August 20, 2006
Author's Note: This article is a supplement to "Why settle for good enough?" which appeared in the December 2002 issue of TPJ-The Tube & Pipe Journal, page 42. "Why settle for good enough" was based on a study of 24 Midwestern tube and pipe fabricators and reviewed why some where highly profitable and others were only marginally profitable. That article resulted in many questions from TPJ readers asking for strategies and tips on developing the caliber of employee enthusiasm and commitment that helped propel some tube fabricators to high profitability. This article was written in response to those questions.
How can the managers of tube and pipe fabricating companies develop the level of employee commitment and enthusiasm that sparks high profitability? The key to involving employees meaningfully in an operational improvement plan is to communicate effectively to them their roles in it. Many executives try, but few accomplish the task.
Shorn of all the touchy-feely jargon that infests modern employee communications like a swarm of locusts overwhelming a bumper crop, the purpose of employee communication is simple: to share information in ways that motivate employees to improve all aspects of their performance, resulting in higher company profitability.
Two types of communication exist: upward and downward. Without both, a company's overall communications effort will be ineffective and its employees demotivated.
Downward communication consists of verbal and written methods of informing employees about their company, its performance, and their own performance in terms they can comprehend.
Macrocommunication. Big-picture communication, or macrocommunication, is used to share information about the entire plant's (or company's or division's) performance. This type of general information typically is communicated to large groups of employees rather infrequently, usually because productivity, quality, and profitability statistics are not tallied very often.
While it is fine to show employees the big picture, these overviews usually do not tell workers what the big picture means to them specifically in their departments or what management specifically wants them to do about the performance in their areas.
Microcommunication. Detailed communication, or microcommunication, is more frequent because it normally is delivered to smaller groups of employees by lower-level managers. To be effective, these sessions must explain to smaller groups (shifts, departments, or single production lines) just what the big picture means to them in their areas and specifically how management wants them to improve their operations.
Communication is effective only when a company keeps performance data (such as quality evaluations and customer complaints) on a micro scale by work area and reviews the information with the work force daily, rather than just at the end of the month. At month-end, how many workers can remember the causes of good or poor customer service, productivity, or quality levels that occurred early in the month? Employee performance easily can be measured daily, and workers must receive feedback on it constantly.
To create a sense of unity, microcommunication should focus on achieving two or three simple-sounding goals, promulgated as key to the company's success. Company size makes no difference. Jack Welch did this effectively at General Electric Co., just as Tom Miofsky does it at MetalCraft Enterprises Inc., a metal fabricator in New Haven, Mo. Successful communication is based on incorporating several general and easily understood goals into a single, overarching theme designed to inspire all employees to circle the wagons for a battle against "them." "Them" might be domestic competition, imports, or whatever management perceives to be a threat to the organization's future.
Microcommunication usually is delegated to specially trained midmanagement communicators or to lower-level supervisors familiar with the work and problems of the smaller employee groupings.
This means that upper management must give lower-level managers broad-gauge information broken down so that they can explain its relevancy to small groups of employees in face-to-face microcommunication. Productivity, quality, or customer service statistics, for example, are meaningful and something most workers understand.
A company's downward communication program should start with midmanagers and first-line supervisors. Once they have bought into the communication process and feel they are an integral part of the organization, the supervisors and managers can be expected to roll it down effectively to the lower levels.
The information passed along in these talks should be reinforced by written communication. At the minimum, this should consist of an easily produced weekly or monthly newsletter and augmented with frequent bulletin board notices.
Many executives say that few employees read notices on bulletin boards, but that's usually because the boards post outdated information presented in a dull fashion. Filling the boards with topical, timely company information about new orders, employees' productivity, quality, or safety can go a long way toward increasing employee interest in them. This creates much more employee interest than inspirational posters of wolves and whales or doves and daffodils.
Skillful use of communication also gives a company the opportunity to recognize employees. This covers individual milestones (birthdays, anniversaries, service awards, diplomas, training sessions completed), as well as at-work accomplishments (attendance, safety, productivity, quality, patents, creativity).
Recognition programs are important because they convince workers that management is interested in them and sees them as real people with interests, ideas, and aspirations for future advancement.
Executive time is well-spent on downward communication if the messages give honest reviews of how the company is doing, outlines of future plans, or discussions of impending decisions. However, downward communication is useless unless it's coupled with an upward communication program.
Effective upward communication is a process by which employees' ideas, responses to their working environment, or critiques of the plans and ideas announced by managers may be used to find ways to improve an organization's overall performance and profitability.
Upward communication is listening. It sounds simple, but it can take years of experience to understand what employees mean by what they say. Many companies start their upward communication efforts with outside experts, who then train internal staff members to carry on after their project is finished.
Years ago a trade magazine ran an article about a tube fabricator that won an Employee Communications Program of the Year award. A quick look at the company's activities suggested the effort was simplistic, but a closer look showed a key fact: To implement the program, company executives, managers, and supervisors all spent about 10 percent of their total time at work in dialogues with employees—telling them what was occurring, what current plans were, how they might be implemented, and then listening to employee gripes and complaints about individual problems, as well as their ideas and brainstorms for ways to accomplish company goals.
Not surprising, the more executives listened and responded to worker suggestions, the less the employees complained and the more they presented ideas and suggestions that led to higher productivity and better product quality.
Upward communication from employees gave executives the ability to make better decisions, for the simple reason that they had better information on which to base them.
This is in contrast to executives who spend their time sitting at their desks, staring at their computers. The most effective leaders of World War II—Patton, Rommel, Abrams, Guderian, Spruance, Yamashita, Balck, and Burke—led their forces from the front. The most effective executives do the same, obtaining information from the battlefield before making command decisions.
Of course, some employee responses are wrathful. They complain about dirty restrooms, inadequate microwave ovens, and poorly equipped breakrooms. Seemingly trivial conditions like these almost invariably send powerful signals to employees of how they are perceived by management. Dirty restrooms and obsolete or neglected amenities show employees that their employer does not care about their well-being; in return, employees will not care about their employer—or his efforts to improve quality, productivity, or anything else.
The flow of two-way communication can be reinforced with financial rewards for working smarter, rather than harder, through a gainsharing plan. Gainsharing is a self-funded, pay-for-performance program in which all employees work to improve performance. Improvements are quantified and given a dollar value. The value, or gain, is split evenly between the company and employees. So for every dollar earned by employees through improved performance, the company saves the same amount.
Properly designed implemented plans can lead the way to employee performance increases from 17 to 22 percent annually through lower labor costs (less overtime at premium pay), reduced material expenses (less scrap and rejects), and better safety (lower workers' compensation costs).
Successful two-way communications programs are not started because executives want employees to feel good, or because the executives have nothing else to do with their time or money. They are implemented because executives realize their workers are not mindless automatons, but intelligent people with a direct stake in their company's success and realistic ideas for improving operations. Implementing employees' ideas can do two things: Establish positive employee relations and improve productivity. It makes no difference if the company is big or small, unionized or not.
With business conditions becoming more competitive, isn't it time for you to ask your employees to help improve your company's productivity and profitability?
Woodruff Imberman, Ph.D., is president of Imberman and DeForest Inc., 1740 Ridge Ave., Evanston, IL 60201, 847-733-0071, fax 847-733-0074, firstname.lastname@example.org, www.imbdef.com.
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