Author Archives: Tom Foster

About Tom Foster

Tom Foster spends most of his time talking with managers and business owners. The conversations are about business lives and personal lives, goals, objectives and measuring performance. In short, transforming groups of people into teams working together. Sometimes we make great strides understanding this management stuff, other times it’s measured in very short inches. But in all of this conversation, there are things that we learn. This blog is that part of the conversation I can share. Often, the names are changed to protect the guilty, but this is real life inside of real companies.

Finding Game Changers

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“They are buying the work,” Tony explained. “They bid the job below our cost, so I know they are not making money. Sooner or later, it is going to catch up with them and they will go out of business.”

“How many projects have they beaten you on, just this year?” I asked.

“More than you can count on both hands and one foot,” Tony replied.

“Tony, you can give me all the excuses you want. Their bid was lower than yours because they have a lower cost structure than you. Their bid was below your cost and there is still profit in the job for them. You have costs in your system that your customer doesn’t value, isn’t willing to pay for and it’s killing your edge in the marketplace.”

Tony’s face was sullen. He had expected me to agree with him. “Look, we have done our layoffs, reduced our inventories. We value engineer every project. What else are we supposed to do?”

“The answer is not some incremental, value engineering, corner cutting line item. You have to go back to fundamentals and look inside your systems, and how your systems handoff, and how your systems impact each other. There are likely three or four game changers, permanent game changers. Your competitor has already figured out some steps that you are unwilling or unable to take. That difference can be counted on both hands and one foot.”

Value Stream of Hierarchy

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From the Ask Tom mailbag:

Question:
As I look at Elliott Jaques model organization, I notice that it is a hierarchy. Over the years, I have heard, or been taught, or read articles about how it is important to flatten out the hierarchy, drive decision-making down to the front lines, closer to the customer. It makes sense to me, but Jaques seems to ignore these new flat organizational models.

Response:
Your observations about Elliott Jaques’ high regard for hierarchy is correct. And these new organizational models really aren’t new. The flat organization, for all its well intentioned “new-ness” is the way things were before there was hierarchy.

Why has hierarchy gotten such a bad rap? Likely, the adverse experience comes from poorly run organizations who blamed their tribulations on something they didn’t understand.

Most people see organizational layers as reporting relationships. Who reports to whom? Who is a direct report? An indirect report? A dotted line report? This view lends itself to command and control and the pushback is predictable in today’s business environment.

But Elliott saw things differently. Elliott was a scientist who spent his time observing the way organizations worked, both functional and dysfunctional. He didn’t make up a bunch of warm and fuzzy theories, he just observed, in a scientific way. He gathered data, documented his findings and arrived at principles he found helpful.

Elliott observed, in functional organizations, that each layer had a Time Span orientation distinct from the next and that, if you drew a picture of those layers, from the longest Time Span goals at the top to the shortest Time Span goals at the bottom, you ended up with a picture of hierarchy. If his findings had been a circle, he would have reported it to be a circle, but his findings supported hierarchy.

As he examined each layer, he found that they solved problems differently. And the way they solved problems was directly related to the Time Span of the goals each layer was working on.

The value he found, in this hierarchy, was the capability of each successive layer to assist the next layer down with their problem solving. This capability created a value stream for problem solving and decision making throughout the organization.

Where we get screwed up with all this pushback on hierarchy is that we see hierarchy as a reporting structure. The real power of hierarchy comes from its value stream. Here is the way Elliott saw it:

Every employee is entitled to have a competent manager with the Time Span capability to bring VALUE to their problem solving and their decision making.

Environment of Distrust

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My next meeting was to hear the other side of the story.

“I hear you are re-thinking your productivity bonus for the production crew?” I asked.

“You bet we are,” Ralph stated flatly. “I know you just met with them. You have no idea what kind of havoc they created. It’s bad enough we had to scrap an entire day’s production run. Then they pulled all the inventory and re-ran everything, so I have a full crew here today with nothing to do. We are trying to get some more raw materials in, but we are having to pay a 30 percent rush charge. And to top it off, they knew they weren’t supposed to work overtime, so they punched out. Now I have someone complaining to the Department of Labor that we forced them to work off the clock. What a mess.”

“See what you started?”

“What are you talking about?” Ralph stepped back.

“That bonus you created,” I replied.

“Nothing wrong with a bonus, I just can’t believe what the crew did, just to get it,” he defended.

“So, you set up an environment of distrust and now you can’t believe how your game backfired.”

“What do you mean distrust?”

“You decided to withhold $100 of their pay, because you didn’t trust your team to do their best.”

Ralph looked puzzled. “No, the $100 was a bonus.”

“No, you were holding $100 of their pay, because you didn’t trust your team to do their best,” I repeated. “You set up the game, they were just playing it and you didn’t like the outcome. By the way, they earned their bonus according to your rules, so you are obligated to pay it.”

Ralph just stared.

Losing Our Bonus

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I was meeting with the production team, and they were a bit disgruntled. Actually, they were pissed.

“We had this big meeting last month. The theme was WHATEVER IT TAKES,” Barbara explained. “And they offered a bonus if we met our goals every day this month.”

I nodded, listening. All the faces were quiet, stone quiet, intense.

“We were up to the last day,” she continued. “As we were counting the last batch, on the last day, we discovered a defect, not just one, the whole batch was bad. We had to scrap everything. We pulled the morning’s production run. Same thing. A whole day’s work had to be re-done, and if we were going to get our bonus, we were going to have to stay on past our shift.”

“Did you tell your supervisor?” I asked.

