Archive for April, 2007

Would Someone Please Supersize the McMBA?

April 29, 2007

I am NOT the smartest guy in the world but I know the value of an education.

I’ve been noticing a lot of posts recently about business schools and the value of having a MBA degree. Some say they’re great, others say they’re useless, still others claim that it’s not the degree itself that’s important but rather the networking and connections that occur during the business school experience.

I personally believe that any and all formal education is essential for personal growth. Coming from a background where neither of my parents even graduated from high school, I can tell you for a fact that it’s a necessity in today’s world.

I have my own opinions about the value of the advanced degree. I also have an opinion about those so-called “Executive MBA” programs. These are the non-traditional abbreviated programs designed for the “busy executive” whose high-powered position does not allow for the time to pursue an advanced degree through a normal academic experience.

These programs are indeed a “valuable” source of revenue to the colleges and universities that prostitute their names and reputations. They are valuable to the attendees as they provide a source of networking opportunities for future job hopping as well as a nice sheepskin (suitable for framing) that validates their intelligence. These programs are also a value to the companies that shell out the big bucks for the cachet of top shelf “credentials” for their executive staffs. It’s a win-win situation for everyone involved.

I am not knocking these programs per se, but I will refer to them as McMBA’s. At, least that’s how I feel about some of the graduates of these programs that I’ve encountered.

I received my MBA from a small private college that was extremely academically oriented. I went the non-traditional route as well – three years of evenings and weekends. Come to think of it, I finished the last two years of my undergraduate degree that way as well. Thank God my employer offered tuition reimbursement. Raising a young family during those years would have been extremely difficult had I paid for my education out my own pocket. The stress of not being available to my family was bad enough. I have no regrets. It was an enlightening experience.

At the time that I was pursuing my pilgrimage through night school, my company was also sending several higher-level officials through one of these McMBA programs at a major university. One of the chosen few happened to be my boss, Gene Jones. If you’ve read 160 Degrees of Deviation: The Case for the Corporate Cynic, you’ll remember that I devoted an entire chapter to him. I’ll never understand how he was chosen for the program but I’d bet that it involved a lot of political maneuvering on Gene’s part. He was after all, already a master at that.

Gene always seemed to have difficulty even writing a coherent sentence. We wondered how he ever had managed to graduate from college let alone high school. If you knew Gene, however, you’d know that this program was right up his alley. At first, he merely pranced around the office, beaming with the fact that he would be “getting his masters” from a prestigious university. Believe it or not, the tweed sport coat with leather elbow patches followed shortly. I’m surprised he didn’t start smoking a pipe and wearing an ascot. Each week he would regale us with the brilliance that he gleaned from the top-notch professors and major business leaders. There were quite a few people in our office attending night school at the time. We all just shook our heads in disgust. What a waste of an educational opportunity.

Gene knew that I was pursuing an advanced degree as well and decided to make me his “collegiate colleague.” He always wanted to compare notes but our scholastic experiences were so utterly different that we did not have much to share. He was surprised that I was on an actual semester system and received grades. He boasted about the non-traditional nature of his program and how his was more of a “pass/fail” affair. Of course, there was always special tutoring for those who might fail. I wondered how much the university had soaked our company for his. Speaking of soaking, our company also reimbursed the attendees of the executive program for mileage to and from the university, meals on campus, and liberal amounts of time off for study – even though the program was held on weekdays. The rest of us had to receive a grade of C or better in our classes to get reimbursed and there was even an annual limit on that. Both Gene and I knew all of this and I wondered how much of his socializing was just about his need for self-aggrandizement.

He constantly raved about the university where this program was being held and even strongly suggested that I transfer my degree program there. There was no way that anyone of a lower level could have afforded that. With the annual limits on our tuition reimbursement program, it would take ten to fifteen years to complete a degree at that institution. Gene’s boasting and bragging became very irritating because of his obvious intention of demeaning my pursuits by crowing about his. I got so fed up with it that I penned a memo to our VP of HR. I wrote about Gene’s elaborate and constant praise of the university and the program as well as his persistent suggestion that I transfer there. Although, I was not at the appropriate corporate level for selection, I requested to be allowed to enter the executive program because of Gene’s unrelenting endorsement of it. I knew that the request would be rejected but I suspected that something else might happen as well. My plan worked. Gene suddenly stopped the socializing. My guess is that he was told to knock it off.

Whatever the company expected from this major investment in Gene never occurred. Thank God we all moved on. Gene stayed put. What a schmuck!

My next encounter was at another company where the president was also the recipient a McMBA. He had inherited the family company and had big plans for growth. Tom liked the fact we were brother MBA’s. Well sort of. He approached me shortly after my hire as operations director and asked me if I could put together an IPO for the company. Huh? I told him that I’d have to study up on that. “But you have an MBA!” he shrieked, “Didn’t you learn anything about IPO’s?” “Yeah, contact an investment banker,” I answered. Our relationship ended shortly thereafter.

