This episode is the first in a series on preparing for the next recession, “Recession Preparation – Processes and Employees.” The entire

teamCMC contributes their expertise:

  • Gary Monti: change management, business analysis/planning, people & politics, project management
  • John Riley, Agility expert
  • Jeffrey Cochran, Human Resource expert

The conversation was based on a point-counterpoint approach, i.e., which is more significant during a recession, a bad process or a bad employee? For this argument the definition of “recession” provided was, “A shrinkage of sales.”

John started the conversation by saying organizations frequently want to cut employees were cut products in preparation for recession. He stressed what is important is to look at the efficiency of your processes and the value to the customer of your products. Consequently, the best place to start in terms of recession is to look at the value stream of your product.

Jeffrey responded by starting with the observation that separate from a recession the bad employee is affecting your bottom line. A better employee typically has a compounding effect on the organization by influencing a drop in morale, productivity, and added stress for fellow employees. In line with this, Gary referenced an excellent book, “The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t,” By Robert Sutton. Jeffrey went on to point out one of the biggest problems with difficult employees is failing to show up for work. The discussion proceeded to talk about the impact absenteeism has on the workplace. The big point regarding this is how organizations will adapt the dysfunction in an effort to keep products or processes moving forward to sustain cash flow. An example was given of how Detroit’s Big Three, back in the ’70s when production quality was terrible, argued that Toyota would never catch on in terms of significant sales numbers. The rule at the time was, “you never want to buy a car was manufactured on a Friday or a Monday.” The reason being absenteeism was so high.

John picked up on that and turn the conversation back towards its impact on processes. He emphasized that with process execution one of most important aspect is retrospectives throughout the product delivery process. During those retrospectives the quality of performance by the team is one of the key elements to be addressed. And one of the key elements in addressing quality is individual team member performance with this issue being addressed directly by fellow team members rather than senior management. The function of senior management is to set the goals and to support the team during execution. The team should be empowered to address whatever it takes to deliver the value to the customer. In other words, the team being very direct with regards to retrospectives conducted on a routine basis is critical for survival during a recession. Vulnerability, then, becomes a key issue because senior management needs to risk turning power over to the team in addition to shouldering responsibility for determining what direction the organization should take.

Jeffrey asked an excellent question with regards to owner stepping in and modifying the process in an attempt to adapt to the dysfunction in its present. There is general agreement that this is the case now the company is put it greater risk of failure because senior management is now pulling back ownership of the process by dictating how the team should adapt to the dysfunction. Gary proceeded to point out how power then shifts from senior management to the dysfunctional employee who becomes the tail that’s wagging the dog. Once this inappropriate shift of power occurs the company is destabilized to some extent in the risk of failure during the recession goes up accordingly. An example is given of an employee who was guaranteed employment as a condition of her former company being bought out. Feeling bulletproof, the employee took advantage of the situation much to the detriment of her teammates. Jeffrey proceeded to note how quality employees suffer because workloads are shifted in their direction. This compounds the damage associated with the absenteeism.

John jumped back into the conversation pointing out that in line with being able to discipline fellow team members the team needs to be given the power to modify processes in order to increase value. A good, iterative process with pre-defined goals that remain constant gets people on board as to what the product is. The other thing is it solves “not knowing what the problem(s) is(are).” By knowing what the goals are the team can morph around the job and gauge each others performance accordingly. In other words, if someone needs time for a doctor’s appointment the team can adapt. The team can also call out someone who isn’t staying on task to achieve the goal(s). This helps surface risks in a very clear manner.

Jeffrey backed up this approach from a Human Resource perspective, e.g., excessive overtime for those picking up the pieces associated with others not performing properly. There was some back-and-forth regarding team size estimates, etc., and whether or not that information and associated processes were adequate. The key point, though, is senior management is where the responsibility lies in determining what is appropriate and insuring the team has the resources needed. Arguing whether it is the people or the process can miss that key point.

The bigger point in all this is making needed changes in preparation for a recession can be a huge challenge if there are a lot of dysfunctional habits spread throughout the company and employee base. The reward system morphs around those dysfunctions making change difficult. It’s not just about the processes and tools. John emphasized the individuals and interactions are critical, especially when practicing Business Agility. The metaphor of a race car pit crew was  used for emphasis. Jeffrey expanded the conversation to the quality of managers.

The conversation then rolled to knowing the principles involved. This is key for success. Everyone needs to know these principles and they need to permeate the workplace. Failure is used as an opportunity to sharpen the team’s application of principles to achieve the goals. This approach is critical since the life expectancy of the average company is <10 years. Also, if there’s a dip in growth to negative numbers there now is only a 10% chance of recovery. What makes success through a recession more likely is multidisciplines individuals who have cross-trained.

Owners and leaders need to promote awareness of the situation and personal responsibility so the organization can shift quickly to changes in the environment as well as recovering from mistakes. Trust, trust, trust…senior managers need to take the risk of being vulnerable and empowering the team. As to the statement mind that meets these criteria John proposed the acronym, VUCA…Volatility, Uncertainty, Complexity, and Ambiguity. The team needs to commit to moving forward in reaching the customer’s goals in situations where VUCA is present. It’s all about maintaining balance.

An additional difficulty can be “Jumping the S Curve” where a new product is introduced to help deal with the declining sales associated with a product mature in the market place. The new product starts a new S curve. The owner must be able to practice cognitive dissonance where a stable frame of mind for the existing product/service line is maintained while also having an innovative frame of mind for new products. The use of group bonuses incentives is a great way to encourage the team to stay focused and perform. Jeffrey mentioned the self-policing a team shows in that situation is similar to how a platoon works when senior noncoms or officers aren’t present.

Keeping team members close to each other and reporting details that are measurable on an almost-daily basis will go a long way towards remaining stable and successful. In line with this Jeffrey talked about the importance of avoiding the word “should.” The owner’s need to take on their responsibility to direct the organization with the right direction and vision.

Need help dealing with complex situations? You can download CMC’s free e-book MINDSET – 5 SIMPLE WAYS TO LOOK AT COMPLEX PROBLEMS and learn how to find a simple vantage point from which you can resolve challenges.

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