the outstanding organization: building the foundation for everyday excellence
TRANSCRIPT
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© 2013 The Karen Martin Group, Inc.
Building the Foundation for Everyday Excellence
The Outstanding Organization
The Nordic Forum for ImprovementsNovember 5, 2013
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© 2013 The Karen Martin Group, Inc. 2
Why?
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The average company performs at levels that are
a fraction of what it’s capable of.
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© 2013 The Karen Martin Group, Inc.
Success with Improvement
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2001 – The Economist
None17%
Lasting20%
Temporary63%
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© 2013 The Karen Martin Group, Inc.
…A Decade Later
2010 – Accenture
0%
10%
20%
30%
40%
50%
60%
70%
80%
Minimal financial impact
Needs re‐evaluation, restart or complete
makeover
“Mixed” to “disappointing”
results
33%
58%69%
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© 2013 The Karen Martin Group, Inc.
Up to 98,000 deathsannually due tomedical errors.
Improvement goal:Reduce by 50% in 5Years.
To Err is HumanInstitute of Medicine, 1999
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© 2013 The Karen Martin Group, Inc.
Something Is Terribly Wrong…
2009
2005 2010
2010
2011
“Progress has been slow.”
Journal of the American Medical Association
“Annual death toll from medical
errors is closer to 200,000.”
Dead by MistakeHeart Newspapers Special Report
“180,000 Medicare patients die annually from medical errors.”
Office of the Inspector General
“No significant change in rate of
preventable errors.”New England Journal
of Medicine
“33% hospitalized patients are harmed; 7% result in permanent
injury or death.”Health Affairs
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7 in 10 American workers are “not engaged” or
“actively disengaged” in their work.
Gallup estimates actively disengaged employees cost the U.S. $450 billion to $550 billion a year in lost productivity.
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© 2013 The Karen Martin Group, Inc.
Employee Engagement – Gallup Findings
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15
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2012
2011
2010
2009
2008
2007
2006
2005
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2001
2000
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ACTIVELY DISENGAGED
NOT ENGAGED ENGAGED0% 100%
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© 2013 The Karen Martin Group, Inc.
http://businessjournal.gallup.com/content/162953/tackle‐employees‐stagnating‐engagement.aspx
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Typical Organization
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Does Your Organization Seek the Silver Bullet?
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Continuously Shifting Priorities?
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Fire Fighting
Constantly fighting fires?
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Blaming People?
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The idea that performance is primarily a factor of the employee is just wrong.
The Outstanding Organization, p. 154
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Work doesn’t have to beas hard as we make it.
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What are the Mindsets and Behaviors That Produce Excellence?
Photo #4 TBD – Greta Garbo?
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Requirements for Excellence in ANY Endeavor
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© 2013 The Karen Martin Group, Inc.
The Outstanding Organization
Outstanding Business Performance
CHOS
Prob
lem Solving
Continuo
us
Improvem
ent
Resilience
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© 2013 The Karen Martin Group, Inc.
Lean Principles,Practices & Tools
Outstanding Business
Performance
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© 2013 The Karen Martin Group, Inc.
Common Areas Lacking Clarity
• Organization purpose & vision• Customers & products• Business goals & priorities• Company policies• Roles & responsibilities• Work systems & process performance• Problem solving & decision making• Terminology & communication
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© 2013 The Karen Martin Group, Inc.
Common Areas Lacking Clarity
• Organization purpose & vision• Customers & products• Business goals & priorities• Company policies• Roles & responsibilities• Work systems & process performance• Problem solving & decision making• Terminology & communication
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Who are your customers?What do they value?
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Value is a verb, not a noun. And it’s often emotional.
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© 2013 The Karen Martin Group, Inc.
