Improving Productivity by Working from Home

Does working from home improve productivity? A Stanford University study of a Chinese travel agency concluded that it does. 

The study found that employees working from home: 

  • Were 13% more productive (9% worked more hours, taking less breaks and fewer sick days and 4% had higher performance rates per minute – hypothesized to be due to quieter working conditions).
  • Had 50% less attrition.
  • Reported higher feelings of work satisfaction.

Total factor productivity increased between 20 and 30 percent (the increase was due from two sources – efficiency in calls per minute and capital input). In addition, the company estimated annual savings of $1,900 per employee.

The learning from the experiment included the following:

  1. Working from home improves performance.
  2. Allowing employees a choice generated a far greater effect than requiring employees to work from home.
  3. A large sample of treatment and control employees allowed the firm to evaluate the impact on different types of employees.
  4. Management was surprised by the dramatic drop in attrition.

In addition to benefits to employees and employers for working from home, society as a whole sees benefits. These benefits include people choosing where they wish to live (instead of close to the employer’s office), less pollution and traffic congestion from work commutes, and an overall better family and community life because of the flexible hours.

However, improving productivity and saving money by having employees work from home does not work (pardon the pun) for everyone. People need to be able to recognize in themselves whether they have the discipline to perform as well as, or better than, working in an office environment.

Also, some individuals need the socializing that comes with working in an office – these individuals cannot thrive in isolation. For others, a careful balance must be struck.

As John James Jacoby (proclaimed lover of naps) writes: “For me, home was always where cool stuff happened, and the office was where I spent time waiting to go home to make more cool stuff happen.”  

Self-control and pride in one’s work is mandatory for working from home. An ability to complete tasks and communicate effectively with others is also a requirement. Trust is also a big element when working from home – employers need to trust that their employees are doing their best, but they also need to respect schedules and expectations.

I work from home most of the time and I cannot be happier about this arrangement. In fact, my most rewarding client work is done at home. This is likely because I am disciplined and have the necessary self-control about my work. It also helps that I love what I do.

The Competitive Edge

What’s your competitive edge? What makes you or your business the “one” to beat?

If you’re like most businesses, you probably say that you’re good at what you do or that you’re better than anyone else in your craft. That’s all well and good, but why should clients care?

Here’s the thing:  Clients don’t actually care about you or your business. They only care about themselves and what you or your business can do for them. This makes sense, since clients want as much value as they can get, but they don’t typically care where they get it.  

What can you or your organization do to position yourselves to be the best? Here are four considerations: 

  1. Cost. Reducing operating costs will provide you with a competitive advantage in the marketplace. Relentlessly pursue the removal of all waste in your organization to reduce operating costs. Look at the entire cost structure of your organization for all potential cost-reduction areas. And don’t forget to pursue Lean production in all you do.
  2. Speed. Make sure you are able to deliver on your promises quickly and by no later than promised due dates. You can improve speed of delivery by improving your organization’s communications capabilities (think:  Technology) and using equipment that is reliable and right for the job. Ensure you have knowledgeable workers to assist with your projects. Also, use just-in-time production to reduce inventories and reduce risk.
  3. Quality. While some companies employ quality as a reaction to the marketplace, to compete on quality means that you and your organization use it to please the customer and not just a way to avoid problems. Since quality is different for each customer, you and your organization need to understand your customers’ needs, wants and requirements, so that you can translate them into exact specifications for the customers’ desired goods and services.
  4. Flexibility. Competing on flexibility means that your organization is able to adjust to changes in the marketplace relating to its product mix, volume or design. This means being able to produce a variety of goods or services within the same facility to meet customized requests. Multi-skilled workers and excess capacity in the business can help an organization compete on flexibility. 

Most organizations should start positioning themselves in the market by focusing first on quality. Once quality is perfected, then focus on speed of delivery, then cost-cutting in operations and, finally on flexibility. 

If your organization is not as competitive as you believe it should be, improving on all of the above competitive advantages may be in order. You will find that as you become more competitive, you will reach a point where a trade-off will be required between being better in one or another area. This will ultimately set you apart from your competition.

