfunded liabilities are part of the government’s credit rating. Low credit ratings by the government increase taxes, the risk increases, making borrowing money more expensive, and the taxpayer generally has no idea how poor their municipal government’s credit rating.  Never forget, municipal government, many times includes the local school board.

ToolsWhile this explanation is elementary, the lessons contained are sufficient to protect the bottom-line, improve knowledge, and provide an opportunity for improving circumstances.  When bottom lines fail, before anything else, look to lost blue money as the cause.  When blue money is disregarded long enough, red money increases exponentially, and green money evaporates; this formula is set in stone.  Potential blue money is not elusive, but it takes keen observation to protect and grow.  Grow enough blue money, and green money multiplies exponentially.

Americans must start demanding fiscal literacy in the politicians running for office.  Americans must begin understanding the captivity they are in where the government spending is concerned.  Ask yourself, would your bank honor a post-dated check?  Why should the government be allowed to write a check the bank won’t allow you to write?  Can you spend 8-15 times your salary between paychecks and maintain your house, car, and other assets?  Of course not, so why should the government be allowed to do this on your tax dollars?

DutyFiscal literacy improves freedom and liberty.  Fiscal literacy is required to maintain the US Constitution and US Bill of Rights.  Budgets are not bad things for government to live on; in fact, the government should be the first exemplar of budgetary soundness and fiscally literate action.  A Liberty FIRST Culture will require fiscal sanity and fiscal restraints, a reduction in debt, and a payment plan for all unfunded liabilities.

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

Customer Service Begins with Employees – Knowing the Paradigm

During the last 60 days, I have had the ability to see two different companies and their training programs up close and personal.  Both companies provide call center employees, and currently, both companies are employing a home shored or remote agent to conduct call center operations.  Neither company is handling remote agents very well; and, while both companies have excellent credentials for providing exterior customers with excellent customer service, both companies fail the first customer, the employee.

ProblemsCompany A thinks that games, contests, prizes, swag, and commissions adequately cover their inherent lack of customer service to employees.  Company B does not offer its employees any type of added compensation to its employees and treats their employees like cattle in a slaughterhouse yard.  Both companies talk an excellent game regarding treating their employees in a manner that promotes healthy exterior customer relations, but there is no substance, no action, no commitment to the employee.  Company B has an exceedingly high employee churn rate, and discounts that rate because of employees working from home and not being able to take the loneliness of an office atmosphere.  Company A has several large sites and is looking forward to having employees back on the call center campus.

When the conclusions for employee dissatisfaction were shared, the question was raised, “How does the leadership team know when the employees are not feeling served by their employer?”  The answer can be found in the same manner that the voice of the customer is found, mainly by asking the employees.  Neither company has an employee feedback process to capture the employee’s thoughts, ideas, feelings, and suggestions; relying solely upon the leadership team to provide these items.  Neither company overtly treats its employees poorly, Company A does have a mechanism to capture why employees leave the organization.  Company A was asked what they do with this information and refused to disclose, which is an acceptable answer.

Consider an example from Company A, a new hire has been in the hiring process since January, was informed they were hired around the first of April but was also told the next start date/new hire training class has not been scheduled due to COVID-19.  The employee is finally scheduled for a new hire class starting the first week of June.  Between the time of being hired and the start date, the employee begins taking classes Mon thru Fri, 1800-2100 (6:00pm to 9:pm).  The employee is scheduled to begin work at 1030 in the morning and work until 1900 (7:00pm).  The new hire asks for help with the schedule, the classes being taken will improve the employee’s skills upon graduation on the first of August.  Training is six weeks long, but the overlap is only 9 working days.  Company A’s response, either drop the classes or quit the job.

Internal-CS-Attitude-Low-ResThus, the attitude towards employee customer service is exposed to sunshine, and regardless of the games, prizes, food, swag, commissions, etc., the employee-customer service fails to keep highly talented employees.  This example is not new, and is not a one-off, unfortunately.  The example is regular business for employee treatment, and as the trainer stated, there are always more people for positions than positions open, so why should we change operations?  Since January Company A has been working unlimited overtime to fill the gap in open positions.

Company B informed all new hires that training is four-days long, and upon completion on the job training commences.  On day 3, training is extended to five days, on day 4 training is extended, and on Saturday, training is extended to a mandatory Sunday.  No excuses, no time off, no notice, and no reasonable accommodation is provided to make other accommodations for children, medical appointments, etc., and by the time Sunday arrives, the new hire class has already logged 60-hours in a week that began on Tuesday.  Several employees are unable to make Sunday and as such are now kicked out of training, and will lose their jobs once HR gets around to giving them the ax.

Neither employer offers reasonable accommodation to employees working from home, as working from home is an accommodation already.  Marking the first area of risk; if an employee works for your organization, regardless of the attitude of employee treatment, reasonable accommodation is the law in America, and similar laws are on the books across the world.  Yet, both companies were able to eschew the law and deny reasonable accommodation.  Company B did it by never responding to the employees after they missed a day of work during training.  Company A did it by forcing the employee to decide without the aid of HR, claiming HR does not have any power in the decisions of training.

