How can firing people be part of developing people?
Can you explain how you reconcile the principles of "developing people" and "firing people," especially in light of the challenges illustrated in your book The Lean Manager? Why, on the other hand, does Toyota try to keep its employees as long as it can?
Well, this is an excellent question, and a thorny topic, so let’s think deeply and discuss it step by step.
First of all, no company, not even Toyota, assumes that everyone will fit with its management style. Toyota does try to retain people as long as it can. But so do most companies. And contrary to popular belief, Toyota never actually promises employment for life. What it does that is unusual is make a commitment not to fire people as a key value, and to be especially careful about this regarding capacity problems. In other words, reducing headcount to compensate for volume drops is not an acceptable lean answer. Instead Toyota will address other root causes.
In terms of how individuals adapt to a company, let's go to the gemba and follow a new hire. Typically, any new employee follows a fairly predictable emotional pattern. First, the honeymoon: they're pleased to have been hired, and everyone is pleased to see a new face, so all is honky-dory. In act two there is a disenchantment period as the company's values and habits clash with the new person's values and habits. This we can observe particularly well when someone gets poached out of Toyota to work in a traditional system. This is often a difficult period both for the company, and the newbie. At some stage, some incident will come to a head, forcing the new person to bow to the company culture, adapting his or her attitudes and behavior to the company - or resign in anger (or be pushed out). After that, the emotional conflict will reach a state of equilibrium. The person's motivation will have climbed to a peak at first, then crashed to an all time low, and then the person will either exit or continue at the company and motivation will go back up and stabilize.
What happens in a lean transformation as described in The Lean Manager? In this story we see a new boss plow forward with lean habits and values. He insists that the organization adapt to his way of working and not the other way around. Not surprisingly, matters don't always go smoothly.
The First Hurdle
Be warned: lean will cause conflict. Let's visualize a company in an industry far from hotbeds of lean fanatics. Say they make concrete elements for construction projects, and have huge yards full of inventory of pre-cast elements, with a few large pieces of equipment to make them. A new general manager who has been doing lean for 20 years comes in to change how things work. What's going to happen?
First, the new boss is likely to introduce kaizen events and rudimentary visual management on the floor right away. That's because lean emphasizes that people try something first, and discuss it second. It's a way to force the pace of learning, and can be a rude shock to people who are used to discussion first, and then - maybe - trying it out. So the first confrontation is likely to be about (1) the capacity of people to do what they're asked although it's different than what they're used to and (2) the ability to learn from this new activity. Some people never pass this first hurdle.
In our concrete elements company, the initial experiments could very well include reorganizing the yard to establish visual stock control (we're talking massive elements which can only be moved by forklift), implementing five S in the production areas (this in a dusty, wet environment) and posting key indicators. It could also mean doing kaizen exercises with workers who have never done so before. Not surprisingly, first attempts won't go easily, and not surprisingly, most managers will be reluctant to throw themselves in that particular pool of cold water. Still, that’s the name of the game.
Bear in mind that while some people might resist a method they find high-handed, they may be very good at what they do. On the other hand, others will find it easier to just say yes, but not be particularly good at their jobs. So, if possible, withhold judgment about people at this point. The only ones to consider parting with are those who are neither good at their job nor willing to try the lean exercises. At some point you will have to part ways. Remember that you are not simply removing obstacles to progress - you are removing the damage that these people have on others' goodwill and motivation at a critical stage where everyone is running on hope but little actual experience.
At the next stage of the transformation, most managers will have agreed to do some kaizen and have some elements of workplace visual management in place. There will be a great deal of variance in terms of performance and process improvement. The biggest factors separating those who show progress and those who don’t are the common sense of the manager in evaluating possible options to improve and their individual capacity to involve and engage people and take them along. Leadership, so to speak. What happens to managers who are not making progress? They’re in a tough spot because they have agreed to use the lean tools, but are failing to use them smartly. In this case, your job is to help them succeed in getting it right.