Off Target

When Target came to Canada in 2011, not only were consumers surprised that the retailer opened up over one hundred stores across the country, but so was the business community. To do such a “big bang” approach, you either know what you’re doing or you’re taking a major risk. Unfortunately for Target, its major risk did not pay off.

Target’s biggest failing was in not piloting its entry to Canada with one or two stores before launching full scale. Any project manager worth their trade will tell you that starting small and building up when it makes sense to do so is the best guarantee of success.

In addition to missing the mark with their full-scale roll-out across Canada, Target missed out on the basics of operations management. For one thing, their demand forecasting appears to have been a dismal failure. If they had forecast properly, they would have learned that Canadians preferred the U.S.-type Target stores and not reincarnations of Zellers.

Target also missed out on strategic capacity planning as well as facility layout design. Their inventory systems management was absent, to say the least. This also speaks to their lack of adequate supply chain management. When inventory is scant (as it was at Canadian Target stores), one might reasonably presume that the retailer was using some type of customized just-in-time fulfillment. However, this, too, appears to not have been part of Target’s strategy.

A material requirements planning or enterprise resource planning software would have helped Target manage its stocks and stores. However, we can see that even if Target had such a system, it, too, failed them.

And what about quality? Quality and price are generally prominent factors for consumers. Integrating quality into every element of an operation allows an organization to reduce its prices while still remaining profitable. Clearly, quality does not appear to have been a high priority for Target.

While one can hypothesize about Target’s demise in Canada, it provides little comfort to Target employees. As well, the company itself is now targeted (pardon the pun) as a losing venture:  At least, in Canada.

One thing is certain, though: Target really did miss its mark!

The Lightness of Black Friday

According to Kevin Roose of the Daily Intelligencer, Black Friday is “a nationwide experiment in consumer irrationality, dressed up as a cheerful holiday add-on.”

It’s hard to disagree with Kevin’s assertion!

The problem with Black Friday is not so much the consumer irrationality (although that really should be a concern for society!); it is more about how suppliers both anticipate and succeed in increasing their inventory turnover by taking advantage of the irrational consumer. Is that such a bad thing?

I think it is and here’s why – first, sales days like Black Friday evoke erratic behavior and, second, these types of frenzied sales force consumerism to take a back seat.

Black Friday sales are not necessarily big sales, but they are a super opportunity for suppliers to unload their burgeoning warehouses. This speaks to poor management of inventory and too much inventory, at its core, implies (and typically masks) big management issues with the company.

Excess inventory may mean that a company is placing inaccurate inventory orders. When this happens, the company holds more inventory than the market demands. That’s why sales like Black Friday are a welcome opportunity to unload the excess, even if it is at a discounted price.

Too much inventory creates other problems for the company, as well. For instance, too much inventory takes up valuable floor and shelf space. If the item does not sell quickly, then other more valuable inventory does not make it to the shelf. This is a double whammy, so-to-speak. Not only is the poorly moving inventory not selling, but neither is the good inventory.

And when companies aren’t able to sell their inventory, this hurts their bottom line. Black Fridays and other types of sales days provide an opportunity for the retailer to drastically cut costs to sell its inventory – even if the sale is a net loss.

A major concern for companies is not only the space taken up by slow-moving inventory, but the associated carrying costs. These costs are typically about 30 percent of the value of total inventory. For instance, if the value of all television sets at your favourite store is about $1 million, then the cost to the company to carry (store) that inventory is another $300,000 on top of that. Carrying costs include things like rent, utilities and labour.

And let’s not forget about waste. In a worst-case scenario (and we know that this happens more often than not – even in Victoria!), companies throw out their excess inventory. This is why it is so critical for companies to ensure that their inventory turnover is high – to reduce carrying costs and waste – both of which cut into profits.

Ultimately, the question we should be asking is:  “Why do we need so much stuff?” And, why do suppliers need to meet this demand?

