In the last article, we learnt that majority of companies are between 2 and 3 Sigma. Due to the low performance, the management is often under pressure to do everything they can to improve the bottom line in the shortest time possible. Profits as quick as possible sounds great. Keep stakeholders happy and bonus for staff and managers! Right?
Companies focused on making profits in the short term often adopt cost cutting measures including downsizing of employees.
When you lay off employees with modest exit package you are likely to see an improvement in the bottom line within 4 – 6 months due to reduction of staff numbers and associated costs. Will this positive bottom line remain and/or improve after a year, two years?
If you are running a business that is neither effective nor efficient, downsizing will only make things worse with less people expected to worker harder. Yes, you have cut costs but are your systems and employees set up for success?
You have probably said it or heard of from someone, ‘I don’t care what you do, just get these results up by the end of the week/month!’ It is not uncommon for managers to adopt a do all it takes attitude to get results up. Again, results will likely be up by the end of the week. But, will the team replicate the previous week results? Unless you admonish, cajole staff again the following week, chances are you will be burnt out from the previous week work and/or basking in the glory of results, only to realize at the end of the month that the results are down again.
Short term profits – Long term losses
What this means is that anytime the focus is almost exclusively on cutting costs, increasing workload for staff, and creating a role where supervisors are task/micro managers you will have short term profitability but long term un- profitability.
To have a competitive advantage and sustain long term profitability and enterprise growth, the company management must focus on changing how they manage their operations and their role in leading transformation. Executives must lead the process. It is not about delegating improvement initiatives to front line staff and expecting results nor is it about hiring consultants to drive short term change.
With six sigma, the work begins with the executives who first create a Process Management System (PMS). The PMS guides management to identify 20 – 30 most important processes, measure the sigma level and develop business objectives based on priority and impact on business operations. Once the worst performing processes are identified, an improvement team is put in place and taught various tools and concepts, which they will apply to their daily work to achieve greater effectiveness and efficiency.
Join our interactive business transformation dinner and operational excellence to gain insights on role of managers and executives in leading transformation.