Common Areas Lacking Clarity
• Organization purpose & vision• Customers & products• Business goals & priorities• Company policies• Roles & responsibilities• Work systems & process performance• Problem solving & decision making• Terminology & communication
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Customer
Receive customer call
Call Center
PT = 2 mins.%C&A = 60%
Review & Post Invoices
Posting Admin
PT = 3 mins.%C&A = 98%Batch: 1x/day
0.0833 hours
2 minutes
2 hours
5 minutes
1.5 hours
90 minutes
1.25 hours
75 minutes
2 hours
120 minutes
4 hours
5 minutes
10.7 hours
10 minutes
48 hours
25 minutes
4 hours
3 minutes
10.7 hours
10 minutes
2 hours
4 minutes
480 hours Lead Time = 572 hours
Process Time = 349 minutes
Select & Dispatch Tech
Dispatcher & Service
Manager
PT = 5 mins.%C&A = 60%
Make Repair; Call to raise
the NTE
Tech
PT = 120 mins.%C&A = 40%
Complete Call in GP
Dispatcher
PT = 5 mins.%C&A = 80%
Review Service Call
Data
Service Manager
PT = 10 mins.%C&A = 50%Batch: 2x/day
Review Open Ticket Report
Billing Admin
PT = 25 mins.%C&A = 75%
Upload time card
Tech
PT = 0 mins.%C&A = 70%Batch: 1x/day
Close call in Verisae
Account Manager (West)
PT = 1 mins.%C&A = 90%Batch: 1x/day
Process Time Cards
Payroll Admin
PT = 10 mins.%C&A = 90%Batch: 1x/day
Process A/P
A/P Admin
PT = 15 mins.%C&A = 85%Batch: 1x/day
Tech
Assess Problem
PT = 90 mins.%C&A = 90%
Tech
Special Order Part
Tech
Pick up Part at Parts Store
PT = 75 mins.%C&A = 95%
Tech
Get Part from Truck
PT = 0 mins.120 m.
Great Plains
Verisae (Customer)
Review Invoices; Close in
Verisae (Pac)
Account Manager
PT = 10 mins.%C&A = 85%Batch: 3-5x per wk
Enter Invoices into Verisae &
Excel; Mail Invoices
Billing Admin
PT = 4 mins.%C&A = 95%Batch: 1x/week
Excel Spreadsheet (Customer)
40%
Receive
Cash; Post Payment
Collections
75 m. 120 m. 240 m. 640 m. 6 days 240 mins. 640 m. 120 m. 60 days90 m.5 m.
?%
?%
Supplier
%C&A %Complete and AccurateAR Activity RatioFTE Full Time EquivalentLT Lead TimePT Process TimeRFPY Rolled First Pass Yield
Acronym KeyLead Time to invoice = 86.2 hrs
Process Time =5.9 hrs. NOTE: Business hours
Activity Ratio = 6.8%RFPY = 1.1%
Lead time to cash = ? days
Value stream maps provide clarity.
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TruthTruth
TruthTruth
TruthTruth
TruthTruth
Truth32
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Gaining Clarity via Visual Management
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How are you performing?
Gray – Highest industry quality scores; Purple – Median industry quality scores; Blue – Client quality scores
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Key Lean Metrics: Quality
• %Complete and Accurate (%C&A)–% time downstream customer can perform task without having to “CAC” the incoming work:• Correct information or material that was supplied
• Add information that should have been supplied• Clarify information that should or could have been clear
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How does work get accomplished? And well how are we doing at it?
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Customer
Process1
Process2
Process3
Process4
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Common Areas Lacking Clarity
• Organization purpose & vision• Customers & products• Business goals & priorities• Company policies• Roles & responsibilities• Work systems & process performance• Problem solving & decision making• Terminology & communication
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A problem clearly stated is a problem half solved.
— Dorothea Brande (writer/editor)
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“If I had an hour to save the world, Iwould spend 59 minutes definingthe problem and one minute
finding solutions.”
— Albert Einstein
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A3 Management
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Plan Do, Study, Adjust
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“Going to the gemba has been life changing for me as a leader.”
‐ Ginny Cattaneo, Sr. VP, FranklinTempleton Investor Services
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© 2013 The Karen Martin Group, Inc.
Activity #1• Pair up or work in groups of 3.• Discuss where your organization
lacks clarity, the root cause(s) for it, and potential countermeasures.
• How will you know if you’re successful? (measurable outcomes)
• 5 minutes to work; 10 minutes for report outs and questions.