Now, many people will advise the employees hindered in their job search that the company does not serve them.  That fit into a new organization is more important than money.  That if an employer does not serve their employees, that employer has no value and the ex-employee is better off.  Yet, the companies hired these people, went to great expense to onboard these people, and now must spend more money to hire more people to fill the gap.  Both companies will have to pay overtime and other incentives to get the newest new hires through training.  All because of the disconnect between serving internal customers and external customers.  Many business writers have said, the only customer business has, are the employees.

Leadership CartoonMyron Tribus used a water spigot to help explain the choices of business leaders where employees are concerned.  A business is either a money spigot and customers, employees, vendors, stakeholders, do not matter, so long as the money keeps rolling in to pay off the shareholders.  Or business is a spigot with a hose on it to direct the efforts of the business through the relationships with employees, customers, vendors, stakeholders, and shareholders, to a productive and community-building long-term goal of improvement.  Either a business is a money spigot or a community building operation, the business cannot do both.

With this analogy in mind, the following four suggestions are provided for businesses that either want to change spigots or need help building the only customer relationship with value.

  1.  Decide what type of business you want to be, and then act accordingly.  No judgment about the decision is being made.  Just remember, the greatest sin a business can commit is to fail to show a profit.  Employee costs can make and break employers and profits.
  2. Provide a feedback loop. Employees are a business’s greatest asset, the greatest source for new products, new procedures, new methods of performing the work, and new modes of operation, and until the leadership team decides the employees have value, the business cannot change to meet market demands.  In fact, that business that does not value employees, cannot change at all, ever!
  3. Be “Tank Man.” As a child, I remember watching the Tiananmen Square incident unfold in China.  I remember watching a man, stand in front of a tank and bring that tank, and several more behind it, to a standstill.  Nobody knows this man’s name, but many remember his stand.  Be the example of world-changing customer service, even if no one will ever know your name.Tank Man - Tiananmen Square
  4. Many parents have told their children, “Actions speak louder than words.” At no other time has these words been truer.  Act; do not talk!  Show your employees’ customer service and they will conquer the world for you.  Actions to take might not mean expending any money.  Showing someone you care is as simple as listening, and then helping.  LinkedIn daily has examples of hero employees who do more, serve better, and act all because their leader acted on the employee’s behalf.
    • Blue Money BurningConsider Company A for a moment, the time of class overlap was 1-hour. The number of days the overlap was going to affect that employee, 9.  Thus, for the cost of nine hours at $17.00 per hour, or $153.00 USD total, an employee was lost.  How much blue and green money was lost getting that employee hired, just to see that employee leave within two days of starting?  How much more blue and green money will be lost to replace that lost employee?

No longer can employer hope to treat employees poorly and still achieve financial success, between social media and modern communication, the word gets out that an employer does not care about their employees.  No longer can labor unions abuse non-union members autonomously.  No longer can a business walk away from social and community abuses with impunity.  The choice to treat people as valuable assets is an easy choice to make, choose wisely!

© Copyright 2020 – M. Dave Salisbury

The author holds no claims for the art used herein, the pictures were obtained in the public domain, and the intellectual property belongs to those who created the pictures.

All rights reserved.  For copies, reprints, or sharing, please contact through LinkedIn:

https://www.linkedin.com/in/davesalisbury/

Leading the Call Center: Flavor of the Month Philosophies

Chinese CrisisHaving just completed a project that saw me leading a team in a call center, I want to make something clear; quick fixes and flavor of the month philosophies do not work.  I cannot stress this enough; yet, the practice continues to the detriment of call center employees and the organizations served by call centers.  Flavor of the month philosophies is the latest bestseller to fix the problems in business.  We have all seen these programs including, FISH, WAIT, Strengths Quest, and so much more.  These ideas are good ideas, and they possess value, but when changed monthly, these programs, never do more than briefly mark the surface intellect of the call center.  I am not disparaging these ideas in the least; let me elaborate as to why the flavor of the month idea fails.

The project previously mentioned when concluded saw the call center director very much converted to a program of definite value in and using one’s strengths entitled Strengths Quest as presented by Clifton, Anderson, and Schreiner (2006).  The culture of strength promotes unity, and by extension, organizational power, when combined intellectually, becomes the corporate culture.  Integration in business, especially in call center operations, remains crucial to bottom-line health.  The call center director invested a lot of organizational resources to capture everyone’s strengths, publish these advantages, and use this information to measure the call center.  The problem was the staff has no idea why they are investing company time in completing the “Clifton Strength’s FinderÒ (CSF),” and many completed this assignment while taking calls and distracted.  How verifiable is the data if the attention of the person completing the task is diverted?