My academic immersion into studies of financial analysis, organizational theory, economics, etc. provided me with some real insight into different ways of looking at and analyzing issues. It helped me fill in the blanks in the old formula that we were all taught at one time or another on how to solve a problem. Remember?

1. Identify the problem
2. Gather data
3. Analyze the data
4. Develop a solution
5. Test the solution, etc., etc.
6. Implement and follow-up

You may have learned these steps a bit differently or learned more sub-steps, etc. but you get the picture. I regret to say that another encounter with a graduate of a McMBA program proved that not to be a universal truth.

George had received his from an East Coast university and had been promoted to VP of operations. He had previously been the plant manager at our most profitable manufacturing facility. Upon his promotion he had been given the task (notice that I did not say “tasked”) of helping another plant become more profitable. I was corporate controller at the time and familiar with the processes at all of our operations.

George sent out an E-mail outlining his plan. He had compared the ratio of revenue to indirect labor at his old plant with that of the underperforming facility. Voila! The answer was to simply cut indirect labor to the same ratio as that of the profitable operation. George scheduled a meeting at the unit and requested a list of names and salaries of all of the indirect employees. The purpose of the meeting was to begin the chopping process. I was invited as well.

The manager of the errant unit flipped when he read the plan. I did too. There were significant differences in production methods, layout, cycle times, products etc. between the two operations. George was comparing apples to oranges. I helped the plant manager cool down and then spent a day outlining all of these differences and detailing the costs associated with each. The plant manager and I spent another day developing an alternative scenario that focused on improving production – you know generating more production at a lower unit cost. It was a rather detailed analysis. The plant manager had been pushing for this for a year and was now hoping that George could help secure the necessary capital expenditures to make it happen. I sent a lengthy E-mail and a plethora of spreadsheets off to George.

A few days later, I called George and asked him if he had read any of the material. He replied that he had read the overview in my E-mail and that it made sense. He also mentioned that he was too busy to read all of the financial data but would try to do so before the meeting.

The day of the meeting came. I went to the plant and met with George and the plant manager. George asked for the list of names and salaries of all of the indirect employees. He had prepared his own spreadsheet with a target for indirect labor expense. That target would bring the unit’s ratio down to that of his old plant. He was in a hurry to go through the list of names and was upset because it had not been completed. I respectfully reminded George about our previous conversation. He ignored me. When I tried again, George cut me off and asked brusquely, “You’re supposed to have an MBA. What did you learn there?” “How to think critically,” I answered in the same tone.

The cuts went into effect immediately. Production dropped and downtime increased. Set-up crews, material handlers and mechanics had been cut to the quick. The union went wild. It took six months to recover back to the old production levels and required bringing back all of the laid off workers. What a nightmare for the plant manager.

I suppose when you have the position power, you may go straight from identifying the problem to implementing the solution. The steps in between are just a waste of time.

Sometime later, the CFO mentioned that George called him after the meeting at the plant and accused me of “criticizing” him.

I am NOT the smartest guy in the world but I know the difference between critical thinking and criticizing.

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The Perks, Power and Perils of Riding a Boss’s Coat Tails

April 22, 2007

One of my readers (Marti) gave me the inspiration for this post. Marti had commented on He Gave one for the Team – an Appropriate Remark for a Real Jackass. That post retells the antics of Roy, a Vice President who had been canned by another company and then foisted upon ours by Ed, the new Chairman of the Board. Roy had previously worked for Ed at the company where Ed had been CEO.

Riding the coat tails of a former boss or having connections does have its benefits but there is a downside as well. Whether you call it networking, cronyism, or simply arrogance and abuse of power, it’s difficult to see the “value added” to an organization from these transactions. Here are few more stories about some of these dynamic duos.

Mark and Gary

Mark had been hired as the Senior Vice President of manufacturing, a very powerful position within the company and second only to the president. He had many years in the industry and was a formidable character in his own right. A few weeks after Mark’s hire, Gary arrived on the scene. Gary followed Mark from one company to another. Mark had always engineered that. They had apparently known each other for many years. Gary was installed as a manager in our headquarter’s manufacturing operations group. Gary had a very hot temper and would fly off the handle at the drop of a hat. He was extremely loud and vulgar. Not the type you’d expect in the corporate headquarters of a major nation-wide corporation. Gary constantly boasted about his relationship with Mark.

Gary’s personality and behaviors were so disruptive that after a few weeks, the director of the group made it clear that it was either he or Gary. Gary was transferred to another division and even relocated to another state where he was appointed manager of a small repair facility. That was fine with Gary. He loved the power and still continued to crow about his personal relationship with Mark. According to Gary, he had always taken care of Mark and now it was Mark’s turn to take care of him.

The chain of command meant nothing to Gary. If he needed resources or wanted to complain about something or someone, he’d call Mark directly. No one really knew how much power Gary actually wielded but in a small and out of way operation, no one was going to test it. If anyone, even from corporate headquarters, got on Gary’s wrong side, he’d threaten to make of his “personal phone calls.” There were lots of myths and rumors about Gary actually getting people fired and receiving apologetic telephone calls at home from those who had crossed him.