It’s true that consumers drive demand, but it should be a corporate social responsibility on all suppliers – from the acquisition of raw materials to the end seller – to help everyone curb excess. But who will start first? Will it be the consumer who refuses to engage in sales like Black Friday; thereby not helping companies move their inventory? Or will it be the smart supplier who decides to stop stocking whatever the consumer wants (and, therefore, risks going out of business)? It’s a difficult question indeed.

For my part, I bought a new iPhone today. Who do I blame? Me for buying a product that I did not need? Or the store that stocked it and enticed me with a good price?

Value and Billable Hours

Why do companies and individuals still insist on billing for services “by the hour?” If you are tracking billable hours, you are not being efficient. And, even worse, you are not providing the best possible service to your customers.

When companies focus on billable hours, it may be to the exclusion of other important activities, like building capacity to better serve customers.  

However, this is a Catch-22 situation:  As you build capacity to better serve your customers, you are not able to bill for your time. Then when you use this new capacity to serve customers, you discover that it takes you less time to provide the same service. If you are billing by the hour and you are very efficient, you are unable to earn as much as someone who is less efficient providing the same service.

This is why billing based on the value of service being provided makes so much more sense. Why wouldn’t your customer want to pay you the same (or more) for a service that you can deliver in less time?  

According to Canadian statistics, the amount of time spent at work is decreasing. This is also the case in the United States. Does this mean that “billing-by-the-hour companies” are earning less? Perhaps, but it might be that these same companies are realizing that it is more economical (and profitable) to bill for value rather than hours. 

The secret to creating value for both parties (the company or person providing the service and the company or person receiving the service) is to focus on outcomes rather than inputs. How much time it takes to create a widget or develop a plan is irrelevant to the value the widget or plan provides to the customer.  

In Lean Six Sigma terms, we want to go beyond just meeting our customer’s needs and wants – we want to be sure our customer is delighted with the product or service they purchase from us. This is value. And it has nothing to do with money.

If customers are delighted with the service provided by your staff, they will pay your asking price to continue to receive this value. It is irrelevant to the delighted customer that it cost you $100 to produce the widget, but they pay you $1,000 for the same widget.

In addition, fixed fees (i.e., value-based fees) have the advantage of using up less administrative time for both sides. There is no need to track hours unless the provider of the service wishes to do so. This improves efficiency for both sides.

In the words of Alan Weiss, “No one cares, really, about how good you are. Clients care about how good they are going to be when you’re done with them.”  And that, really, is the ultimate goal of any service or product.

 

Solving Problems using an A3

An “A3” is an international size piece of paper, approximately 11-by-17 inches. Using an A3 is an effective way to present a situation – a story that anyone can understand – all on one page. 

It is a visual tool for problem-solving because it presents all of the main elements in a condensed space, allowing for on-the-spot review. It is a powerful management process encouraging learning through a scientific approach to problem solving. It includes a description of the current conditions, goals, analysis, and an action plan for implementing solutions.

There is no standard format for an A3. Each A3 suits the situation. At the end of this blog, a detailed example is provided that you can use and modify to suit your organization’s situation.

Regardless of format, A3’s answer the same basic questions:

  1. What is the problem or issue?
  2. Who owns the problem?
  3. What is/are the root cause(s) of the problem?
  4. What are some possible countermeasures?
  5. How will you decide which countermeasures to propose?
  6. How will you get agreement from everyone concerned?
  7. What is your implementation plan – who, what, when, where, how?
  8. How will you know if your countermeasures work?
  9. What follow-up issues can you anticipate? What problems may occur during implementation?
  10. How will you capture and share the learning?

The key to using the A3 and, in fact, to any approach in problem solving is defining the problem. As Charles F. Kettering, inventor, said: “A problem well stated is a problem half-solved.” Too many times, people start “fixing” symptoms of problems rather than the actual problem. This never achieves the desired long-term results.

In its simplest form, a problem is a barrier that prevents the organization from achieving its goals. A problem may also involve the design or performance of work.