My assignment, as a call center supervisor, included gauging the employees in the call center about their strengths.  Of the 10-employees in the call center, two had forgotten and blatantly said they do not care.  Three expressed a desire to retake the CSF to more fully focus on the task instead of completing it between calls.  Four employees asked why and what is the purpose of taking the CSF.  Finally, all the employees, when asked how they use the CSF data in their daily actions, expressed the same answer, I do not know.

Let’s be clear; there is nothing wrong with the latest flavor of the month programs to improve an organization, provided the leaders understand change, embrace change, train and teach “the what” and “the why,” and then remain committed long after the excitement over the bright new object fades.  I had the misfortune of working in a call center where the entire corporate culture was expected to change with every fresh flavor of leadership, and the organization is a mental mess.  What is a leader to do when each new flavor-of-the-month is presented as a potential fix for organizational dilemmas?  I suggest the following as a launching point for corporate discovery and leadership support.

  • If the organization is going to invest resources in a particular program, do not change for a set period, which includes pre- and post- measurement and evaluation. If the organization does not know where they start, they can never know what happened or where to go in the future.blue-money-burning
  • Organizational change must be more than surface polish or potential money (Blue Money) is lost, never to be recovered. Organizational change needs to fundamentally affect the organization and be allowed to produce measured results.  Does this mean that if something is not working, we keep at it?  No!  It means to provide sufficient time and measurement to gauge the application and the organizational change.  Many times beta-testing the proposed change can identify the processes, procedures, and other trouble points to be mindful of, or correct in beta-testing, to ensure full organizational change may occur with a higher chance for success.
  • Get everyone involved, enthused, and a willing advocate for the change. Getting everyone involved is not producing marketing materials and desk references.  Getting everyone involved requires explaining why and detailing what in the organizational change.  Getting everyone involved means there will be feedback, pushback, and rebellion.  Expect pushback, but never allow pushback to derail reform.  Pushback is a healthy activity that provides essential opportunities for the leader to explore solutions, answer questions, and evaluate the results.
  • Teach and train; train and teach. Learning should be a constant and desirable outcome of organizational change.  Teaching is not training, training is not teaching; but, both are critical skills needed for leaders and learners.  Teaching is helping someone else acquire knowledge.  Training is teaching a behavior or ability.  Teaching is usually one-way communication using measurement tools, e.g., tests to gauge knowledge learned and retained.  Training should be two-directional communication, is completed through experience in closely monitored environments, and includes 360-degree feedback to improve the training environment.  Never allow teaching and training to become the same confused term; while the words are closely related, they are not the same action.
  • When was the last time you discussed what you are reading with front-line employees? When was the last time you engaged a front-line worker about what they are reading, thinking, and ask for suggestions to improve?  When was the last time you asked to be trained on a process, procedure, or organizational action by those who do it all day?  If recently, did you ask why, a lot?  I promise you will be surprised when you have these conversations, especially since they open up opportunities to explain and expound, learn, change, adapt, and engage with those you lead.
  • Organizational change requires enthusiasm from all parties to begin to engage and deepen the shift from surface polish to fundamental culture adaptation. Enthusiasm takes many shapes, sizes, and colors, including the loyal opposition of followers, opinions, and feedback.  The leader must exemplify and honor, or support, the enthusiasm around them as a tool for succeeding in changing the organization.
  • Clarify intentions. Clarify processes.  Clarify procedures.  Clarify by asking follow-up questions and reflectively listen to obtain mutual understanding.  Clarification remains one of the most critical tasks in organizational change.  When confusion rears its ugly head, respond with explanation and follow-up, as detailed in two-directional communication.  When the comprehension is doubted, ask for feedback as an opportunity to increase clarification.  Clarification is both a tool and an opportunity; do not waste this opportunity and tool by neglecting those needing clarification.
  • Organizational change needs a mechanism for gathering data from many sources, including the employees affected, the vendors, the suppliers, and the customers. Open the valve for data to flow back.  One of the most horrific organizational changes it has been my displeasure to witness was increased because the leaders operated in a vacuum and never allowed data flow that was contradictory to the previously agreed upon results.  The leaders in this organization worked hard to refuse hard data, which contradicted their bias, and this ruined the business, the employees, and the customers.

I cannot guarantee following all these points will make organizational change succeed, roses bloom, bottom lines inflate, rainbows dance, and all of life fall into organized lines leading ever upward.  I can guarantee that without these points, organizational change that promotes an environment of learning will never be more than polish.  Consider the axiom, “Lipstick on a pig.”  The lipstick is not bad, the pig is not bad, but placing lipstick on a pig is out of place and does nothing to improve the pig.  Flavor-of-the-month changes are lipstick on a pig, not bad, but out of place until the entire organization is on board and enthusiastically supporting the move, and proper measurements are in place to gauge, measure, and report the change.

Business theorist Chris Argyris put forth a model, later discussed by Senge (1994) explaining our thinking process as we interact with the world.  This seven-step method is called the Ladder of Inference; according to this model, as we move up the ladder our beliefs affect what we infer about what we observe and therefore become part of how we experience our interaction with other people.  Organizational change can be plotted along the same model or ladder of inference.