I had a few opportunities to visit the operation where Gary was stationed. I got along fine with him but always watched what I said. Gary had begun building his own empire and boasted about how he had replaced some of the facility’s workers with people he liked. Gary made no pretense about the fact that they ran personal errands for him, mowed his lawn, painted his house etc. – all on company time. “Anyone got a problem with that?”

This kept on for several years. I guess that the other corporate elites had decided that Gary was best “out of sight and out of mind”. Then Mark retired and the chickens came home to roost. Gary was caught up in a major scandal involving the misappropriation of company funds. While his parachute was not golden, it did open and he landed safely into retirement.

Steve and Vaughn

Steve came on board as the Senior VP of Engineering. Steve had been a highly respected chief of engineering at a major global manufacturer in our industry. Vaughn came along too. At first, we could not figure out exactly what Vaughn did or where he fit in the organization. Vaughn was straight laced and highly educated but he was not an engineer by training or education. Based on what we saw from Vaughn during the first six months or so, he seemed more like Steve’s personal secretary. He prepared all of Steve’s presentations, wrote most of Steve’s letters and memos and always accompanied Steve to meetings and out of town conferences. During these events, Vaughn would actually conduct the presentations. Steve would simply sit by and smile. Steve was very low key and unassuming. It began to look like Vaughn was the real power behind Steve. It became sort of a joke around the company.

Vaughn instituted a meticulous reporting program for the engineers to log the hours that they spent on various projects. He was extremely diligent about his program and pestered the engineers constantly to account for every minute spent at work during each week. On Fridays, he would go from engineer to engineer insisting that they complete their timesheets with precision. Vaughn would also call lengthy meetings where he would review these statistics and berate those that either not filled out their logs correctly or those whom he felt spent too much time on particular projects. Steve participated but was always silent. He just sat and smiled.

Steve retired a few years later. No one really talked about any of his accomplishments. No one really could think of any. The engineering group was reorganized and the Senior VP position was eliminated. Two new VP positions were established, R&D and manufacturing. Too young to retire himself, Vaughn stayed on board. He continued to prepare presentations for the two new VP’s but was relegated to the role of running the slide projector. The new VP’s now conducted the presentations. Vaughn became super-anal about his engineering time logs. His incessant pestering and nasty E-mails really drew the wrath of the engineers. They were spending almost as much time logging their hours as working on projects.

It all ended during an all-engineering department meeting with our new “no nonsense” president who went around the conference room asking everyone what he or she did. Vaughn was fired shortly thereafter.

Miles and David

Miles had been brought on as the new VP of purchasing and logistics. He had hired a director of logistics from outside company. The new director was a really sharp fellow. I had been assigned as a cross department liaison with the logistics group to work on a major project.

I was in the director’s office one morning when his phone rang. It was the receptionist who informed him that his new employee was in the lobby. The director was perplexed and told the receptionist that she must have been mistaken. He had not hired a new employee and knew nothing about it. We continued our chat after he hung up but the phone suddenly rang again. It was the receptionist who claimed that there was no mistake. David was waiting for him in the lobby. The director hung up and called HR. They knew nothing about David either. A half hour later, the director’s phone rang again. This time it was Miles. Miles informed the director that David was in the lobby and that the director was to put him to work – in an important and high paying position of course. The director sheepishly excused himself and ended the meeting.

Miles had personally hired David without informing anyone. You see Miles belonged to a prestigious organization outside of the company where he had befriended David’s brother who was a high-ranking official. David was out of work and Miles had promised to take him aboard and find him something important to do. Miles must have really had a lot of power to get away with something like that in our “lean and mean” corporate headquarters. No one had ever heard of anything like that before in the entire history of the company. David’s background did not really fit into any positions in the logistics arena. Nonetheless, he was named supervisor of something or other. He had no staff and no one knew exactly what he did. He just sort of helped out.

It was rather humorous to watch Miles and David at company events. Miles would always ignore the director and make a beeline straight for David. With his arm firmly around David’s shoulder, they would talk lovingly about David’s family, particularly David’s brother.

Two year’s later our company went through its first ever reduction in force. This was a cathartic episode for our firm. No one really had any experience with such a reduction and so the senior staff set down the ground rules. All positions had to be justified and individuals would be retained or let go based on company need and seniority. David could not be saved.

There was a glimmer of hope, however, for those who had been furloughed. The laid-off employees were told that if economic circumstances rebounded, employees could be called back if positions were re-justified. To qualify, the employee had to fit the position’s requirements and hold seniority over any other employees who had been displaced.

Nine month’s later, David was back. In fact, David was one of the first employees to be called back and ahead of others with more seniority. Through some sleight of hand, a position had been created and justified in the purchasing department. Purchasing was also under Mile’s control. You cannot imagine the uproar from those who knew other employees who had been laid off and not called back. Sometime later, David’s brother managed to get David a better position at another firm.