The gap between the existing and desired condition is the problem. Achieving performance improvement occurs through understanding of the gap.

At its core, an A3 template helps solve problems by describing the following:

  • Background or context of the problem
  • Current conditions including facts and data about the problem
  • Goal that the organization wishes to achieve in addressing the problem
  • Analysis of the problem to describe why the problem exists
  • Recommendations for how to address the problem
  • Plan for implementing the recommendations
  • Follow-up after implementation to ensure continuous improvement

The A3 is also useful for describing action items – a condensed project charter for each item covering one or two 11-by-17 inch sheets instead of multiple letter-sized typed pages.

Once you start using the A3 format to assess your organization’s problem areas, there’s a good chance that you will never go back to using traditional methods.

Value: Defined

Lots of people are talking about value these days – especially in light of Lean culture.

The Merriam-Webster dictionary provides eight definitions for “value.” The definitions relate to market price, luminosity, and denomination. From a business perspective, value is related to market price and the customer’s perception of a fair return on an exchange.

From a Lean perspective, value is anything that the customer is willing to pay for – as long as it meets these three criteria:

  1. The customer cares about it.
  2. The product or service must be physically transformed or the step toward transformation must be an essential prerequisite for another step.
  3. The product or service is delivered “right the first time.”

“Non-Lean” organizations sometimes have a tough time determining what it is that their customers’ value. But determining value is actually not that difficult. It comes down to ensuring that the above three criteria are met – all the time. Look at it this way:

  • An organization with efficient processes is able to keep its costs down. This results in a greater ability to attract more customers and translates to value for the customer.
  • An organization with inefficient processes incurs higher production costs. These costs get transferred to the customer. The customer does not see this as value.

Inefficiency can be a business killer. This is where Lean organizations have an edge over non-Lean organizations.

Lean cultures enable waste reduction in business processes that directly contribute to value for the customer. Lean cultures help businesses thrive.

If your customer values your product or services, they will pay your asking price. If your offering does not meet your customers’ criteria for value, the customer may still pay for it, but will definitely be shopping around next time they want the same thing.

Next time you complete a transaction with your customer, ask them to rate the value that they just received from you. Their response will tell you how well you are actually doing compared to how well you think you’re doing. Consider it a reality check.

Value is the key to organizational survival. If an organization consistently delivers poor value to its customers, it goes out of business. It’s that simple.

Thriving or Surviving?

What is your worst case scenario? What will you do if: (a) you are unable to prevent it from happening, or (b) you are unable to mitigate the outfall from its actual occurrence?

What if the worst possible thing happens during your project, in your company, in your life? What will you do if you cannot prevent the thing you thought you could prevent?

It’s true. Sometimes even the best thought-out plans and prepared-for scenarios are beyond our control.

Many organizations create risk management strategies and hope to never use them. Some even go beyond planning and simulate risks to test their risk mitigation strategies. But imagine an environmental, financial, or other disaster that is beyond your or your risk management strategy’s control. The risk blows up your project or your organization.

What happens next is the difference between surviving and thriving.

An organization that survives will patch up the outfall from the risk and continue business with a limp, hoping to get back to pre-risk operations.

An organization that thrives will look beyond the risk, reinventing itself to become a stronger, better service provider. In short, companies that thrive are lean to begin with and are able to bounce back stronger than ever

Many companies anticipate and identify challenges and opportunities in any project. That is a typical first step. However, moving beyond the first step involves change—and change is difficult. For one thing, agile companies (those that thrive) do not have an emotional attachment to the corporate status quo. They are not in love with their product or service. In fact, the less emotionally attached the corporation is to its products, processes, services, etc., the easier it is to change and become a thriving organization.

A thriving enterprise reinvents itself frequently. It not only looks forward five, 10, 15 or more years down the road, but it continuously adjusts its products, processes, and services to meet the approaching challenges and opportunities. In fact, a thriving organization learns to “fail forward” to thrive. That is, developing a perspective around change, challenges and opportunities that are relentlessly solution focused enables organizations to thrive.