Leadership LadderOrganizational change begins with information output; then collect data, preferably through listening and observation while doing the work; interpreting the data includes obtaining data, evaluating meaning, deciphering intent, and understanding value.  Please note, the assumptions should not be made in a vacuum and could be wrong; thus, always return to the data producers and ask questions to ensure mutual understanding.  Once conclusions are mutually understood, they become beliefs; but, don’t stop until beliefs become actions.

If a model is needed, please benchmark Quicken Loans and Southwest Airlines, both organizations are doing a tremendous job with the ladder steps, especially moving organizational beliefs into motivated organizational action.  Remember, one does not climb a ladder to view the horizon and scenery, they climb a ladder to begin working, carrying the tools needed to perform the work, and possessing certain knowledge that the work can be accomplished.  Climb the ladder of success with the intent to work, achieve, and move forward.

References

Clifton, D. O., Anderson “Chip,” E., & Schreiner, L. A. (2016). Strengths quest: Discover and develop your strengths in academics, career, and beyond (2nd ed.).

Senge. P. M. (1994). The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Currency Doubleday.

© 2017 M. Dave Salisbury

All Rights Reserved

The images used herein were obtained in the public domain, this author holds no copyright to the images displayed.

Understanding Money: Shifting the Paradigm on Money

Several years ago, I spent a significant amount of time trying to explain the different types of money to a very inexperienced young man.  I was highly unsuccessful; so, I take this opportunity to explain various types of money and how they work in the scheme of things.  I hope this explanation helps others to not only understand their own money, but also to become more cognizant of how governments spend your tax money.

Green money is cash.  Green money is the dollars and cents in a bank account or your pocket and is easily spent.  Image result for images, green moneyGreen money is often called liquid money or liquid assets, liquid because the holder is presumed the owner, who is in possession of it and who can spend it freely any way he wishes.  Possession is nine-tenths of the law.  One of the first lessons most of us learned growing up was if you wanted to buy something and your pocket was empty you went without.  Liquid assets are cash, green money, and are available to be spent in any way the holder chooses.

Non-liquid assets are consideImage result for images, house, car, boatred green money as a result of their sale; this is why a house, a car, a boat, and other such items are considered assets.  The sale of the asset provides the opportunity to turn a non-liquid asset into a liquid asset.  However, since many times the asset is employed as collateral for a loan, the sale of that asset means the loan holder is paid first from the sale.  If the resale value is insufficient to cover the full loan owed, the loan, which is red money, can still be collected; this process is why red money is so important to understand.

Red money is debt.  Red money always comes with a penalty called interest.  Interest is green money turned red to return the profit to those who lent the initial funds or principle.  That debt, be it a loan, a credit card, or other debt model, remainImage result for images, red debt traps a burden to the borrower, continues to accumulate interest, and can be called due at any moment in time.  While some laws protect the borrower from excessive interest rates, it remains important to know about and be cognizant of the interest rate trap.

The interest rate trap comes in several forms.  While in the US Navy, stationed in Norfolk, Virginia, a sailor buddy bought a beautiful car for $4000 with a 45% interest rate.  He put $1500 in green money down, so the full loan amount, principle and interest, for 60-months was $7805.49, including the sales tax.  When the car was stolen, later that month, the insurance company valued the car at only $1000, leaving the sailor to pay immediately $6805.49.  This is one type of interest rate trap; another comes from Payday Loans.  Borrow your next paycheck today, get the money today, and pay your paycheck back during the next 36-months at an interest rate between 30-60%.  By the time the payday loan is paid off, more than four separate paychecks to cover a single paycheck loan will have been invested provided payments have been made on time and as quickly as possible.

While paying off this loan, you lose your job.  You can lose your car as well because your car is sometimes used to insure your payday loan.  If the resale value is insufficient, you lose your car, you lost your job, and now you still owe a considerable sum that gains interest.  Red money is dangerous; like the sword of Damocles, the danger hangs by a tiny thread above the borrower; one wrong move and the sword falls.  Debt, red money, can be helpful; but, careful planning and budgeting are required before entering into debt obligations.  Always it is better to save and budget green money, or obtain investors, before contemplating debt.

Black money is dead Image result for images, black moneymoney.  Consider the person who takes green money and places those dollars and cents under a mattress or in a coffee can in their home.  The cash is out of circulation, is not valuable enough to collect, and no one is benefiting from the money through interest.  Black money can be created in other ways that will be explored later in this article.

The next type of money is blue money, also referred to as potential money.  Consider a hammer. The hammer might cost $20.00 in green money to buy and bring home.  In the hands of a trained construction worker, a $20.00 hammer, over the course of the hammer’s effective working life, has the potential to earn thousands of dollars in green money for the construction worker.  Image result for images, blue dollarsIn the hands of an inexperienced worker, the hammer has the potential to cost thousands of dollars in green money.  Training a person to improve their performance might cost $300 in green money; but, if that employee is able to improve his performance on the job, potentially millions of dollars are able to come into the company because of the training.