Glen and Jack

Glen was hired as Senior VP of worldwide operations. Glen knew Jack from another company and liked “the cut of his jib” or something equally goofy. Anyway, Glen decided to put him on the payroll. Jack lived in a far western state considerably distant from any of our operations. Glen assigned Jack to special projects and the company footed the bill for his extensive and expensive travel.

Due to simultaneous resignations of operations managers, two openings occurred on the East Coast. Although our corporate succession-planning program had already ensured that several candidates had been adequately groomed for the positions, Jack was appointed as director over both operations. A new level had even been created on the organization chart for him. He had no real experience as an operations manager and so his function was to be more administrative. He would “learn the ropes” all right but from the top down instead of the bottom up. There was no doubt, however, that Jack was in charge. Since the budget could not justify a director and two operations managers, one internal candidate was promoted but forced to actively manage both operations. This called for the manager to travel every other week, splitting the manager pretty thin. Jack received a phenomenal relocation package. The new manager had to stay in “budget” hotels and take “red eye” flights to even out the costs.

More from the “Double Secret” Handbook for bad Executives

April 15, 2007

Found this chapter neatly folded and tucked away in a copy of Execution. An apt hiding place?

Chapter 5 Tips and Tricks for Saving Face

We all know that while it’s rare but sometimes you may find yourself in a tricky position with subordinates or peers. You’re busy and important and it could happen that you may have given out some bad information, promised something you couldn’t deliver or sent someone on a time wasting wild goose chase. While it’s more likely that the aggrieved party may have simply misunderstood the brilliance of what you said or what you meant, you may be confronted or challenged from time to time. Even if the accusations are true, you cannot afford to appear guilty or God forbid apologetic for such transgressions. That would result in a loss of face and be perceived as a sign of weakness. You must retain you personae of prestige and power no matter what the circumstance. To help you overcome such dilemmas, we have devised several techniques for not only extricating yourself from these situations but also solidifying your position and authority. You’re probably already familiar with these simple formulas but a quick review is always helpful.

Fast-Talking

Suppose you suspect that a subordinate or even a peer may confront you over something they think you said or did. Have a plan. Prepare a speech in advance. It doesn’t even have to be about the issue at hand. “Fast-Talking” is something you’re already familiar with. It requires speaking a mile a minute without coming up for air and completely ignoring the other party. Remember, the outcome here is to cause them to forget about their petty issue and focus on your power.

This technique works very effectively when confronted in your office or in a public area. Once you’ve started, never allow the other party to get a word in edgewise. If you must take a breath and they begin to speak, cut them off immediately. Your words must be delivered in a sharp staccato manner, like a machine gun. Avoid any eye contact. Act frenetic and move around a lot. If seated, shuffle papers and stand up and walk around. Show no emotion other than “passion” about the subject you’re talking about. Once satisfied that they are now stunned and speechless, leave the area quickly. Always mutter something as you walk away with your back to them. Look up to the heavens and shake your head in disgust as your words trail off and you disappear. They’ll think twice about confronting you again.

The Shocked Stare

If ambushed and not prepared, the strategy is to freeze and stare them straight in the eye. Do not show any emotion and do not blink. Appear to be slightly shocked. The moment they stop to take a breath, immediately interrupt them and in a cold and clinical manner and say something like,” I can see that you’re very agitated. Please try to compose yourself.” That should shut them down for a moment and give you enough time to either change the subject or leave the area without further comment. If they persist, switch to Fast -Talking. Hell, if you can pull this off in public or better yet during a meeting, you might really embarrass the poor SOB. After all, they have the problem now.

The Bombshell

Suppose you get a tip or suspect that you may be confronted or challenged by a peer during a meeting in which your superiors or higher-level management will be present. As a seasoned executive, you should always have some little tidbit socked away for just such a situation. You know, some embarrassing statistic or bit of gossip that will deflect attention away from you and onto someone else. Timing is everything here so ensure that the bomb is detonated right before your antagonist has a chance to speak. Mention it in passing and act naïve. Make it sound like an innocent remark. So what if you have to finger a colleague. Your prestige is at stake. Even if it’s not true, the temporary damage will get the focus off of you. They’ll be vindicated later – after the meeting. If the peer against whom your innocent remark was directed raises a fuss, use the shocked stare technique. It was just an innocent remark. Why are they so emotional? Do they have something to hide?

The Shill

Here’s another technique that works very well in meetings. It’s a little trickier and does require some teamwork. Teamwork really pays in business you know. Here’s where you call in a favor or convince someone of influence to help you out. This person must be prepped for in advance. You might try giving them a sob story about how the aggrieved party really has it in for you and how they are intent on destroying you, your career, family, pet dog etc. Lay it on thick. Sympathy is a powerful emotion that you can conjure up in people.

