February 7, 2006
A study of executives at several tube and pipe fab shops revealed that the executives and managers are ensnared by four potential traps: talking instead of doing, failing to see the big picture, avoiding listening, and failing to communicate.
Editor's Note: This article is a continuation of "Why settle for good enough?"
What do you see in the bookstores these days? You see rows of weary shelves, some bending under the burden of books revealing the secrets of self-help swamis, and others twisting under the turgid tomes of successful executives telling how their management miracles spurred success, increased market share, and, in a moment of triumph, enabled them to decipher the Da Vinci code. Those of us with masochistic minds further torture ourselves reading similar tales in trade magazines, trying to learn the success secrets of some executive or another who has just received a Man of the Year award.
But few pipe and tube fabricators qualify for Dun & Bradstreet's top-quartile financial ranking in the industry. We rarely read about fab shop executives' struggles with today's typical problems of slow-paying customers who strain their working capital, demotivated workers who produce at a snail's pace, or those whose new CNC benders take months to get working properly. These executives are frustrated by their company's system, which forces them to work incessant hours with little to show for their long labors. Few books or articles discuss these executives, their problems, why they occur, or what they can do about them.
"Why settle for good enough?" was a study of 427 midsized manufacturers, 24 of which were steel pipe and tube fabricators. Only four of these fabricators were in the top quartile of the industry, as measured by inventory turns, scrap and rework, employee turnover, on-time shipment rates, and return on sales. The result was many questions from TPJ readers. One way or another, they asked, "What are the industry leaders doing that we aren't doing?"
Their interest led to follow-up interviews and management surveys with most of the 24 fab shops originally studied. Eschewing the usual double-domed jargon that grows in the groves of the academe, I found four common traits among their executives leading to four traps that seemed to account for the lackluster results of their companies. These traits are traps that stifle innovation. Identifying the traps is the first step in getting free.
Of all the management hallmarks of executives in those fab shops mired in the middle of the financial pack, the first and most common trait was the tendency to talk instead of act. This was almost universal.
Managers and executives face decisions daily. Most are minor; but occasionally they are major decisions. Not surprising, many managers and executives finalize such decisions usually after discussions with other executives. Should we start a second shift or continue all production on one with heavy overtime? Will our sales volume grow enough to pay for a lights-out manufacturing line that integrates cutting, forming, and welding with automatic loading and unloading, a major investment needed to lower our per-unit costs to meet China prices? What should we do to reduce employee turnover? Should we try to expand our customer base or cull it to just the most profitable ones? And which ones are the most profitable anyhow?
Invariably, one hallmark of executives of struggling tube fabrication shops was their reluctance to reach a firm decision, even after all the facts were in. Caught between their entrepreneurial instincts to try new methods and their managerial desire for stability, these executives continued reviewing the problems at hand, talking rather than doing. Because of their dilemma, they often regarded talk as a form of action. Talking about a problem was less threatening than actually doing something about it.
Why does this occur? It seems that despite whatever entrepreneurial streaks they might have, some executives do not differentiate between talking about a problem and taking action, especially if it means new approaches to an existing problem. Talking requires no change in behavior, no adjustment of routine, no alteration of procedure, no risk to anyone or their status. Since change is perilous and may lead to unforeseen consequences, talking rather than doing seems to be a pattern among executives in the less successful companies.
The second trait exhibited by executives in the less successful companies was a failure to see the big picture and failing to understand how their activities contribute toward reaching, or not reaching, big goals that lead to strategic success and higher profitability.
Many able supervisors get promoted to managerial positions because of their attention to detail. A good number of managers have risen to executive status because of similar diligence. Unfortunately, after rising to executive status, many managers do not grasp the notion of what they should be doing, and they never let go of the details they are familiar with.
These executives have never surrendered their comfort of handling minutia and appear reluctant to delegate the details that now should be left to subordinates. As a result, they spend long hours dealing with the mountains of minutia that now fall under their newly expanded spheres of authority. Faced with this mass of familiar tasks, they do not have time or inclination to focus on major issues facing them. They cannot realistically assess how their day-to-day activities contribute to the overall goals they need to reach for their company to grow.
Consider the newly promoted general manager of a Missouri job shop, a fabricator that bends and cuts tubing for a variety of light industries, including outdoor furniture and electric lawn and garden tools. The company was profitable because it could produce to and ship customer orders within three to four weeks. As a result, it could price its products rather steeply.
When the company was smaller and the newly promoted general manager was plant manager, it made sense for him to spend most of his time on the floor, checking production schedules, reviewing customer blueprints, and helping design programs so changeovers on the benders were made quickly.
As the company grew and he was promoted, the new GM needed to oversee and coordinate the activities in other areas rather than worry about just the benders. Programming the bends for a line of aluminum lawn-chair frames paled in comparison to coordinating the different functions that made for manufacturing efficiency. His new duties required overseeing purchasing to make sure enough inventory was on hand, coordinating the purchasing department's efforts with those who wrote the programs for the CNC equipment, making sure the quality assurance manager paid attention to material handling (forklift drivers bent and dented many loads of tubes), and checking training efforts so newly hired shop floor personnel could learn how to flare and deburr tube ends. All of this was required so the company could deliver quality product promptly to customers throughout the Midwest.
But the general manager was still spending six long days a week in the plant, worrying about bending dies and equipment maintenance, while subordinate "managers" ran around trying to expedite one hot job after another, depending on the decibel level of customer screams. Average deliveries dropped to seven weeks, and shop floor efficiency fell to less than 65 percent with no end in sight.