Money is created when it is borrowed and interest is paid on the loan.  For example, Jack has an extra $500 (green money).  He gives this money to his friend Joe in the form of a loan (red money).  Joe takes the loan, adds to his business potential (blue money), and through increased profits is able to pay Jack his $500 loan plus the interest of $300.  Hence, $300 (green money) is created as profits for Jack.  While a simple analogy, understanding money should be simple.

Joe’s loan to Jack showed on Joe’s books as red money until the loan and interest were paid.  During this time, Joe was also making green money, or profits sufficient to pay his workforce, his other obligations, and still retain sufficient to pay himself.  Small business owners are not paid until everyone else is paid, and it is not uncommon for small business owners to be scraping by on the smallest margins because all their non-liquid assets are locked up in loans to keep the business afloat.  When poor business practices begin risking inventory and equipment and shareholder investments are added into the equation, is it any wonder why small businesses struggle.

Money is also created when saved in the various saving tools offered by banks.  The diligent saver can save $40 a week until he or she is 65 years of age and potentially have millions in the bank for retirement.  Why, because the bank will pay interest to the saver from the interest collected on the loans the bank makes with the green money invested.  Many different savings tools can be considered as non-liquid assets because of the agreements made between the saver and the bank.  Generally, the longer the agreement for the bank to hold the money, the higher the interest rate paid as the bank can schedule payments and loan the same dollars more easily when the money of the saver is scheduled to be in the bank for a longer period of time.

Often Federal treasury departments of governments create money by printing more or larger bills.  The problem with printing more money is one of surplus, which begins to increase interest rates and decrease value.  Consider for a moment, if the only way to create money is to work money through lending, improving business, etc., then printing only makes harder putting money to work.  Too much money on the market creates negatives; negatives include lower dollar value, which makes items cost more, and increased interest rates, which makes borrowing costs increase.  More importantly, except for necessities, the willingness of producers to spend money stops.  These are normal cause and effect actions.  A long enough period of decreased willingness to spend money and an economic downturn is initiated.

State, City, County, Town, municipal governments are even more pernicious with their plots and plans.  On the local government level, money cannot be printed; hence, debt is entered into and municipal bonds are sold to create money in the private sector, which is then paid to the government in increased taxes, but the money lent to the local government was already spent.  One truth discovered about government, when taxes are increased, money is asked of the voters to borrow.  The truth is, the government body asking for more has already spent the increase, spent the budget, and usually spent twice as much as they are asking the voters to allocate.  Consider special elections for increasing taxes, the money being asked for has been spent, the budget was spent, and now the voters are asked to pay for the cost of the special election.  Many times, the increase being asked for has been spent three to four times before the election is even considered.

Poor fiscal planning increases debt by decreasing the value of the original municipal bonds, and the government has to borrow more to get relatively close to the value of the first municipal bond sold.  Note, municipal bonds are considered as debt to the local government and as green money non-liquid assets to the purchaser; municipal bonds are able to be bought and sold on the private market.  Government focuses upon the holder of the most bonds; because elected leaders are focused upon the holders of the most bonds, citizens bear no weight in being heard.  Money talks!

Municipal bonds, in several different locales, can be held as unseen debt, or black money kept on other books, not currently open to the public.  The monies owed are not considered red money, because there is no plan by those in power to pay these debts; thus, the amount of a city’s debt could be significantly higher than reported.  This is called an unfunded liability.  Unfunded liabilities never have a plan for repayment by those in power.  Unfunded liabilities can be a mixture of a lot of different debts (employee retirement, some municipal bond types, unpaid bills to local service providers, etc.), but the common denominator remains.  No plan is in place to meet that obligation and no budget item covers these debts; thus, black money increases.  Unfunded liabilities are hopes of current politicians on future prosperity, and sometimes, depending upon laws, unfunded liabilities are part of the government’s credit rating. Whether it is, the debt does not go anywhere, might or might not accrue interest, and always is hidden from the taxpayer, who is responsible for paying the bills.

While this explanation is very basic, the lessons contained are sufficient to protect the Image result for images, blue dollarsbottom-line, improve knowledge, and provide opportunity for improving circumstances.  Some key ending points when bottom lines are failing include:  before anything else, look to lost blue money as the cause.  The more blue money is disregarded is exponentially equal to red money increases, and green money evaporation; this formula is set in stone.  Potential blue money is not elusive, but it takes keen observation to protect and grow.  Grow enough blue money and green money multiplies exponentially.

© 2017 M. Dave Salisbury

All Rights Reserved

SMART Training –Shifting the Paradigm on Corporate Training

GearsCorporate training continues to be a difficult topic to describe, mainly because everyone seems to “know” what training is, but cannot understand what it is not, even when receiving inferior corporate training. As an adult educator, schooled and experienced in corporate training, let’s discuss corporate training, the principles, the need, and the student.