Bear in mind that everything goes wrong, all the time, in a lean environment. Good lean plants are more effective and more efficient - but they don't appear this way to the naked eye. That's because systems force problems to surface. If there is enough healthy tension in the shop floor management system you'll see problems everywhere: boxes without kanban cards (because the batch size is really tight), bad parts in quality red bin areas (because every bad part is isolated and investigated right away), stopped lines (rather than continue with a problem) and so on. As a manager, performing in a lean environment means being able to keep people engaged and focused in a workplace that sends "please take care of me NOW!" signals all over the place. Truly, this is not for everyone.
As you continue with a lean implementation new challenges will emerge. After managers have learned to use lean tools to improve their processes, they will inevitably fail at the next stage: developing their subordinates' ability and initiative to take ownership of the lean tools. This typically happens when a manager becomes proficient at process and quality improvement but loses sight of people development. His people learn to respond quickly to whatever he's focused on, at the cost of abandoning the broader system. This type of manager hasn’t developed the leadership strength of seeing the whole. Now, this is a person you most definitely want to keep yet will probably lose. This person has shown a gift for getting things done, and will probably be lured to an environment where he can score more easy gains without having to deeply change his personal beliefs.
Remember, when it comes to training and retaining skilled lean managers, Toyota has been at this game much longer and understands it much better. They are scrupulous when it comes to hiring people. The number of people they interview just to fill one position is absurdly high compared to common practices. Toyota still loses a lot of middle-managers outside Japan. This is not because they're weak managers, but because they get poached, or find the strain of working for Toyota exhausting, or they get frustrated with the slow progress moving up the ranks (in Japan, many stay within the Toyota Keiretsu but move to suppliers).
In order to avoid a mismatch between a lean culture and the kind of managers we seek, what would be the broad criteria to recognize lean-oriented people who you don’t know well? In general, we can outline three main traits:
1) A spirit of self-development: lean is ultimately a learning system. Teachers can teach, but students need to want to learn. The first thing to look for is whether the person shows a penchant for autonomous self-development. This is easy to spot because they'll talk to you about instances where they were wrong yet persevered until they finally got better at it.
2) To be at ease with getting things done in uncertain conditions and not giving up easily. This is harder to see without seeing the person work, but easy to test. Set a challenge for the person and look for whether they quickly turn the problem into practical things to try (tomorrow, without investment) and whether they keep at it even though their first tries don’t work out as expected.
3) The knack of working with people (and getting them to work). They must be able to get things done while accepting other people's input and get them engaged in paying attention to whatever is at hand as well. This is different from just getting along, and, ultimately can be nurtured in true lean leadership, but is important from the start. Unfortunately, this is hardest to spot from the outset, and the most challenging to teach people as they develop.
Note that this list doesn't talk about getting results, or planning and commanding, nor even communication or networking. At the end of the day, lean is a knowledge development approach to business, and accordingly, the most prized character traits are the aptitude to develop oneself and then coach others.
So, how do you reconcile "develop people" and "fire people"? The crux of the matter is that to develop people they have to want to develop themselves. There's no getting around that basic fact. There's no room for people who don't show this quality in a lean organization. Some individuals may be smart, proficient, and sympathetic, yet refuse any attempt at self-development. They will not practice kaizen. They will not self-measure. They will not accept that they're wrong half the time - just like anyone else. Sooner or later, you’ll have to let them go. Keeping such people within a lean environment is both harmful to the others and to themselves because it makes them miserable. Whether you actually fire them or whether they leave is a matter of circumstances more than anything else (more people leave in The Lean Manager than actually get fired).
Another way of looking at this is that when you're committed to the lean way, you aim to develop everyone, and that you will fail to do so. Firing anyone counts as a failure, yet these are to be expected. Hopefully, you will learn from every one of them so such situations happen less frequently in the future. Firing or losing anyone reveals the gap with the standard, which would be to develop every employee. Time for kaizen on our own leadership abilities.