Like love and respect for a family, revisiting and remembering the past is good, but not if it stalls your future. Organizations that pre-emptively make the necessary hard decisions, will not only sustain their future, but will thrive in doing so.

Kaizen to the Rescue

Successful organizational improvement initiatives depend on successful follow-up and maintenance. To this end, a very effective continuous improvement approach is Kaizen—“change for the best” or “good change.”

Kaizen is a Lean methodology that includes a set of activities applied continuously to all functions in an organization. What sets Kaizen apart from other improvement methodologies is that it involves all employees in the organization—from the CEO to the front line workers.

And it is easy to apply in any type of organization and to all processes within the organization.

Kaizen originates in Japanese businesses, but its influence since the Second World War is worldwide. The reason is simple: Kaizen humanizes the workplace by involving all employees to spot and eliminate waste in business processes. The process is transparent and inclusive of all those involved in the process: from suppliers to customers to employees to all other stakeholders.

The continuous improvement from Kaizen is a daily process of evaluating workflow and eliminating waste on the spot. In many organizations bogged down with policies, directives, and other “checking” mechanisms, workflow is slow and wasteful. But with Kaizen, eliminating waste directly targets these checking mechanisms to improve efficiency and productivity, enabling a faster workflow.

Another benefit of Kaizen is that usually only small improvements are delivered. Over time, these small improvements add up to big improvements because many (all) processes are involved throughout the organization. And this compound productivity improvement means huge savings in time and money for the organization—systematically replacing inefficient practices with customer value-adding practices is a win-win for all.

Kaizen replaces the command-and-control mid-twentieth Century models of improvement programs. Because changes to processes are carefully monitored by those who directly work in the process, Kaizen’s continuous improvement is sustainable. In addition, changes are typically done on a smaller scale, so it is easier to monitor and sustain improvements in the long term.

While Kaizen events are usually week-long blitzes of improvement and limited in scope, issues identified at one event are very useful in informing subsequent improvement events. This type of “paying it forward” approach of “plan-do-check-act” helps maintain a cycle of continuous improvement in all of the processes in the organization.

What is also interesting, but perhaps not surprising, Kaizen has evolved into personal development principles because of its simplicity. Check out Robert Maurer’s book on this topic: One Small Step Can Change Your Life: The Kaizen Way.

Peak Performers: Not Always Good for Business

Are you a peak performer? According to organizational psychology, the five fundamental peak performance proficiencies are:

  • Awareness of self in all domains
  • Control of effort
  • Visualization
  • Cognitive skills
  • Self-programming

These proficiencies are common to all top achievers. However, a top achiever on a team when all other members are not top achievers may be counterproductive. Why? When one team member is working harder (or less hard) than other members, workflow is hindered. In their book, Learning to See, Mike Rother and John Shook illustrate this concept.

In this graphic, you can see that individual process steps, if not optimized to the system, can create an inefficient system. A system’s parts (or team members), if synchronized, enable the system to run smoothly. This means that no one piece of the system is running faster or slower than it should. What this means for service or manufacturing settings is that workflow needs to be balanced among all individuals if the organization is to function efficiently.

There is a prevalence of advice on managing underperforming employees, but an equivalent amount of literature is not available for managing over-performers. Perhaps this is because over-performance is not seen as a problem. But it can be a problem on teams, especially in a manufacturing setting, but it can also affect service.

I am not espousing that everyone should be an underperformer—far from it! But organizations can benefit if they ensure that their systems are free of waste (especially travel and motion waste), so that their employees can be as efficient as possible. By eliminating waste and creating flow, underperformers and over-performers can work together more productively, creating efficient workflow.

Performance psychology teaches us that workers want to succeed in an organization. By extension, these same workers want the organization to succeed. What is not clear is what motivates workers to want this success.

Regardless, organizations need to remember that their front-line workers are often the face (or voice) of the organization’s brand to the customer. Organizations that provide their workers with tools and systems that enable efficiency will help their workers want to continue to succeed. It’s that simple.