One aspect of organizational development needs to be considered at the outset, the difference between active and reflective listening. In active listening, the person not currently speaking pays attention to content and intent, engages in emotional meaning, focuses on removing barriers, and remains non-judgmental and empathetic. In reflective listening, the speaker and the listener take active listening and employ two-directional messaging to ensure mutual understanding. The central aim in reflective listening will always be the desire to achieve mutual understanding in communication.

The importance of understanding listening in training remains the utmost concern as the process of engaged, reflective listening producing the environment for the most potential positive training results. The needed 360-degree or two-directional communication to safely and more efficiently operate is critical in training and necessary in communication. Trainers must be able to gather anecdotal evidence and hard data to check for validity and veracity in training operations. Without a quality control mechanism that includes open and honest feedback, the trainer is operating in a vacuum and wasting corporate resources.

The majority of adult educators in the US today, and possibly much of the world, have become convinced of several untruths because the colleges teaching adult education seem fixated on teaching misleading concepts that ultimately do more harm than good. For example, ADDIE, as a methodology tool used to govern training, is useless without a quality control and a return and report function, both of which must be added to the basic ADDIE model; thus changing the design and interposing more personal opinion and bias into what became, with the addition of quality control and two-directional communication, an untested model. Colleges continue to press the ADDIE methodology as the only proper method for instructing adults, without changing or testing the basic ADDIE model. Other untruths include Maslow’s “Hierarchy of Needs,” which has been researched and found not entirely accurate, nor does it explain the natural needs and the current model of the world; thus, remaining just Maslow’s opinion.

By teaching untruths to the soon-to-be-adult educators, the adult educators go forth professionally to train other adults, using the same untruths. Thus fulfilling the axiom of GIGO, programmer’s aphorism meaning, “Garbage In results in Garbage Out.” Hence, the untruths are disseminated into future classrooms, and the company and the adult students lack proper training, resources are wasted, and the potential in training is lost.

Putting the value of training in dollars and cents is difficult, but the following will give an idea of the problem. Two kinds of money govern business, blue and green. Blue money is all about the potentblue-moneyial for good or ill to the bottom line of an action, process, tool, employee, etc. Green money is cold, hard, cash, and the food of bottom line health. What is the potential of cross-training employees? If done properly, incalculable positive results and consequences are forthcoming. If done incorrectly, immeasurable adverse effects and consequences will abound. Leading to a stunning observation; if enough blue money is burned, green money evaporates, and the business leaders have no idea how or why the bottom line is vanishing, and market share is shrinking. Since training is all about increasing an employee’s potential and runs the risk of the employee leaving the company, the potential costs and benefits remain difficult to quantify in dollars and cents.

As a newly hired operations manager, I made three expensive presumptions: 1. All the production employees were cross-trained. 2. The machine maintenance had been done properly, and the production machines were in top order. 3. The production employees knew the jobs they were being paid to accomplish. The presumptions cost a lot of blue and green money until rectified, which cost the plant valuable production time, temporary staff increased costs, and the need to perform the production floor manager’s position as well as the operations manager’s role until these three presumptions were corrected. Total cost from my hire date until resolved, 3-months of 50-hour weeks, and more than triple my annual salary in green money. With the total savings from higher potential after addressing the deficiencies, the annual salary of every employee in the plant multiplied by five.

Leading to how to increase potential, decrease blue money evaporation, and develop SMART Training, I have found the following ideas helpful to consider in creating hybrid solutions:

