Tag Archives: long term thinking

Manufacturing Skills Gap or Management Skills Gap?

I stumble across articles discussing the problem of manufacturers having difficulty finding workers with the skills they need (in the USA largely, but elsewhere too) somewhat regularly. While it is true that companies have this problem, I think looking at the problem in that way might not be the most insightful view. Is the problem just that potential workers don’t having the right skills or the result of a long term management skills gap?

To me, the current manufacturing skills gap results directly from short term thinking and disrespect for workers practiced by those with management skills shortages over the last few decades. Those leading the manufacturing firms have shown they will flee the USA with the latest change in the wind, chasing short term bonuses and faulty spreadsheet thinking. Expecting people to spend lots of time and money to develop skills that would be valuable for the long term at manufacturing firms given this management skills shortage feels like putting the blame in the wrong place to me.

Why should workers tie their futures to short term thinking managers practicing disrespect for people? Especially when those managers seem to just find ways to blame everyone else for their problems. As once again they do in blaming potential workers for their hiring problem. The actions taken based on the collective management skill shortage in the manufacturing industry over the last few decades has contributed greatly to the current state.

If managers had all been managing like Toyota managers for the last 30 years I don’t think the manufacturing skill gap would be significant. The management skill gap is more important than the manufacturing skill gap in my opinion. To some extent the manufacturing skill gap could still exist, market are in a constant state of flux, so gaps appear. But if their wasn’t such a large management skill gap it would be a minor issue, I believe.

That still leaves companies today having to deal with the current marketplace to try and find skilled workers. But I think instead of seeing the problem as solely a supplier issue (our suppliers can’t provide us what we need) manufacturing firms would be better served to look at their past, and current, management skills gap and fix that problem. They have control over that problem. And fixing that will provide a much more solid long term management base to cope and prosper in the marketplace.

Another management issue may well be the hiring process itself. As I have written about many times, the recruitment process is highly inefficient and ineffective. When you see workers as long term partners the exact skills they have today are much less significant than their ability to meet the organizations needs over the long term. In general, information technology recruiting has the worst case of focusing on silly skills that are really not important to hiring the right people, but this also can affect manufacturing hiring.

Related: IT Talent Shortage, or Management Failure?Dee Hock on HiringManufacturing Jobs Increasing for First Time Since 1998 in the USA (Sept 2010)Building a Great Workforcemanufacturing jobs have been declining globally (including China) for 2 decadesImproving the Recruitment Process

Practical Ways to Respect People

What matters is not your stated respect for people but your revealed respect for people. Here are some ideas I collected after being prompted by a post by Ron Pereira: 7 Practical Ways to Respect People.

  • Don’t waste people’s time: have meetings only when necessary and provide agendas in advance. Use email effectively instead of presenting material in meetings that can better be presented in email. Don’t have complex benefit manuals, aimed at making lawyers happy, that employees are expected to use.
  • Do what you say you will.
  • Provide bad news early (don’t hope it will get fixed somehow so you don’t have to address it, let people know what is going on and let them help).
  • Pay people fairly – I would venture to say most senior executive pay today is inherently disrespectful, If I am wrong about the “most” part, certainly a huge amount executive pay is inherently disrespectful.
  • Put the long term success of all stakeholders as the focus (don’t risk people’s jobs for short term bonuses, don’t use large amounts of leverage risking the future of the company…). Respect all stakeholders and provide them confidence their long term success is important. Companies that find themselves laying off workers due to managements failure to succeed over the long term are not being respectful to those workers. That failure is most obvious today but the important improvement is not in handling the layoff today, it is in the behavior for years before that did not build a system that was successful in the long term.
  • Tell people what they can do to improve. It is respectful to help people improve. It is treating people like a child that needs to be shielding from any hint of weakness in need of improvement.
  • Don’t expect a few people to do far more than their fair share of work because management allows poor performance to continue un-addressed.
  • Continue reading

Short Term Investing Focus

Buffett’s New CEO Shows Analysts, Hedge-Fund Managers to Door

Buffett’s Berkshire Hathaway Inc. completed the buyout yesterday after winning the approval of Burlington Northern investors. The deal, valued at $100 a share, allows Rose to hand out returns of nearly 300 percent, plus dividends, to investors who bought stock the day he was named CEO in 2000. The problem, he said, is that shareholders with that length of commitment are dwindling in number and influence.

“When I started as CEO 10 years ago, the typical investor had a time frame of three to five to seven years,” Rose said in an interview. “Year-by-year, that’s gotten shorter.”