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Where does your organization lack clarity?Problem Root cause(s) Potential Countermeasure
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Sporting Goods Manufacturer –Product Launches Per Year
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0
10
20
30
40
50
60
70
80
Pre‐Focus Post‐Focus
73
24
No additional resources; higher quality products launched
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* Poll of 700+ Subscribers
70%Organization is attempting “more than”
or “significantly more than” we can reasonably handle.*
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Booz & Company Findings
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
No writtenpriorities
Conflictingpriorities
Competingdemands
82%
64%
49%
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Focus Law #1:STOP DOING
Focus Law #2:DO FEWER THINGS
AT ONCE
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There is no such thing as multitasking.*
* For cognitive tasks.
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Task #1: Focus Reduces ChaosTask #2: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Round 1 – Alternate between tasks : letter, number, letter, number, etc.
Round 2 – Complete one task before beginning the next.
Sentence:
Numbers:
Sentence:
Numbers:
The Cost of Switch Tasking – Timed Activity
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To create new ideas is a gift, but to choose wisely is a skill.
— Ryan Morgan
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A Key to Apple’s Success?
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“…saying no to 1,000 things to make sure we don’t get on the wrong track or try to do too much. We’re always thinking about new markets we could enter, but it’s only by saying no that you can concentrate on the things that are really important.”
— Steve Jobs
© 2012 Karen Martin & Associates, LLC
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What is Your Improvement Strategy?
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Classic Strategy Deployment (Hoshin Kanri)X‐Matrix
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1. Increase sales 5%.3. Achieve 10% profit.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec IT Mktg Ops HR Bob Fin PE Pario COM Direct
CDs / AMs
PD Rec
PD Mgmt
BMD SWS
23,500 units sold by 12/31/2013 through al l channels (approx. $700K)
X X X X X X X X X X X X Bob Dana 2 3 3 3 2 3 3 1 1 3 3 1 3
11 Develop & del iver tra ining to top 50 Dealers X X X X X X Bob Rex/Tim 3 3 3
21 Revised course materia ls by 6/30/2013 X X X Bob Josh R? 2 3 3 2 2
5Education: 1 school dis trict spec'd/underperforming COM dis tributor (25) by 12/31 valued at min $35K each
X X X X X X X X X X X X Howard Michael S 1 3 2 3 3
810 new dea lers on board (net) ($500K per dealer this year)
X X X X X X X X X X X X Howard Mike B 2 3
95 new dis tributors bringing $200K annual rev (& 5 terminated)
X X X X X X X X X X X X Howard Howard 1 1 1 2 3
17 10 projects spec'd by 12/31; $300K rev by 12/31 X X X X X X X X X X Howard Dana 1 3 3 3
29 20 by year‐end X X X X X X X X X X X X Howard Mark H 2 3 3 3
32 TBD X X X Howard Howard
33 TBD X X X X X X X X X Howard Howard
10Useful reporting and metrics are establ i shed and in place
X X Jim Randal l 3 1 1 1 1 1 1
30 TBD X X X X X Jim Josh 3
31 TBD X X X X X X Jim Josh 1 1 1 3 1 1 1 1 1 1 1 1 1 1
25 TBD Jim Shannon 3 3 1 1 1 1 1
26 System 7.0's in place X X X Jim Randal l 3 2 1 2 1
15100% accurate payrol l ; 100% management sati s faction at Apri l mgmt. meeting
X X X Josh Phyl l is 1 3
20Internet task l i s t i s s impl i fied and streaml ined for PDs then plan i s rol led out to PDs
X X X X Michael M Michael M 2 3 2 3
22Des ign Calculator i s updated success ful ly and rol led out
X X X Neal l Matt D 3 1 1 3 2 2 3
24 Competi tive Analys is complete and distributed for use X X X Neal l Dana 2 3 3 3 3 3 3
1 Des ign changed to solve delam i ssue long‐term X X X X X Susan David R 3 2 3
1230 parts sourced in U.S.; completed plan for managing China ‐sourced parts
X X X X X X Susan Shannon 3 3 2 2
13Warehouse la id out; kanban revised; Syspro implemented
X X X Susan Shannon 3
14 Lay out complete; equipment ins ta l led X X X Susan David R 3 3
X = Planned
2013 Priorities
2013 Goals & Objectives4. Improve morale (metric TBD).2. Achieve 50% gross margin. Created: 01‐14‐13
Revised: Level of Effort/Involvement Required
Priority Goal or Measurable Objective Exec Owner
Plan review dates:
Tactical Owner
● = Actual
< Company Name >Co
nten
trem
oved
for con
fiden
tiality
Modified Strategy Deployment Annual Plan
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Strategy Deployment Key Feature: Catchball
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Executive Team
What?How?Who?When?