  1. Quantify and Qualify blue money loss. This sounds technical but is quite easy to implement.   I suggest the following principles for review and application:
    1. Respect those around you as potential superstars. Respecting includes employees or customers, vendors or shareholders, deemed less useful. Respect first, last, and always. People will always rise to the level of respect shown.
    2. Change your perception. How valuable or costly is a hammer when directly proportionate to the amount of training in the hands of the operator? If you, as the business leader, are not willing to change how you see the hammer, then it will be impossible to see the worker differently.
    3. Focus on people. Processes are how work is accomplished. Products and services support the company, but the people remain the variable requiring attention. Get out of the office, get onto the production floor, interact, ask questions, and know people.
    4. Freedom to act is a blue money saving principle. If the actions taken by individuals are rigidly controlled, the customer is not served, the problems multiply, and the result is wasted potential. Remember, for every dollar in potential money spent, five dollars in cash evaporates.
  2. Believe in cross training. It is said that Soldiers, Sailors, Airmen, and Marines love to train. They might grumble, moan, and complain, but the training helps lift the morale, empowers the individual, and enhances the individual self-image and self-worth. The same is true in business and every other human endeavor; embrace a love for training.
  3. In accordance with item two above, make sure that the training is valuable and SMART. Relevant training is a knowledge object that can be used immediately, often, and is easily recognized by other employees as something to aspire to obtain.
    1. SMART training is specific; if the employee is to be a cashier, do not include forklift training with cashier training.
    2. Measurable, can the employee feel they learned a job-ready skill. Attainable training is training that can be achieved. For example, not everyone needs to be a nuclear physicist to perform well in customer interactions. Scale the training to meet the tasks at hand. Yes, training should be tough, but attainable.
    3. Realistic training is directly applicable to daily tasks, not trying to cover 20-years of hypothetical nuance, but realistic to daily production goals.
    4. Timely training means to train the employee to the job standard, as it is designed currently, not 5-10 months down the road.
  4. Training has a shelf life; thus training must adapt and change as the business changes. Allow training to live and die as needed to meet the business needs. This also requires cognizant and purposeful planning for strategic and tactical goal realization. Nothing is worse than receiving training in a classroom, then needing to receive different training on the floor because the trainers do not know current operations.
  5. Organizational design. This topic seems peculiar to mention in an article regarding training, but please note, many times, the disconnect between training and operations is not the training or operations, but how the organization is designed. An example, during a project recently concluded, I saw this principle first hand; a common theme on the production floor was a feeling of disconnect between higher levels, e.g. director level and up leadership and senior manager level direction and down. Because of the perceived disconnect, e.g. front-line employees thinking and feeling the higher level leaders are not interested and engaged, and the real disconnect, e.g. the leaders changing methods of work without understanding the processes, procedures, and technology in the work performed, many problems on the floor were never discussed and resolved, simply Band-Aid solutions applied with the hope the core problem goes away, while complaining that the leaders did not have a clue. Use the following to improve organizational design concerns:
    1. Problems in organizational design are easy to spot and discern during process reviews; this is a valuable time; use it well. Thus, never let a process age beyond 18-months and always ensure each process has a single individual responsible for the shelf life of the process.
    2. Use the quarterly, semi-annual, and annual employee events to listen to employees, talk with staff, and take these thoughts back to strategic and tactical planning meetings to direct resources to qualify and quantify the comments from employees, then act promptly, and keep the employees in the communication loop.
    3. Stop the Band-Aid solutions. If the problem needs a Band-Aid, the problem is bad enough to invest actual time and resources in fixing properly. Communicate using reflective listening to achieve two-directional communication with mutual understanding.blue-money-burning
  6. The student in corporate training can be the customer, a shareholder, a vendor, another employee, etc. Training should be an ongoing topic looked forward to as an enabling event. Want to quickly see if the training is SMART? Listen to the comments made by employees when annual compliance training is announced. If there remains a monumental lack of enthusiasm, training is not SMART, not valuable, and blue money fire pits are raging, burning potential directly and green money by remote. Hence, the following tips should help in understanding the student more completely:
    1. Regardless of mode, make sure the student is known before training occurs. Knowing the student ensures the proper language is employed in offering training, and the trainer and the student can relate to each other and the topic under discussion.
    2. Know what the student expects to receive from the training and then adapt the training to meet the expectation. Even if the student does not know what they desire in post training, allow the student to vocalize and establish expectations.
    3. Confidence in training comes from trainers knowing who they are and what they offer. If teachers are not confident, students will never be confident and will have been taught how not to be confident in acting upon the training principles.
    4. “Enthusiasm,” per Henry Chester, “is the greatest asset in the world. Enthusiasm “beats money, power, and influence.” Enthusiasm is sourced in confidence and trust. Faith in the topic is acquired by being trained and trusting in the application and organizational design to support the issue being taught. Enthusiasm is easily taught; teach by example and others will follow!

Employ voice-of-the-customer (VoC) surveys more completely. Make a team of highly professional, and soon to be promoted to team leader, employees and have them administer the VoC program. Employ the VoC as a tool to improve the business processes, procedures, and organizational design. Possessing inputs for training topics, directing customer interaction resources for marketing, and understanding the role of potential (blue money) inherent in the business products and services, as well as the employees delivering on the company promise for customer interaction, improves the business processes, procedures, and organizational design. By employing seasoned employees, the VoC becomes an organizational tool worthy of the customer and the cost of collecting the customer’s input.

There remains a great need in business for SMART training, which includes realizing the potential in people and processes to influence for good or ill. Tooblue-money-burning-2 often the problem in lost bottom-line or dropping market share is not found in green money costs but in blue money waste. When costs need cutting, always look first for lost potential and save the potential first. If the potential waste is not stopped first, the blue money will continue to burn and will morph into different budget areas because the potential lost is a raging forest fire untended and burning green money.

© 2017 M. Dave Salisbury
All Rights Reserved
Copyright for images used is retained by the original creator and used under fair use.

Shifting The Employment Paradigm – Or, Hastening The Trend to Stop Knowledge Loss

Several mainstream academic and corporate researchers are reporting a trend in employment, shifting from an employer-employee relationship with fixed costs to a non-traditional or contractor based workforce, where costs rise and fall as needed to fill business needs.  American Express recently announced a huge layoff; other business organizations are also scaling back employee hours or executing mass layoffs.  Since the New Year (2013), several business organizations have announced reductions, under Federal Government pressure, making full-time employees become part-time employees with less than 20 hours a week scheduled.  Before implementing mass layoffs and the inherent drain of knowledge resulting from those layoffs, business leaders would do well to research shifting from employees to knowledge-based contractors, which has proven profitable and unencumbering to the ebb and flow of transition and to the uninterrupted, well-ordered processes of success as well as solving the unintentional consequences of unresolved patterns of cost escalating loss.