Executives like this one have not learned to differentiate the big-picture, strategic goals they need to achieve from the activities that should be delegated to subordinates to accomplish the goals.
This trait is easy to identify and, with some effort, correct. The first step is acknowledging the trait; the second step is attending management development sessions geared to overcome it. Most managers can be taught how to list activities, prioritize goals, and rate the contribution of the former to the latter. This process allows them to use their time as effectively as possible in those activities only they can do to reach the strategic achievements needed to meet company goals.
The third trait executives in less successful companies exhibited was the inability to listen to subordinates. As was pointed out in "The ups and downs of employee communication" (TPJ, June 2004, p. 26), an active listening program of upward communication from employees to managers, and from managers to executives, enabled all to make better decisions, because they had better information on which to base them.
The most effective leaders of World War II ... led their forces from the front. The most effective executives do the same, obtaining information from the battlefield before making command decisions.
The more successful executives cited in the survey developed communication systems for listening to subordinates to discover what was actually occurring on plant and office fronts. This allowed them to coordinate the efforts in the different areas they were responsible for, thus achieving a smoothly running operation. What is being done in engineering to ensure the tube bending dies jibe with customer blueprints for lawn-mower handles so manufacturing can produce them promptly and accurately? Does manufacturing know how to use the productivity data generated daily by the latest enterprise software so the causes of poor output can be identified and corrected? Does the company experience a disconnect among the purchasing, sales, and production scheduling departments that results in many blown shipping dates? Just who is doing what?
One executive of an Ohio welded steel tube mill was troubled by high defect rates in its forming department. Defects of the mild steel parts climbed steeply, while customer shipments fell further and further behind, despite all the horsepower he was throwing into the quality assurance department. A management audit of plant supervision and quality assurance technicians revealed that despite all their resources, plant employees had never been taught the importance of tracking the weld seam by magnetic flux methods. As a result, tool damage was at an all-time high in the piercing process, and customer shipments were becoming more and more delinquent.
If the executive had questioned supervisors about the high downtime in piercing, or just how, when, and where new employees were trained, the defect problem could have been cured long before despairing customers sought other suppliers.
Many executives in the survey assumed that their subordinates understood their assignments. These executives did not bother to check to see what they assumed was occurring on the plant floor was actually taking place. Many struggling executives in this follow-up survey often dismissed as mere "gripes" subordinates' suggestions for ways to improve operations. When employees point out shortcomings in equipment, materials, and policies, they are trying to be constructive. Their comments often suggest ways to improve productivity and quality, with resulting cost savings. Profits are hurt when executives are out of touch with the realities their workers face daily.
The fourth widespread executive trait in struggling companies was a failure to communicate effectively to subordinates the need to achieve difficult-to-reach goals. These executives ordered things done, rather than reiterating tirelessly to subordinates why the goals needed to be accomplished and asking for their cooperation in meeting the required objectives.
One West Coast tube producer had 75 employees making tubes for various industrial end users. A finance manager, eager for promotion, wrangled a transfer to be plant manager when the current one retired. He figured a bit of profit-and-loss responsibility would help him reach the executive suite. Upon taking his new job, the ex-finance manager tried to impress the president with his managerial skill by concentrating on cutting labor expense in the face of rising low-cost competition from the far side of the Pacific. He tackled the problem of making all employees work bell-to-bell to increase output and cut per-unit labor costs.
Not bothering to explain to the union leadership or his employees why the job-saving bell-to-bell work was needed, the new plant manager posted a notice that all the cutoff presses must continue to hum until 10 minutes before the shift was over. Because the union contract gave workers a 10-minute wash-up period at shift end, many employees complained, saying they had no time for maintenance—checking the mill coolant for cleanness and checking oil filters—before washing and changing from uniforms to street clothes. All this was impossible in 10 minutes, they claimed.
Soon four senior operators were disciplined for shutting down early. The union filed a grievance for them. In the meantime productivity dropped. This led to a fiery query from upstairs.
If the new plant manager had realized that the union leaders were just as afraid of losing their jobs to competitors as he was, a meeting with them to discuss the lost-time situation, to outline the need for higher output, and to make the minor concessions to reduce downtime on the cutoff presses would have ensured cooperation and higher production, rather than expensive conflict.
While no single executive in these companies exhibited all four traits described, many of them seemed to be caught in at least one of four traps. First is an organizational climate that emphasizes stability rather than innovation, leading to talk instead of action. Second is an inability to differentiate between activity and effectiveness, which leads to long hours of work with frustratingly little result. The third trap is a lack of a communications system, which leads to an inability to bring organizational dysfunctions to the surface, let alone resolve them. The final pitfall is being unaware of the need for constant and creditable communication, so subordinates understand and cooperate in meeting the strategic goals the company needs to achieve.
Because of these four traits and traps, inertia triumphed; frustration reigned; and the companies' productivity, profitability, and market share often suffered as a result.
Executives with any of the four traits can be identified by their performance in management development courses that address their individual company's specific needs. While the investment in such efforts is greater than buying a canned program off the Internet, the payoff is greater too. Investing in a no-nonsense effort to determine and remedy the causes of suboptimal performance is a serious decision. But given the competitive pressures the U.S. tube and pipe industry now faces, executives everywhere ought to be asking themselves this question: "Am I going to keep hoping to boost the bottom line, or am I going to get out of this trap and do it?"
TPJ - The Tube & Pipe Journal® became the first magazine dedicated to serving the metal tube and pipe industry in 1990. Today, it remains the only North American publication devoted to this industry and it has become the most trusted source of information for tube and pipe professionals. Subscriptions are free to qualified tube and pipe professionals in North America.