Senior Mgmt
What?How?Who?When?
Middle Mgmt
What?How?Who?When?
FrontlinesWhat?How?Who?When?
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© 2013 The Karen Martin Group, Inc.
Cascading Goals is the Means to Organizational Alignment
Organization
Division/Business Unit
Department
Individual
Individual
Department
Individual
Individual
Division/Business Unit
Department
Individual
Individual
Department
Individual
Individual
Division/Business Unit
Department
Individual
Individual
Department
Individual
Individual
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© 2013 The Karen Martin Group, Inc.
Rockwell Automation
60
20
12
3
12
0
5
10
15
20
25
Pre‐Focus Post‐Focus
ProjectsStarted
ProjectsCompleted
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© 2013 The Karen Martin Group, Inc. 61
ClarityConsensusCourageCommitment
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© 2013 The Karen Martin Group, Inc.
Activity #2• Pair up or work in groups of 3.• Discuss where your organization
lacks focus, the root cause(s) for it, and potential countermeasures.
• How will you know if you’re successful? (measurable outcomes)
• 5 minutes to work; 10 minutes for report outs and questions.
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Where does your organization lack focus?Problem Root cause(s) Potential Countermeasure
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© 2013 The Karen Martin Group, Inc.© 2013 The Karen Martin Group, Inc.
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Practice vs. Performance
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Athletes Businesses
TrainPerform
65
Train90%
Train1%
Perform 99%
Perform 10%
Jim Loehr & Tony Schwartz, The Power of Full Engagement
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© 2013 The Karen Martin Group, Inc. 66
Develophypothesis
Conduct experiment
Measure results
RefineStandardize Stabilize
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© 2013 The Karen Martin Group, Inc.
Building mastery takes 10,000 hours of deliberate practice
67
From The Outstanding Organization, p. 115
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© 2013 The Karen Martin Group, Inc.
Value Stream Mapping
Strategy Deployment (Hoshin Kanri)
or A3
Daily Improvement, Projects, & Rapid Improvement Events
Ways to Practice PDSA
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© 2013 The Karen Martin Group, Inc.
Standard Work Creates Clarity & Builds Discipline
Metrics‐Based Process Mapping, Karen Martin & Mike Osterling, 2012, Productivity Press
0
10
156-1
0Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A
1 Fax PO to Sales Rep 0 0 45%
2
Review PO; clarify with
customer as needed
20 2 90% Fax PO to warehouse 10 4 90%
5
6
Check inventory levels; notify
Sales Rep re: status
5 4 95% Fax PO to Sales Rep 5 0.33 90%
0 20 10 5 50 2 4 4 0.33
45% 90% 90% 95% 90%0 20 10 5 5
Rolled %C&ACritical Path LT
Total PT
Critical Path PT
5431 2
Mary Townsend
Hours Worked per Day Sally DampierOccurrences per Year Sam Parks
Current State Metrics-Based Process Map
Dave Morgan25-Jun-088 Facilitator
Process Details
Michael Prichard
Order FulfillmentProcess NameSpecific Conditions Domestic orders through sales force
37,500
Date Mapped
Sean Michaels
Sales Rep
Ryan AustinDiane O'SheaMapping Team
LT Units
Function / Department
PT Units
Step # ►
Customer
Finance
Warehouse / Shipping
Seconds
Minutes
Hours
Days
Seconds
Minutes
Hours
Days
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© 2013 The Karen Martin Group, Inc.
True Continuous Improvement
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Process Owner ≈ Process Doctor
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© 2013 The Karen Martin Group, Inc.