All you require of your shill is to wait until your antagonist begins their attack upon you and interrupt them with the words, ”That was a cheap shot!” The impact of those words coming from a third party will quickly take the steam out the attack. Others may even nod in agreement. An apology may be called for – but not from you.

We hope this little refresher will provide some tools guaranteed to save face in a variety of situations.

PS from The Corporate Cynic. Guaranteed to save face all right – both of them!

Complex Conclusions and Questions Raised by a few “Simple Metrics”

April 8, 2007

I had been working as the Controller for a midsize manufacturing concern for about two years. It was a five-plant operation put together by some venture capital folks. The investors were not directly involved in the operations. We had a president who had been with one of the plants for several years and generally knew the business. He had never worked for a major corporation or been a senior executive before but seemed like a pretty sharp chap. He was a bit arrogant, a micromanager and appeared to lack cohesive direction. Because of this we were constantly changing focus from increasing sales at any cost, to cutting costs, to penetrating new markets, to cutting low margin customers and then back to square one again. One could almost say that we were slightly schizophrenic and dysfunctional. This caused a lot of mid-management turnover that resulted in operational problems like poor scheduling, material shortages, low efficiency, etc. The corporation as a whole was doing OK financially but there was no growth. We were always short of cash and could not replace or add any capital equipment or make any major improvements. Adding to staff positions took an act of God. If anyone asked for capital funds, they would always be told to “earn it first and spend it later.” Everyone made do with what they had. That was our environment. Stagnation was almost becoming a self-fulfilling prophecy.

Our plants had all been stand alone small businesses prior to the consolidation and although they bore our corporate logo on all their buildings and letterhead, they continued to operate basically as they had before. There was no centralized ERP system or even connectivity between the plants and headquarters. Each plant had some kind of legacy-computerized systems to track production, measure efficiency, pay the bills, etc. Some had better, some had worse. We shared a few common Excel workbook templates that the CFO had designed for reporting financial data.

It was at this juncture that we changed direction again. The president decided that he could no longer devote his time to directing day-to-day operations with the individual plant managers and needed to concentrate on growing sales. He hired a new VP of operations.

Bruce had been a divisional VP of operations for a major global manufacturer in our line of business. According to his Bio, he had been with that firm since leaving college and worked his way up from being a plant HR manager to plant manager and so on. Bruce was in his mid-thirties, well spoken but almost as arrogant as the president and slightly cockier.

Bruce made the rounds at our plants for the first three weeks of his employment and then presented his observations to both our president and CFO. I was not fortunate to see the entire report but the CFO mentioned that Bruce had determined that the plants spent an excessive amount of time on internal reporting. He also observed that there were too many reports floating around the plants and headquarters. According to Bruce, these could all be replaced with a few simple metrics. I was both pleased as well as suspicious at hearing this remark but I thought that I’d wait to see just what was in store. As I expected, my suspicions were soon rewarded.

I was moving more and more into the corporate side of things for the company but the CFO thought that I should speak with Bruce about his ideas concerning reporting. We were hiring a new plant controller for our local facility and the CFO thought that this might be a perfect opportunity to change some of the plant’s reporting to the new few simple metrics.

Bruce handed me a form titled “Dashboard” that contained six “metrics” or six items listed vertically that were required to be reported each month. Across the top of the form were five column headings. The first was a column for actual, the next three columns were headed Good, Outstanding and Exceptional and the final column was titled “score”. I could see at the bottom of the form that he had simply copied it from a set of forms from his old company. It still bore their name and logo. The first three metrics were fairly simple and benign. I recognized immediately that this was data everyone collected and reported in a similar format. It was of a common nature: safety, net profit and efficiency. The next three, however, looked unfamiliar: I asked Bruce what they meant. I will not go into a detailed explanation here. Suffice it to say, they were quite complex and nothing like we were used to.

Bruce explained that his former company had measured these three simple metrics and that they were key performance indicators. I asked him of what value this data had in managing an operation. He never really provided an answer but smugly related that his former operations had always managed to score “Exceptional” in these areas. Scoring Exceptional had resulted in his plants’ being given more resources as well as gaining “bonus” payments for management. I then asked for an explanation about how the metrics were calculated. Bruce went into a lengthy dissertation using some terminology and jargon that I was totally unfamiliar with. It became obvious that these terms and this reporting were peculiar to his former company and had probably been developed over a considerable period of time. I am certain that they were important and valuable in the context of that company’s operating environment and corporate goals. But in ours? We had no way of duplicating this data with the output available from our various manufacturing-reporting systems. I asked Bruce about how he had received these reports back at his old company. He stated that they emanated from their headquarter’s IT and accounting departments. I told him that we had no IT department and explained our reporting processes and capabilities. Bruce insisted that these metrics were key performance indicators and that he needed this data to manage the plants.