“No, way. He doesn’t have a bonus on the line, we do. So we pulled another batch of material off the shelf. We had to use every last piece. And the team agreed we would stay over until we finished. You see, they won’t pay the bonus if we have to go into overtime, so everybody punched out while we worked.”

“And?”

“And we got it done. Made the quota. Quality passed. High fives all around. At least that’s what we thought. Next morning, though, you would have thought we had set fire to the place. We all got yelled at, and now we hear they are re-thinking our bonus.”

Ten Scholarships

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Monday, we kick off our next series in Working Leadership Online, Time Span and Effectiveness. This subject area looks at the roles we create for our team members and how we go about making managerial judgments on effectiveness. If you are new to the concepts of Time Span, you will never see your team the same way again. It will help you make your decisions about who will play what role by asking three critical questions.

We are offering ten scholarships to this program. If you are interested, please respond to Ask Tom.

A Matter of Decision

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Thanks to Gil Herman for inviting me to spend the day with his Vistage KEY group in Chicago sharing the research of Elliott Jaques. Here is a question from yesterday’s session.

Question:
How do you implement the concepts of Time Span, and the corresponding layers, in an organization where there is very little structure and very few managers. Everyone seems to be doing everything.

Response:
This is a dilemma for most Stratum I and Stratum II organizations. How do you begin to create structure where there is no structure?

This is not a question of implementation. This is a dilemma because it is a decision. Before you can implement, you have to decide, and the decision has to stick, that means commitment.

It’s like being in love. When you are young, you think being in love is a feeling. Later in life, you understand that being in love is a decision. Implementing the principles of Time Span is a decision.

And here are the details of that decision. The choice is to continue to live with the chaos that comes from everyone doing everything. And the reward for free-wheeling chaos is more chaos. The organization will remain, stuck, in its own muck.

The other side of the decision is to change. Stop the chaos, organize roles, define methods, create systems. Easy to say, hard to do. But it all starts with a decision.

Managing Effectiveness

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“Why now?” I asked. “Why this sudden interest in Performance Management?”

Patricia had pulled a file with the job descriptions for her team. But my question stopped her. “I just feel like things are coming back. I look at 2010 and see some upside coming our way. I can’t go back to the way things were before,” she stated flatly. “Some things have to change around here.”

“What changes do you have to make? What do you have to do?” I asked.

“Some real work,” she replied. “I have to sit down and really think about what I want my team to accomplish. These job descriptions describe, but they don’t talk about goals. I feel like I need to start over, from scratch.”

“Starting over, really looking at the productivity you need from each role in the company is a big job. Are you sure you are up for that.”

Patricia nodded slowly. “It’s a matter of necessity.”

Next Monday, we kick off our next series in Working Leadership Online, Time Span and Effectiveness. This subject area looks at the roles we create for our team members and how we go about making managerial judgments on effectiveness. If you are new to the concepts of Time Span, you will never see your team the same way again. It will help you make your decisions about who will play what role by asking three critical questions.

We are offering ten scholarships to this program. For those who are interested, please respond to Ask Tom.

Did I Just Say That?

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Patricia settled in to work on the first dilemma of her Performance Management system, Where to Start.

“Your first gripe about that HR website system was that it wasn’t relevant to the roles of your team. How are you going to change that? Not to make it more relevant, but absolutely relevant? What are you going to hang your hat on?” I asked.

“Instead of a generic form from the website, I was thinking about basing the system on our job descriptions.” As the words came out of her mouth, she scrunched her nose. “Did I just say that?” she realized.

“Yes, what’s wrong with using your job descriptions as a cornerstone to your Performance Management system?”

“I am not sure our job descriptions are much better than the stuff we got off the website. We haven’t updated them in a couple of years and no one really looks at them.”

Nothing Really Changes

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Patricia wasn’t happy with her company’s Performance Appraisal system. She was clear about the reasons why.

  • One size appraisal forms don’t fit. They are often irrelevant for the role under review.
  • The suggested rating criteria are general, vague and can be interpreted in different ways. The discussion is centered around what the rating criteria means or doesn’t mean, instead of what happened.
  • The Performance Appraisal system is centered around an annual discussion, designed to cover events ranging across an entire year, without any supporting documentation other than a person’s memory.
  • The Performance Appraisal is a backward looking process.
  • Most actions that come from the Performance Appraisal discussion are corrective in nature. Fixing weaknesses instead of building on strengths.
  • After the Performance Appraisal discussion, nothing really changes. Any impact, good or bad, usually fades within a few days. Maybe after a few minutes.

I congratulated her analysis. “Job well done. Most people won’t sit and write these things down. With this analysis, we can make some headway.”

Patricia smiled. “Thank you.”

I smiled. “So, now the work begins. Your challenge will be to take each of these reasons and create something new. Your new Performance Management system has to address each of these issues, especially the last one. I want to see something that truly creates meaningful change.”

Patricia had some work ahead of her.

Bored With This One

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“I talked with some of the other managers,” Patricia explained. “No one likes our Performance Appraisal system.”

I nodded. “Tell me more.”

“Here’s the thing. Sure, we get together informally on a daily basis and talk about what is going on. But to sit down formally once a year to evaluate someone isn’t very productive. Even if I could remember something that happened earlier in the year, what’s the point. It’s water under the bridge. And most of the scoring questions are about things that I don’t think are relevant for most of our positions.”

“Then, why did your company select the format from this website?” I asked.

Patricia smiled. “Because no one wanted to take the time to really think this thing through. No one wanted to volunteer to create something more effective. Over the years, we have had six or seven different evaluation systems. And every couple of years, somebody says they are bored with this one or that one and we change. No one has ever liked any system we have ever had.”