Process Owner Role
• Manager or below• NOT a third party (C.I. staff or external consultants)• Responsible for overall process performance
– Tracks performance against 2‐5 Key Performance Indicators– Leads corrective action when negative trends appear– Leads continuous improvement to progressively raise the bar
• Granted authority to cross org chart “boundaries”– And widely recognized to possess this authority
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© 2013 The Karen Martin Group, Inc.
Value Stream & Process Oversight
73
Value Stream Value Stream Manager Process Process Owner
Outpatient Imaging Sally V Scheduling & Registration Bill G
Exam & Clinical Reporting Jose C
Reports to physician Maria J
Inpatient surgery Tonianne S Admission Tom M
Clinical stay Kathleen T
Discharge Mike M
Billing Sylvia S
Revenue Cycle Management Bruce T N/A N/A
Value Stream & Process OwnershipABC Medical Center
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© 2013 The Karen Martin Group, Inc.
Activity #3• Pair up or work in groups of 3.• Discuss where your organization
lacks discipline, the root cause(s) for it, and potential countermeasures.
• How will you know if you’re successful? (measurable outcomes)
• 5 minutes to work; 10 minutes for report outs and questions.
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© 2013 The Karen Martin Group, Inc.
Where does your organization lack discipline?Problem Root cause(s) Potential Countermeasure
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© 2013 The Karen Martin Group, Inc.
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© 2013 The Karen Martin Group, Inc.
“I’ve become a better person, a better husband, a better friend, from working at
Gore.”— Terry, a W.L. Gore Associate
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© 2013 The Karen Martin Group, Inc.
Employee Engagement & Business Performance*
7%18%
26%
49%
67%
33%
9.57:1 1.83:1
EngagedNot EngagedActively Disengaged
World Class Average
*Per Gallup
Ratio of engaged to actively disengaged employees
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© 2013 The Karen Martin Group, Inc.
Lean (Done Right) Fuels EngagementEngagement Accelerates Transformation
79
LeanPractices
Employee Engagement
© 2013 The Karen Martin Group, Inc.
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© 2013 The Karen Martin Group, Inc.
Engagement Drivers: The Three C’s
Connection
The Outstanding Organization, pp. 155‐158
To vision, annual goals, immediate supervisor,
peers, customers
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81
The single most important process for you to nail in your
organization is new hire onboarding.
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© 2013 The Karen Martin Group, Inc.82
You had them at“You’re hired.”
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© 2013 The Karen Martin Group, Inc.
To what degree do new hires receive all of the tools and information they need to function effectively on day one?
0%
10%
20%
30%
40%
50%
60%
70%
Always, Sometimes Rarely, Never
Before initial roundof improvementAfter initial round ofimprovement
14%
44%
63%
23%
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© 2013 The Karen Martin Group, Inc.
Onboarding – Common Missing Pieces
• General information– Company (e.g., purpose, products, customers, values, business goals, etc.)– Org charts– Phone directories
• Job‐specific orientation– Role and responsibilities– Documented procedures (standard work)– Apprenticeship approach: Observe, do with supervision, do– Clear understanding about what constitutes “success.”
• Tools– Physical (e.g. desk, etc.)– Technology (e.g. phones, computers, physical access, access to applications
needed, logins, etc.)– Identifiers (e.g. signage, business cards, etc.)
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Value Stream Maps: Effective for New Hire Orientation
You are here
© 2013 The Karen Martin Group, Inc.
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© 2013 The Karen Martin Group, Inc.
Engagement Drivers: The Three C’s
Connection
Control
The Outstanding Organization, pp. 155‐158
Heavy involvement in decisions that
influence how they do their work.
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Improvement Roles
Who? Accountability Practice / Tool
Senior Leadership What has to happen
Strategy Deployment and Value Stream Mapping
Frontline Workers How it will happen
Daily Continuous Improvement and Rapid Improvement Events
Middle Management
Strategic
Tactical
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© 2013 The Karen Martin Group, Inc.
Leaders determine strategy (what)
Workers determine tactics (how)
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© 2013 The Karen Martin Group, Inc.