The increased focus on short-term results, fueled by real- time media and quarterly analyst calls, can be a distraction for a railroad executive who needs to buy locomotives that run for 20 years and put down tracks that last for 40, Rose said. Burlington Northern said last month it would commit $2.4 billion this year to capital projects, including track, signal systems and locomotives, about $240 million less than in 2009.

“The money I spend this year really won’t pay off for three, four, five or seven years down the road,” said Rose, 50. “There’s the advent of the hedge fund which has changed the time horizon of what satisfies the institutional investor.”

“The speed of the news today I think has harmed, quite frankly, investors looking at long-term assets,” Rose told reporters in a news conference this week. A long-term perspective is “one thing that our country has kind of lost sight of, not just for the railroad equity investor but for a lot of investors.”

Decades ago Dr. Deming said short term focus was one of the seven deadly diseases of western management. Unfortunately we have made very little progress on the deadly diseases. The failed, health care system with it’s focus on a few special interests fighting to keep the broken system that does great harm to society but benefits the special interests is another a disease that has definitely gotten much worse.

Related: Think Long Term Act Dailyposts related to Warren BuffettGoodbye Quarterly TargetsA Great Day for Georgia-Pacific

Worker Retention at Zappos

Tony Hsieh, chief executive of Zappos, spoke at a recent y-combinator event (two great organizations we have mentioned before).

Facebook and Zappos’s Different Views on Worker Retention

“We actually want our employees stay with the company for a long time, for 10 years, maybe their entire life.”

“We now provide mentorship and training so employees can join at the entry level and, over a period of five to seven years, have the opportunity and training to become senior leaders in the company,” he said. “Constant growth is what will keep them in the company for a very long time.”

Hsieh said he wants Zappos to have a higher purpose than just driving profits and that if employees buy into it, it is easier to have great customer service and for employees to want to stay at the company. He’s outlined that in core values that the company uses to guide itself.

“For your employees, if you can inspire them through your vision, that’s not just about profits or being number one in the market,” Hsieh said. “I like to say the best businesses are the ones that figure out how to combine profits, passion and purpose and the vision and culture to do that.”

Great stuff. I must admit I would not find spending $700 million on an internet shoe and apparel retailer was a great idea for Amazon if it were not Zappos. I am happy to own a small portion of Zappos with such inspired leadership. The contrast in the respect for people Hsieh shows and so many other unethical CEO’s is amazing and inspiring. We need more such leadership examples to follow.

Related: Paying New Employees to QuitZappos and Amazon Sitting in a Tree…People are Our Most Important AssetBuilding a Great Workforce

Dr. Deming Webcast on the 5 Deadly Diseases

The W. Edwards Deming Institute has posted Dr. Deming’s 1984 video on the 5 deadly diseases of western management.

  • Lack of constancy of purpose
  • Emphasis on short term profits – “creative” accounting, focus on quarterly profits
  • Annual Performance Appraisals – management by objective, management by fear
  • Mobility of management – [see Toyota for a great example of a company that operates on different principles – where the leadership has been with Toyota for decades]
  • Running a company on visible figures alone – many important factors are “unknown and unknowable.”

Dr. Deming added 2 diseases to reach his famous 7 deadly diseases: excessive medical care costs and excessive legal damage awards swelled by lawyers working on contingency fees.

Personally I believe all 7 of those diseases are still prevalent and causing damage. I do think some progress has been made on longer term thinking but far too many organizations still are extremely short term focused. And I would add two new deadly diseases of management: excessive executive compensation and an outdated intellectual property system.

Related: Deming CompaniesPurpose of an OrganizationContinual ImprovementCreating JobsNew Management Truths Sometimes Started as Heresies

Zappos and Amazon Sitting in a Tree…

Amazon is acquiring the unique company – Zappos: we have written about Zappos previously: Paying New Employees to Quit. Jeff Bezos uses the webcast above to talk to the employees of Zappos. Excellent job. The letter from Tony Hsieh, the Zappo’s CEO, to employees is fantastic. This is a CEO that respects employees. These are leaders I would follow and invest in (and in fact I am glad I do own Amazon stock).

First, I want to apologize for the suddenness of this announcement. As you know, one of our core values is to Build Open and Honest Relationships With Communication, and if I could have it my way, I would have shared much earlier that we were in discussions with Amazon so that all employees could be involved in the decision process that we went through along the way. Unfortunately, because Amazon is a public company, there are securities laws that prevented us from talking about this to most of our employees until today.

