Business Expert

The following is an excerpt from my new book, “MORPHING INTO THE REAL WORLD – A Handbook for Entering the Work Force” which is a survival guide for young people as they transition into adult life. The book offers considerable advice regarding how to manage our personal and professional lives. As a part of this, I found it necessary to discuss some basic management concepts and philosophies.

TYPES OF ORGANIZATIONAL STRUCTURES

Within any organization, be it commercial or nonprofit, there is always a chain of command that dictates how the organization will be governed. To this end, there are basically three types of organizational structures:

* Hierarchical – representing a classic tree structure (top-down) defining administrative relationships between people. The hierarchical organization, as depicted by an organization chart, expresses superior, subordinate, and lateral relationships within an organization. It also suggests the scope of activities within an organization.

* Matrix – represents a pool of people serving different capacities in an organization. For example, on one business function a person may represent the leader, on others he may be a follower. Under the matrix approach, one person may serve more than one leader.

* Project Team – is similar to the Matrix except as performed on a project-to-project basis. In other words, a person’s tasks are prescribed by the project for which he is assigned. He will serve in this capacity until the conclusion of the assignment, after which he will be assigned to another project in perhaps another capacity.

Regardless of how companies organize themselves, either in a multi-tiered hierarchy or in a flat organization, there is always a superior/subordinate relationship between personnel for administrative purposes. The notion that an organization runs as a pure democracy is a myth. There will always be a need for leaders and followers.

THE FIVE BASIC ELEMENTS OF MASS PRODUCTION

There is basically two ways of producing any product, either one at a time or in mass production. Mass production affords us the ability to produce more products at reduced costs. As such, industrial engineers have long known that in situations involving voluminous work products of the same type, an organization needs to observe the five basic elements of mass production:

1. Division of Labor – to break the production process into separate tasks performed by workers with different skills.

2. Assembly Line – defining the progression and synchronization of work.

3. Precision Tooling – for mechanical leverage in the assembly line.

4. Standardization of Parts – for inter changeability and assembly by unskilled and semiskilled workers.

5. Mass Demand – the impetus for mass production.

You will find these five elements in every company who offers repetitious work products, be it an automotive manufacturer, a restaurant, a bank or insurance company, an engineering firm, etc. Actually, more organizations operate in accordance with these five elements than those who do not.

These five elements lead to the need of standard and reusable methodologies representing the business processes needed to perform the work. Such methodologies define Who is to perform What work, When, Where, Why, and How (I refer to this as “5W+H”).

UNDERSTANDING PRODUCTIVITY

Productivity = Effectiveness X Efficiency

Too often people fallaciously equate productivity with efficiency. Efficiency simply represents how fast we can perform a given task. For example, an industrial robot on an assembly line can perform a task such as welding very precisely and quickly. But if the weld is being performed at the wrong time or wrong place, then it is counterproductive, regardless of how efficiently it performs the task. Effectiveness, on the other hands, is concerned with the necessity of the task itself or as I like to say, “Do the right things.” Under this scenario, the manager should consider effectiveness first, and efficiency second. By being conscious of both effectiveness and efficiency, the manager can avoid the “Rearranging the Deck Chairs on the Titanic” phenomenon whereby people work on the wrong things at the wrong time.

Undoubtedly, you will meet salesmen who will offer products promising improvements in efficiency. But if they cannot be implemented into your operation effectively, it will be counterproductive.

Just remember, 100% efficiency multiplied by 0% effectiveness equals zero productivity.

In terms of delivering a quality work product, the manager should understand the relationship of quality to the time necessary to produce the goods.

The faster the product is produced, the more likely it will contain defects in workmanship; conversely, the more time allowed in production, the greater the chances for producing a high-quality product. Although everyone stresses the need for quality, the reality is the manager must be able to balance development time against defects in workmanship and that a suitable development time needs to be devised to match the level of quality desired. This also means the level of precision in production is proportional to the level of quality desired, all of which will greatly influence a manager’s style of management. For example, in a high pressure situation, the manager may exercise more supervision and a little friendly bullying in order to get the job done. Under less pressure, the manager will allow more worker freedom and participation in developing decisions.

NEXT WEEK: We will conclude this three part series with a review of some important Laws and Rules to observe in the workplace.

If you would like to discuss this with me in more depth, please do not hesitate to send me an e-mail at timb001@phmainstreet.com

Organizations require a strong communication line to support all units of business. Without a steady line for communication, costly errors are bound to appear. One great way of communicating not only with people inside and outside of an organization is through the use of blogs.