It was obvious from our conversation that complying with Bruce’s wishes would entail much more data gathering, input, validation and reporting than we were used to. His few simple metrics could only add to the workload. I reported this back to the CFO. He listened attentively but suggested that we give it a try anyway. Bruce was new and both the CFO and the president were banking on Bruce to help turn things around. Besides, we probably could have used to get rid of some of our old reports anyway.

I contacted the plants and obtained copies of all of the reports Bruce had referred to earlier. They were all of a similar nature and reported various metrics: downtime, set-up time, machine hours, labor hours, variance to standards, etc. Of course there were variations and a variety of formats due to dissimilar computer systems but they were all pretty basic. Two of the plants had such primitive systems that they did not even report some of this data. I also spoke to the plant controllers who insisted that their respective plant managers needed these reports to adequately manage their plants. It was all they had. Not many of these reports could be eliminated and since those that could were mainly byproducts of the production data that was already being collected, scrapping them would not result in any reduction of manpower or effort. I then briefed the controllers on the new metrics that Bruce was insisting upon. Three of the plants complained that this data was not even available through their reporting systems and that it would have to be gathered, collated and reported manually. Four of the five agreed that the data would require a lot of work and additional resources to obtain. I mentioned all of this Bruce and he said that he’d talk to the president about it. He insisted that he needed the data at any cost and that it would pay for itself.

I reported this back to the CFO but he reiterated that Bruce had to be given a chance to turn things around. Within six months, Bruce had replaced three of the five plant managers with individuals that he knew from his former employer. The three newbies insisted on new the reporting metrics. These metrics were what they were used to and they could not manage without them. There was now even more turmoil at the plants due to the new reporting requirements. Bruce had forgotten to mention that although his simple three new metrics were reported monthly, they also needed to be monitored on a daily basis as well so that operational adjustments could be made throughout the month to ensure that the month end results were not a surprise. Bruce insisted that the daily results be reported to him everyday by 10 AM. Plant personnel were scrambling to gather the data to meet Bruce’s daily reporting deadline. Resources were diverted from production supervision, quality assurance, technical support and even accounting functions to gather data for daily reporting. Because two of the plants had no easy methods to even gather accurate information, they estimated it. A tremendous amount of effort seemed to be directed toward completing the daily report rather than interpreting or reacting to the information it contained. If one person the chain of reporting was absent due to illness or vacation, the daily reporting fell apart. Bruce insisted that there be “back-up” personnel. There were none. Staff was already stretched to the limit. Whenever the reports were late, threatening E-mails would emanate from Bruce’s laptop. Several long time employees at the plants were actually terminated for not fulfilling their roles in the reporting process even though that was not their primary job function.

Our president soon began to monitor the daily reports himself. Apparently, his focus had changed again. Being a micromanager by nature, he even made several modifications to the formats. This set him on a collision course with Bruce. I believe there was a power (if not ego) struggle going on between them. The president did not like the daily results gleaned from the reports and wanted something done about them. But critical resources had been diverted from real value added activities to gathering and reporting the data. This resulted in even more threatening E-mails from Bruce.

Two years later, Bruce was gone. He had resigned and taken one of his former plant managers with him to another company. A year later, another of Bruce’s hires was terminated for allegedly falsifying data. The new directive from the president was to “Get back to the basics.”

There are many conclusions and questions raised by this story. You may agree, disagree or even add your own.

1. Small companies oftentimes feel that they can “cash in” on the success of large corporations by hiring executives from those concerns. A word of caution here: Large corporations have already invested in the infrastructures needed to support complex reporting metrics. Bruce had “grown up” in such a concern and might have thought that his former environment could simply be transplanted to another company. We did not have the resources to replicate his former comfort zone. He did not seem willing to recognize that.

2. I will always wonder exactly what was Bruce told during his interview for the position. What was he told about the context of our firm? Did he even ask about it? What specific goals was he given? What did he agree could be accomplished?

3. During his three-week orientation plant tours, did Bruce bother to find out anything about how our plants operated and the resources available to them? Armed with that knowledge, he might have modified his strategy and concentrated on other areas besides reporting. Had he done that, Bruce might have been able to make some real impact on productivity or efficiency without creating more complexity and chaos. He did not seem very flexible about modifying his goals to fit the environment.

4. Snapping your fingers and sending threatening E-mails is no way to lead improvements. This should be a slow and calculated process.

5. My overall impression of Bruce was that he was more of a big company bureaucrat than anything else. We were a very “hands on” organization. Even the president went out on the floor and kicked the tires from time ro time. Bruce always wore blue jeans and said that the people would relate to him better if he dressed down. But he rarely made an appearance in a production area. He chose to lead through his laptop. He worked from home a lot of the time.

6. Perhaps someone can explain why flexibility, adaptability, ability to prioritize and solve problems as well as good people management skills are always held up to middle managers as important personal characteristics. Yet, certain executives appear not to need any of them – just a pedigree.