Several months ago, they reached out to us and said they wanted to join forces with us so that we could accelerate the growth of our business, our brand, and our culture. When they said they wanted us to continue to build the Zappos brand (as opposed to folding us into Amazon), we decided it was worth exploring what a partnership would look like.

We learned that they truly wanted us to continue to build the Zappos brand and continue to build the Zappos culture in our own unique way. I think “unique” was their way of saying “fun and a little weird.” 🙂

Over the past several months, as we got to know each other better, both sides became more and more excited about the possibilities for leveraging each other’s strengths. We realized that we are both very customer-focused companies — we just focus on different ways of making our customers happy.

Amazon focuses on low prices, vast selection and convenience to make their customers happy, while Zappos does it through developing relationships, creating personal emotional connections, and delivering high touch (“WOW”) customer service.

Continue reading

Goodbye Quarterly Targets?

Goodbye Quarterly Targets?, Business Week:

For about a decade, companies have tried to goose their stocks-or manage the market’s expectations-by putting out quarterly earnings projections. Now the practice has come under fire as business leaders fret that the focus on short-term targets undermines long-term growth.

On March 14 the Commission on the Regulation of U.S. Capital Markets in the 21st Century, a project of the U.S. Chamber of Commerce, urged executives to stop issuing their short-term goals. The practice is a “self-inflicted wound by American CEOs,” says commission member Robert Pozen, chairman of MFS Investment Management, a Boston fund manager.

Debate over this issue has simmered for years. Indeed, dozens of companies, including Coca-Cola and McDonald’s, have quit publicizing quarterly earnings targets. Now the issue has become urgent, the Chamber argues, as U.S. companies face growing long-term competition from overseas, where such projections are not widely made.

Learning that a fixation on short term profits is bad for the organization is a good step. Deming talked about this problem over twenty years ago in seven deadly diseases of western management one of which was: the emphasis on short term profits.

Related: Life Beyond the Short TermDell Falls ShortConstancy of Purpose

Going lean Brings Long-term Payoffs

Going lean brings long-term payoffs by John Torinus:

The growing number of Wisconsin manufacturers, and the few service companies, taking the lean journey are learning that it is not a sprint.

The immediate paybacks come in the form of saved space, less distance traveled, fewer handoffs, faster throughput, lower inventories and man-hours saved.

I would state the authors next point differently. The early paybacks provide resources to invest in making large more fundamental changes to the organization. Those successes also help convince people these lean ideas have merit. Dilbert does a good job of illustrating how many workers feel about the latest words spoken by their management. Without visible success expecting employees to believe the new management practices is unwise.
Continue reading

Management Training Program

Fog Creek Software Management Training Program by Joel Spolsky:

Finally, when you’re really really good, they let you hang around with Yussef on the ovens. Yussef was about 100 years old and so good at running the ovens it was scary. When Gabbi tried to show me how to solve the problem of bread sticking to the conveyer belts on the way out of the oven, he ran back and forth like a lunatic for ten minutes, turning knobs, pulling levers, redirecting heat, and burning a few hundred loaves while he struggled to get things under control.

But Yussef, facing the same problem, turned one tiny knob on a seemingly-unrelated chimney about one degree to the right. It made no sense, he couldn’t explain why it worked, but it did: it solved the problem instantly and suddenly perfect loaves started popping out. It took me another couple of years to really understand the complex relationships between heat and humidity inside an 80 foot tunnel oven, but it would have taken ten more years before I could solve problems as well as Yussef did.

From the Lion of Lean [the broken link was removed] (an interview with James Womack):

So I said to the Toyota executive, “You’ve only got two or three suppliers per category, and you never take bids. How do you know you aren’t being ripped off?” So this guy, who was around 60, gives me an incredibly frosty look and says, “Because I know everything.” Everything? “That’s my job,” he says.

Continue reading

Life Beyond the Short Term

Life Beyond the Short Term by Simon Caulkin, The Observer.

Last week’s column – ‘Adrift in a parallel universe‘ – about the perversion of management provoked an eloquent, sometimes passionate, response.

In the spirit of a positive alternative, a prime text is W Edwards Deming’s 14-point programme for transforming management, drawn up in the 1980s.

Once again Simon Caulkin has penned an excellent article. In this article he gives an overview of Deming’s 14 points. I am glad to have found another positive source for improving management – see our directory of management improvement blogs for some additional sources I find valuable.
Continue reading