Blogs are not only used for connecting with people from outside the company but inside as well. Blogs can be used to promote the company, it can be used to showcase an organization’s innovations and new plans and agendas and it could also be used to reach new markets. A great example of these types of blogs can be found on Uprinting.com Blog. The site uses blogs as a medium for communicating with its clients as well as its employees. Organization’s not using blogs are missing out on a lot of things.

Because of the speed of the Internet in today’s setting, messages can now be related faster and more efficiently unlike a few decades earlier where a company memorandum had to be passed around from department to department. Blogs can also be used as a simple way of appreciating the value of an employee within the company. TheUPrinting Blog does the same thing. In it, employees that have lived up to the ideals of the company gets appreciated, even showcasing stories of their dedication and commitment to excellence that only UPrinting strives to achieve over other online printing firms.

Some corporate blogs are also open to the employees themselves. These types of blogs are used to add fresh ideas, comments and suggestions coming from the employees themselves. Other company’s on the other hand uses a separate blog for their employees and a different one for their clients or customers. The blogs for employees usually contain new directives and new policies as well as other news and events that relate to the company.

Blogs have become a very useful system of communication for companies and organizations. It won’t be long before corporations and even small businesses embrace the benefits that only blogs can offer.

Six Sigma projects are strategy-driven, in the same way that the portfolio is driven by organizational strategy. So, how do the business drivers that are at work result in some projects being Six Sigma projects, and others not?

Business Drivers and Project Selection

Business drivers are the starting point for any project selection process because of their close relationship to organization strategy. Business drivers form the foundation for strategy. Strategy forms the basis for organizational goals. The goals can be translated into specific metrics for purposes of establishing benchmarks. The result of all of this is a set of initiatives wrapped up in a portfolio of projects and programs. The type of metrics determines the project methodology, such as Six Sigma.

3 Types of Metrics

There are 3 types of metrics that influence project type or approach.

1. Business Metrics – typically measure financial performance aspects

2. Operations metrics – measure various aspects of the operations for the enterprise at a macro level

3. Process Metrics – provide detailed information about the processes being employed in the day to day operations

All 3 of these metrics support and relate closely to one another, and ultimately to the organizational strategy. But Six Sigma supports the detailed process level activities, which are present throughout most functions within the organization. Thus any projects that will ultimately be measured by process metrics are candidates for Six Sigma projects.

Once a project is a candidate for a Six Sigma project, it needs to be determined if the project will be best served by a more “classical” approach to process improvement, or if the best path is a pure Six Sigma approach. The classical approach would go something like this:

1. Ientify the problems to be solved

2. Define the problems clearly

3. Investigate the defined problems

4. Analyze the problems

5. Solve the problems

6. Validate the results or solutions

If the project requires the greater rigor of Six Sigma, it will likely be best served by one of 2 main methodologies that are Six Sigma specific:

1. Design for Six Sigma (DFSS) – Processes that are compliant with Six Sigma methods and metrics are created within the project.

2. DMAIC – The Define-Measure-Analyze-Improve-Control method is the 5 step Six Sigma process improvement methodology.

The Identification of Metrics

Identifying the key driving metrics within the organization is the key to success in identifying strong candidates for Six Sigma projects. One of the most popular systems of organizational metrics today is the Balanced Scorecard. In the Balanced Scorecard, the management system that generates the metrics is aligned with the company’s strategy and goals. Metrics are developed based not only on the financial perspective, but on 4 different perspectives for measuring organizational effectiveness:

1. Financial performance – traditional way of measuring performance within a business

2. Customer-centric view – measures alignment with customer needs, such as customer retention, satisfaction, loyalty, complaints, and related measures

3. Internal business processes – these relate to operational aspects such as throughput, work in progress, and project management effectiveness

4. Learning and growth – relates to metrics around the concept of knowledge workers continuously learning, expanding competency in the right areas, and knowledge sharing and collaboration

Whether by accessing Balanced Scorecard information or identifying some other source within the organization, it is critical to access definitive information on the organization’s key metrics.

Prioritization of Six Sigma Projects

The assumption is that at this point, it has been concluded that a certain project lends itself to the Six Sigma approach. There are a number of positive and negative factors that need to be considered in prioritization. Aside from alignment with strategy, consideration must be made for urgency, size relative to resources, significance to the organization, impact, risk, ease of application or implementation, and degree of resistance within the organization.

Conclusion

Six Sigma projects are derived from the need to satisfy certain process metrics that support the business objectives and strategy of the organization. All projects need to be aligned with the business objectives and strategy, and Six Sigma projects are no exception. Six Sigma projects will typically account for a portion of the projects in the portfolio. The unique effectiveness of Six Sigma is most apparent where achievement of improved process metrics is the goal. Six Sigma is very data and metrics driven, so there must be a clear ability to gather or generate appropriate metrics before, during, and after conclusion of the project in order to drive success.