7. What does this say about the leadership of the corporation?

Requiem for TQM or Total Quality Mismanagement

April 1, 2007

I promised Jon at Gemba and that I would relate my experience with the TQM fad of the 1990’s. Do not misconstrue the intent of this article. I was an adherent of the TQM concept. People often wonder why older managers like myself seem to be skeptical and gun shy of every new program that comes down the pike. Perhaps this writing will answer those questions.

The story takes place at the height of the popularity with TQM (Total Quality Management) back in the 1990’s. For those that don’t remember TQM, it was a grass roots program designed to analyze processes with an eye toward improving them. The overall goal was “zero defects” through continuous improvement. It required the steadfast support and commitment of top management that would ultimately result in a cultural change in the organization.

I was working as a division operations manager for a multi-million dollar nationwide corporation. At the time, we were having very serious problems with a new line of capital equipment that had just been introduced into the market. Everyone was perplexed about what could be creating these issues. These were very high profile problems and our customers were not happy. There was even talk of a quarantine and boycott of the product.

Our company was an extremely conservative firm, led by an equally conservative CEO. He was an old money, East Coast, Ivy League educated, very academically orientated, well-read and highly opinionated hard line executive. He was extremely vocal about his views and could always be expected to be exceptionally blunt when discussing something he didn’t like or disagreed with. There was even talk that the company had resorted to hiring a PR firm to carefully edit his speeches and press releases. I always thought he was kind of refreshing.

The pressure from the customers must have been overwhelming. The search was on for an answer and it could no longer be “we’re working on it.” We all got the memo that announced our foray into the world of TQM. Our customers had embraced it and so would our company. In hindsight, launching into TQM was not necessarily the answer to the particular quality issue at hand. In fact, the problem was corrected through a combined team of engineers and even scientists brought in by the company in consort with our customers. Unfortunately, this occurred while we were in still in the stages of TQM implementation. I believe that finding the solution to that particular problem before the full TQM program was in place served only to hasten its demise even sooner than it would have happened on its own.

The company spared no expense getting us on fast track to TQM. They picked one of the more expensive TQM program providers and flew us all over country. I was chosen to be an instructor because I managed a large region and my operations were far flung. I picked our division HR manager as my assistant. Ron and I were great friends. He operated out of corporate headquarters and his boss, the Vice President of Human Resources wanted tabs kept on the progress of the program in the field. Being stationed at corporate headquarters afforded Ron a bird’s eye view into what was going on at the senior staff level as well as with the CEO.

Ron and I attended the instructors’ training modules together. It was during one of the early orientation sessions that he made an off-handed comment to me about how the CEO didn’t really believe in any of it and had been forced into TQM by the customers. Knowing the CEO as I did, I knew we were in trouble right out of the gate.

I will admit that I was skeptical about the TQM concept from the outset. How could such a culture change take place at an extremely conservative firm like ours? I did not like the gimmicky “Fru-Fru” (you know –the silly exercises, role playing, campaign buttons, etc.) that was associated with the training. I’ve never liked that stuff. I really didn’t think that TQM would work in our kind of operations either. But I was committed to learning the methods and as long as I was chosen to be an instructor, I dug into the materials like I would study for any other academic course. It took me a while to intellectualize the concepts but over a cocktail one night at the program sponsored “happy hour”, it clicked. The whole thing was unbelievably simple. It made sense logically and I felt that the concepts could be easily communicated to the employees – with or without the “Fru-Fru.” I actually began believe that this could work. I even transferred some of the methodology to my personal life. I still use some of it today.

We got down to the business of setting up training at the division level in accordance with the schedule and format set out by the program. It was a step-by-step process that rolled out in a series of stages. But while we in the field were diligently at work laying the groundwork, things were already going awry at corporate headquarters. Part of the implementation protocol required a show of support by top management. This included a visit by one of the TQM program consultants to meet with CEO. Ron informed me that the CEO had refused to meet with them. After a plethora of pleadings by the consultants, he relented but had assigned the whole program to a lower level vice president.

The next step in the process was the big corporate “kick off” meeting at headquarters. All the divisional managers were flown for the hoopla. It was a topnotch affair attended by a few hundred people including the entire corporate office staff. The CEO even gave the keynote address. He voiced his support for the program but one could tell that his conviction was lukewarm at best. Two of his comments were telling: “…I hope that no one thinks that we’re getting into this program because I happened to pick up Business Week and read an article about it. We need this.” and his final comment with which we were sent off to go and do TQM, “I really want this program to work but I don’t want people wasting their time attending a lot of meetings.”

Interestingly enough, although a grass roots program, the events were always confined to corporate headquarters and never found there way down to the production worker level. Everything that occurred at our company was always centered on corporate headquarters. That’s where the CEO and the power base were located. Everything revolved around them. Even though the production facilities were the areas deemed as needing the program, only their top managers were called into headquarters to participate. Production workers only read about it in the company newsletters.

