“I am not sure where the problem is,” Gerald said. “He has been with the company for eight years, so he knows the ropes, how things are done, what the culture is. But ever since we promoted him four months ago, he has been different.”

“In what way,” I replied.

“Well, he seems dedicated enough, shows up early, stays late, though, during the day, I can’t seem to find him.”

“What about his performance. How effective do you think he is, based on what you expect from his position?”

“That’s the thing,” Gerald sighed. “I don’t think he is effective, but you can’t ever pin him down to find out what the problem is. His department never delivers on time, and when they finally do, it’s incomplete. They always have to scramble to finish the job.”

“What problems does that create?”

“Morale, for one. His team’s enthusiasm is pretty low. They complain about having to do the same job twice, or get halfway through something and have to stop, tear it down and start over on another ‘more important’ project.”

“And?”

“And, it’s having an impact on customers. Some of the phone calls are getting all the way up to me. When they get to me, something is wrong.”

“So, what do you think is happening?” -TF

“I need you to make a phone call,” I told Corina. She looked puzzled, feeling guilty about something she wasn’t sure of.

“There’s a lesson in this,” I continued. “It’s a counterintuitive lesson that most people and organizations don’t learn until it’s too late.”

“So, you are talking about the difference between the company’s goal and my goal for the plant?” she asked.

I nodded, “Yes, the difference. There shouldn’t be a difference. But no one sat down and punched through all this, so there could be agreement. In fact, I would bet that you never sat in a meeting to truly clarify the goal for the plant. I would bet you assumed, by all manner of policies and directives, to produce as much as you could as efficiently as you could.”

I was nodding. Corina was nodding. “How much excess inventory is now hiding in that warehouse?” I asked.

Corina smiled, but quickly realized what had seemed to be good news wasn’t after all. “I would have to pull the reports, but I think we have about four weeks of production built up in the warehouse. I mean, we were building to forecast, but we weren’t selling to forecast.”

“Okay, let’s make that phone call.”

“Come on, I think you are splitting hairs,” Corina said. “Everyone knows that the goal of the company is to make money, and the goal of the plant floor is to make as much product as efficiently as possible.”

“Is it, really?” I asked.

Corina stopped. She was trying to be defensive without being defensive. Rarely works.

“Has there ever been a time,” I continued, “where you were doing such a good job on the plant floor that you produced more than the company was selling?”

“Oh, all the time. We always produce to the sales forecast that Joe puts together. And his forecast is always wrong. I mean, right now, is a good example. If you had been here last week, you would have seen stuff stacked up all over the place. We even had three semi-trucks in the parking lot loaded with finished goods.”

“Where is it all now?”

“Well, there was a warehouse that we were trying to sell. I got lucky and found out in time to stop it, so we moved all the excess inventory there. Now, that’s utilization of resources.”

“Who knows about this?” I probed. “Does Sam, your VP of Ops know?”

“Yeah, he was down here a couple of weeks ago and saw all the inventory. He looked concerned, but I told him we were working on it. When he came down a couple of days later, I had all the stuff taken care of. He looked relieved.”

Our conversation became quiet. -TF

Registration closes tomorrow for our next Leadership program in Fort Lauderdale. Visit www.workingleadership.com. We kick-off the class this Wednesday, March 19.
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Corina was still puzzled. She was struggling with the question about the purpose for the organization. “The purpose for the plant,” she said, “is to make as much product as efficiently as we can.”

“I know that’s the way it seems,” I replied. “But what is the purpose for the organization?” Corina had been thinking about her Cap Ex budget for 2009. “If you only think about the plant, you will make wrong decisions,” I continued. “What is the purpose of the organization?”

Corina was in deep thought. She was certain this was a trick question. “The purpose of the organization is to make money,” she finally offered.

“Yes, and only when you remember that purpose, will your thinking about the budget be correct.” -TF
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For those believers, Happy St. Patrick’s Day!! Green beer tonight.