Engagement Drivers: The Three C’s
Connection
ControlCreativity
The Outstanding Organization, pp. 155‐158
Full use of talents, capacities,
potentialities, & skills
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© 2013 The Karen Martin Group, Inc.
Problem solving and making improvement—done properly—is a high.
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© 2013 The Karen Martin Group, Inc.
Cross‐Functional Problem Solving & Improvement:Connecting, Using Creativity, Gaining Control
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© 2013 The Karen Martin Group, Inc.
“I went home yesterday and told myfamily that it was one of the best
working days I’ve ever had. I was able to fully use my capabilities for three days.”
— Fred Valenzano, Professional Engineer
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Engagement Drivers: The Three C’s
93
Connection
ControlCreativity
The Outstanding Organization, pp. 155‐158
To vision, annual goals, immediate supervisor,
peers, customers
© 2012 Karen Martin & Associates, LLC
Heavy involvement in decisions that influence
their work life.
Full use of talents, capacities,
potentialities, & skills
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© 2013 The Karen Martin Group, Inc.94
—The Outstanding Organization, p. 153
© 2013 The Karen Martin Group, Inc.
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© 2013 The Karen Martin Group, Inc.
Activity #4• Pair up or work in groups of 3.• Discuss where your organization lacks
engagement, the root cause(s) for it, and potential countermeasures.
• How will you know if you’re successful? (measurable outcomes)
• 5 minutes to discuss; 10 minutes for report outs and questions.
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Where does your organization lack engagement?Problem Root cause(s) Potential Countermeasure
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© 2013 The Karen Martin Group, Inc.
The Outstanding Organization
Outstanding Business Performance
CHOS
Prob
lem Solving
Continuo
us
Improvem
ent
Resilience
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© 2013 The Karen Martin Group, Inc.
“You can make a difference no matter where you sit in the organization.
But only if you start.”
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© 2013 The Karen Martin Group, Inc.
Karen Martin, President7770 Regents Road #635San Diego, CA 92122
858.677.6799
For Further Questions
Blog & newsletter: www.ksmartin.com/subscribe
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© 2013 The Karen Martin Group, Inc.
To Download the Organizational Self Assessment:
www.ksmartin.com/the‐outstanding‐organization
Click “Download a free organizational
assessment”
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Self‐AssessmentSheet 2: Assessment
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© 2013 The Karen Martin Group, Inc.
The Outstanding OrganizationSelf‐Assessment Sample Questions
Key Behavior Assessment Questions
Clarity C‐1: What % of the workforce can describe your organization’s purpose and the value you provide to your external customers?C‐6: What % of work areas have visual management in place?
Focus F‐2: What % of the workforce say that priorities are stable and don’t shift unnecessarily?F‐6: What % of meetings have stated goals and written agenda that are communicated in advance?
Discipline F‐3: What % of processes have 2‐5 Key Performance indicatorsthat are consistently used to measure success and drive improvement?F‐5: What % of processes have a clearly identified process owner who’s accountable for performance?
Engagement E‐4: What % of the workforce feel they have a degree of control over their work processes and environment?E‐5: What % of new hires receive all of the information, equipment and supplies they need to be successful beginning on day one?
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© 2013 The Karen Martin Group, Inc.
Self‐AssessmentSheet 3: Scorecard
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© 2013 The Karen Martin Group, Inc.
Organizational Assessment:Sample Baseline Measurements by Department
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
A B C D E F G H
ClarityFocusDisciplineEngagement
106
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How Do You Rate? (1 = strongest; 4 = weakest)
Clarity Focus Discipline Engagement
Dept A 1 2 4 3Dept B 1 3 4 2Dept C 1 2 3 4Dept D 4 1 2 3Dept E 1 3 4 2Dept F 1 2 3 4Dept G 2 3 4 1Dept H 2 4 3 1Dept I 1 2 3 4
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© 2013 The Karen Martin Group, Inc.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1st shift 2nd shift 3rd shift Management
ClarityFocusDisciplineEngagement
108
Organizational Assessment:Sample Baseline Measurements by
Shift & Employee Type
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© 2013 The Karen Martin Group, Inc.
Tack för erat engagemang ochlycka till med erat
förbättringsarbete framöver.
― Karen