Over the next twelve months, the program peaked and then began to degenerate as the novelty wore off and company priorities began to change. The training schedules, formats, and overall protocol that the program consultants had laid out began to be modified and reprioritized by corporate officials. I will list several of those items here. If you were familiar with some of the doctrines and methods employed TQM that were popular back then, perhaps you’ll recall some of these:

OFI’s (Opportunities for Improvement)
These were to be grassroots ideas for improving the processes performed by the employees themselves, i.e. “If my area had better lighting, I could more easily…. and the work that I pass on work would contain less defects.” “If the parts were degreased before I got them, I could….” “If I had a different tool, I could….” You get the picture. The intent was to improve the process. Although each OFI was to be put to writing and catalogued, they were not intended to be suggestion box items. The program was also explicit about the fact that no financial incentives be attached. The improvement of the process was to be its own reward. Operating the process would become easier with less rework, etc.
What went wrong:
1. One of the corporate AVP’s, who had only attended an “Executive Summary” session had latched to the notion that each OFI should show a direct link to a product improvement. He resurrected an old idea that had been suggested by a field employee for modifying an ancillary device on a finished piece of equipment. The suggestion had nothing to do with employee’s process and was based on a simple observation. The AVP decided that this example should be used as the model for all OFI’s. He also suggested that the employee be given a cash reward for the idea. Since he was an AVP, his position power trumped the intent of the program.
2. When we were initiated into the OFI process at our training sessions, the program consultants stressed that American workers were not as keen as Japanese or even European workers when it came to writing OFI’s. Americans were more apt to just “fix” things as opposed to committing their ideas to writing. The consultants showed statistics of the propensity of various groups to create written OFI documents. We were even told not to expect too many at first. That is indeed what occurred. This initial paucity of OFI’s was deemed unacceptable by our corporate management. Our workers were better than the Japanese or Europeans and, therefore, should turn in even more OFI’s. Besides, the company had just made a considerable monetary investment in TQM training and, by God; they wanted to see something for it. The entire OFI program deteriorated into a numbers game and a contest. You can guess the rest. If you can’t imagine the undue pressure placed on line management, the nonproductive shenanigans, infighting and poor morale that resulted, I can write an entire post about them.

Commitment through training
Training was the backbone of the program. If one did not understand the doctrines of TQM, there was no way that a culture change could occur within the organization. Let’s face it. There are a lot of people like me out there who really need to intellectualize the nuts and bolts of something before we “buy into” it.
What went wrong:
1. The key corporate executives only participated in the “executive summary” overview session (held at a resort in Florida). Some did not even consider it worthwhile to attend.
2. Due to the CEO’s statement about “too many meetings”, corporate employees received mandatory but abridged training. They did get all of the “Fru-Fru.”
3. Plant and field employees received more intensive training at first but then it began to taper off as the business cycle picked up and production demands took priority.
4. After the first year of the program, all continuing education had ceased.

Program review benchmarks
One of the protocols of the TQM program that our company had chosen was to hold benchmarking events at various stages of the implementation to review what had been learned to date and take stock of progress. There were to be a series of these events scheduled to build upon each other and culminate in the recognition of the culture change.
What went wrong:
1. We could not have these events in the field due to scheduling and budgetary concerns. Our larger operations were only able to squeeze in one or two.
2. Corporate headquarters, of course, held a massive affair combining several of the benchmarking events into one. Sparing no expense, a hotel ballroom was transformed into a genuine three-ring circus arena complete with clowns, prize booths and even a dunk tank. The office staff was dressed in “zero defect” tee shirts and played ring toss games to win giant yardsticks for “measurement.” Banners and balloons carried the words “All work is a Process” and “Quality is Free.” The tab for all of it sure couldn’t have been. The food was great. But other than for the fun and games, no one really seemed to know why they were there. It was all kind of surreal.
3. I went back to the corporate office after the event and visited the accounting department where I had spent many years before moving into operations. The walls were covered with charts and graphs. I asked one of the supervisors what it was all about. “Measurement!” he answered. “But what are you measuring?” I asked. “Everything!” he answered, “The Controller told us to put up as many charts and graphs as we could.”
4. Reading about the event in company newsletter and seeing the pictures of the gala demoralized the production workers.

Three years later it was all over. The company received a spiffy “Quality Statement” like all large corporations have today. New employees received a booklet describing the TQM process that they were to memorize. They might also have been shown a videotape. The OFI process had stopped (thank God). The entire administration of the TQM program had been remanded to the Quality Assurance Department. Their focus went back inspecting finished goods and reviewing production processes. The relationship with original program consultants reverted to receiving a monthly newsletter. Nothing else changed.

The banners were sagging on the walls and the balloons were all but deflated and hanging limp, sad reminders of an extremely expensive foray into the TQM fad of the ‘90’s.
I always thought that the following words should have been inscribed headstone of the program:

RIP TQM
Enacted for the wrong reasons. Afforded only lip service support by a disinterested top management. Continuously modified by ill-informed senior officials.

My experience with this program at that company can be summed up simply. It turned me from a skeptic into a believer and then into a cynic.