Consider the costs, not simply dollars and cents, but intellectual cost, productivity costs, time lost, and more that is now draining the resources of these organizations.  The fixed employee costs are too egregious to be borne, but the need for the work of the employee remains.  The fix to the problem continues to lie in disconnecting the employee and connecting that same worker to the organizational brand as an independent contractor.

For example, Company A employs 200 people.  Federal Government Regulations declare that the new fixed income costs have risen to $10,000 per employee, totaling $2 million annually.  Company B is a direct competitor to Company A and employs the same number of people, but 175 of these employees are contractors with various length contracts for specific work projects, hour of the day specified, and wages.  Company B, according to the IRS, employs only 25 employees at the same cost per employee of $10,000 totaling $250,000.  The advantages are obvious, realistic examples abound, and the process is slowly advancing.  It is past time to hasten this work.

Consider the loss of intellectual power during a mass layoff.  This is a potential (Blue) cost and the impact is measured in final (Green) cost outlays.  John Q. Worker, has been with Company A for three years and has moved from production labor to supervisor, mainly by his competency in keeping production running smoothly.  John and his senior team members have been groomed as subject matter experts and are recognized for their professionalism and work knowledge.  John’s team is laid off along with several lower ranking members of other teams.  The knowledge drain in production creates a debt into which training, time, and other company resources must be poured to recover the loss of knowledge when John and his team were laid off.  In a down economy, how does Company A recoup the loss of knowledge?  What happens if John and his senior team members, who all work well together, approach Company B and offer their knowledge for sale?

This single cost reflects a vast amount of organizational resources that will require double the cost outlay to replace.  How is the investment doubled? John was just one person; however, the doubling of the investment comes from the immediate lack of knowledge coupled with the need to train a replacement on the job.  Layoffs only work in boosting short-term profit margins but remain a permanent lose-lose situation for the business organizations due to the intellectual drain, the doubling of costs to replace and restructure, and the need for business to continue.  Needs of business do not go away when employees are laid off.  Yet, how many of these now doubled costs would be an issue if John was changed simply from an employee to an intellectual worker, in fact, all those who were laid off.  John and his team would remain in their current roles performing their skills and talents with freedom and independence, and the company would gain a powerful resource for improving production as well as taking a straight loss and turning it into a permanent gain.

This is the power of the independent contractor model.  Layoffs are straight loss scenarios: employers lose, employees lose, communities lose, states lose, and ultimately the entire society loses.  Jobs lost in New York make for tougher times in California.  Collins (2001) wrote, in his book ‘Good to Great,’ about this cycle of layoffs and the destruction caused.  If American Business cannot or will not choose a different model to embrace, other than employee/employer, the American Experiment is doomed to fail; doomed because the same problems inherent in ‘Right to Control’ are the root causes to runaway government power grabs, compensatory spending problems, and theft of public resources for personal gain.

Other thoughts from Collins (2001) include the following gems for consideration, regardless of your level of leadership.

“Mergers and acquisitions play virtually no role in igniting transformation…”  This means that changing organizations through merger or acquisition does not correct the core problems in an organization.

“Technology … has virtually nothing to do with igniting transformation…”  Adopting new technology does not change core problems.

“Greatness is not a function of circumstance.  Greatness … is largely a matter of CONSCIOUS CHOICE.”  [Emphasis mine]

The final quote from Collins (2001) is the perfect thought:  choose greatness, free the employee to become an independent contractor.  This brings about the final conclusion discovered by Collins (2001): “… Good to great companies paid scant attention to managing change, motivating people, or creating alignment…”  Collins (2001) declares this is possible because the workers were empowered with the dual culture of entrepreneurship and discipline.  Other authors and business researchers are drawing the same conclusions.  When the employee is empowered, truly empowered, the organizational leaders are free to drive the company because the people problem is solved and the freedom to use their skills and talents as a contractor perfects the processes and procedures.

Shift the paradigm, free the employee, and watch the business become great.

How does Company B from our example manage all the contracts?  The HR team contracts two-contract lawyers for contract design.  One full-time IT person engineers the contract website where the prospective contractor creates a contract using options personally motivating to the contractor.  Upon legal endorsement of the validity of the newly created contract, the head of the HR Team, working in concert with the head of the department, makes operational changes to meet essential requirements, which are presented to the potential new contractor for negotiation and agreement.  Upon reaching an initial agreement, the document goes back to HR Legal Team for final review and approval.  Once completed, the new contractor signs with the department head and work begins.

References

Collins, J. (2001). Good to great why some companies make the leap… and others don’t. (1st ed.). New York, New York: HarperCollins.

© 2013 M. Dave Salisbury

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