One of the imperatives of any continuous improvement program is a commitment by the organization to protect jobs. If people don’t trust the company, they will be reluctant to do anything that will increase productivity. Obviously, if fewer people can do more, then there is a need for fewer people. Companies can lay people off as a result of improvement activity exactly once. After that there won’t be any more improvements.
Instead, the company’s leadership should commit to the use of attrition to match staffing to demand. This simply means that as people leave the company, they are not replaced. Over time, the headcount will come down.
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Attrition is a valuable tool for Lean managers. One of the realities of productivity is that it can’t get better without an increase in output or a decrease in inputs. An improved process in and of itself doesn’t change costs. One of the parts of the productivity equation also has to change.
When demand is rising, the stream of improvements from a Lean culture allows the team to simply absorb the extra work. But when demand is stable, improvements don’t pay off unless the composition of the team changes.
Attrition lets managers match the workforce to the demand. People routinely leave companies for a variety of reasons. Many of these have nothing to do with the organization. A person may choose to retire, go back to school, or move into a different field. They may also move. Sometimes their spouse has the better job and they follow their partner’s career. They may also simply be looking for a change of scenery or want to move back to where their family is located. When these people leave, it is not a reflection on the company, and in many cases, the company can do nothing about it.
Another form of attrition comes as people are let go for poor performance. The first choice is always to help the person improve, but sometimes he or she is just in the wrong job. Some people also have character flaws that make them undesirable as employees. Thieves in the workplace or those with chronic absenteeism fall into this category. This form of attrition is actually good for the company. It clears out problem people, and creates healthier relationships between the remaining employees and leaders.
Another form of desirable attrition is when the people who are not fully engaged in the improvement culture self-select and decide to seek employment elsewhere. Many of these people need extra coaching and consume leadership time and energy, but their performance is not bad enough to terminate them. Eventually they might come around, but when the company is overstaffed, their departure can be positive.
The final form of attrition, though, can be a problem. It is when good employees leave for greener pastures. If the greener pasture is in another department, the company benefits. When they go to another company, though, it hurts. They take valuable know-how with them. Unfortunately, you can lose some great employees this way. It can be especially challenging to retain strong performers when attrition is being used as a reduction strategy, as there are fewer advancement opportunities within the organization.
One of the challenges with attrition is that the people that leave are not always from the group that needs a reduction in staffing. As a result, managing headcount with attrition will require a shifting of personnel as the needs of the company change. Having a good cross-training plan between departments will make this sort of transition easier to deal with when the need arises. Without that flexibility, an unexpected departure can lead to chaos.
One thing to keep in mind as people move is that an improvement focus changes the nature of jobs. In a Lean company, a sizeable percentage of an employee’s time may be spent on project teams or making process improvements. These skills are highly transferrable. That can make inter-departmental moves a bit more manageable.
Use a resource team to help manage attrition. Pull people out of processes as soon as the gains are made, and move them to a resource team. This group can be used to backfill, help with spikes in demand, and support the improvement process.
Be careful, though. Don’t make this an employment purgatory. Rather, it should be a launching pad for future leaders. The time spent here, especially the time spent improving processes, will greatly enhance the team member’s skills. The resource team should therefore contain top employees, not marginal ones. It will take incredible willpower for managers to send their best and brightest here, but the overall benefit to the company will be amplified if people want to go to the resource team.
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