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Maximizing People Systems in a Lean Transformation


It’s a given that lean transformations emphasize worker participation, but too often the role of the human resources organization is overlooked.

“It surprises me how little folks actually think about the people side of lean,” says Kathi Hanley, people systems practice manager with the Murli Group and the architect of their people-related curriculum. “They don’t really step back and look at all the components of the management system and ask what needs to change in their HR practices to drive the lean transformation.”

That can be a costly mistake, she adds. “When I worked at Toyota, I saw how human resources plays an essential role in the Toyota Production System. It became clear to me that a big gap exists in many organizations between lean thinking and the HR management systems.”

Employee selection, compensation, promotion, and retention practices -- all activities that typically land in HR’s wheelhouse -- need to support the transformation to a lean enterprise, Hanley says. Instead, these systems tend to be based on traditional personnel beliefs and practices that often fail to promote the kinds of thinking and practices that support lean.

“You want behavior to change to bring about a successful lean outcome, but too often we see traditional organizations continuing to provide incentives for people not to change,” says Joe Murli, president of the Murli Group. He and Hanley are LEI faculty member who teach lean management system topics including the People Systems workshop.    

For example, incentive programs that encourage employees to maintain high production volumes, boost revenue, and get ahead through individual effort may work at cross-purposes to the behaviors needed to achieve a lean transformation. “Companies need to encourage team-based behavior to support the learning organization,” Murli adds. “All the things an organization does should be aligned with the behavior we want to see. Your people systems should directly support the kind of team-based, problem solving culture we want to achieve.”

Lean HR Competencies

The Hanley-Murli team provides workshop participants with an understanding of how people systems integrate with the other elements of lean management to foster a culture of continuous improvement throughout the organization. One of its goals is to help organizations develop an employee life cycle-focused approach to HR management. The employee life cycle approach begins with attracting and on-boarding individuals into their new roles or positions and continues through engagement, inspiration, and retention of employees. This focus is designed to promote development of lean competencies such as problem-solving and teamwork.

But adapting traditional HR management systems to support lean isn’t easy. For instance, Murli says that when he works with a client on a lean transformation, a key area of focus is the organization’s core competencies. As is often the case, these core skills tend to be wholly functional, instead of the kind of team-oriented abilities that support lean success.

Hanley and Murli teach workshop participants to define the gaps between the organization’s current competencies and those that need to be developed for lean success. “Once we have defined the gaps, then HR has certain tools at its disposal to begin closing them,” Murli says. Among them are:

  • Align specifications for a new job with a set of lean behaviors;
  • Reorganize the HR structure to support the model of leader as teacher;
  • Keep lean behaviors in mind when assessing and selecting the right person for a job;
  • Emphasize the applicant’s potential to fit in with the team in the employee selection process;
  • Establish a new definition of what good work is that incorporates lean behaviors;
  • Include how well a person engages with and understands their role as part of the team in their performance evaluation; and
  • Modify the promotion process to support lean behaviors such as coaching and teaching on the part of supervisors and managers.  

For instance, at O.C.Tanner, a Salt Lake City-based manufacturer of employee recognition systems, job applicants are screened based on their problem-solving skills. Similarly, at automotive airbag manufacturer Autoliv’s 1,500-employee plant in Ogden, Utah, management places a heavy emphasis on developing people as problem-solvers and lean coaches. In addition, new hires at Autoliv receive instruction on APS, the company’s version of the Toyota Production System, as well as an understanding of Autoliv’s primary goal of building quality products.

Although developing employees is essential to any lean transformation, traditional HR management tends to place little emphasis on managers’ performance as teachers and coaches. “How well managers are developing people in the organization is very important in lean,” Hanley points out. “But traditional compensation systems typically reward management only for bottom-line results. Managers should be rewarded for their ability to execute talent management and development. As with everything else in lean, we need to think about people systems in a different way.”

When working with a client on a lean engagement, Hanley and Murli typically will map the organization’s strengths and weaknesses. Then they identify which competencies need to be developed to ensure a successful lean transformation. These often include:

  • a quality first orientation;
  • an emphasis on customer service;
  • a team orientation; and
  • more effective communications.

Workshop participants learn how the most critical components of people systems affect lean behaviors and competencies. “One of the big contributions this course makes to any lean transformation is the focus on these competencies,” Murli says. “That, and the need to involve HR early in the lean transformation.”

Enlisting HR’s participation in lean from the get-go is critical. Unfortunately, most companies tend to only seek HR’s help when it’s required to effect a change in policy or job descriptions. “In my personal experience, it’s the distinct minority of organizations where the HR organization is fully engaged in the lean transformation,” Murli says.

And it’s not only the younger, less mature organizations that fail to engage HR up front when embarking on a lean journey. “I expect that in small, entrepreneurial companies, but it surprises me to find that is the case in many medium- to large-size companies,” Hanley observes.

Regardless of the size of the organization, leaving HR out of the lean loop until the eleventh hour can prove to be a crippling oversight. “HR can help, but it also can hinder the changes to new ways of doing things,” Hanley says.

“You can’t get there without making sure that your people systems are aligning with lean,” Murli adds. “The process of moving the organization from A to B cannot go well without changing the people processes. That’s because the lean management system falls apart without appropriate people systems.”

Hanley says this point can’t be overly stressed. “HR needs to be involved from the beginning, because HR is the keeper of the values of the organization,” she adds. “HR holds the keys to the People Systems car.”

Both HR professionals and senior leaders and professionals from other organizational disciplines -- organizational design, organization effectiveness, change agents, process engineers, and lean leaders-- are encouraged to attend the People Systems workshop.

Take the Next Step …

Align HR policies and practices with your effort to create a lean culture of continuous improvement. Register for the in-depth, two-day workshop People Systems: A Component of the Lean Management System.


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  • People Systems: A Component of the Lean Management System
    This two day course is a critical examination of the policies, practices, and systems that incent the work force to behave in a predictable manner consistent with desired outcomes. It also deals with methods of realigning those incentives to encourage the behaviors we seek in a Lean thinking organization.