The Power of Lean for HR
Lean concepts have been around for quite some time—starting in the auto manufacturing industry. Even so, many companies today are just beginning to investigate what a Lean implementation could do for their business. No matter the company's industry—manufacturing, service, or otherwise—Lean processes offer organizations of all types and sizes methods to identify and reduce waste, which positively impacts your employees, customers, and the bottom line.
Tom Ault, ERC's Director of Technical Training, brings a wealth of industry and technical experience to our members and clients' fingertips. With a solid understanding of the financial and organization-wide impacts training has on a business, Tom works to identify continuous improvement needs and deliver custom solutions based on each company's specific situation.
The following interview with Tom reveals some of the basic principles and benefits of Lean, how it impacts the HR function, and why Lean should be an initiative to consider for your business.
What exactly is Lean?
You've heard the word 'Lean' get thrown around quite a bit in training and process-improvement conversations... but you're not really sure what it all means. Don't worry—you're not alone! Tom says that one of the most common issues he encounters before a Lean implementation is simply a misunderstanding of what Lean is and what it does for an organization.
"In every industry, most companies have a standard set of procedures to deliver products and services to their clients and customers. Lean is really understanding those processes and knowing how to streamline them to make a better product/service at a lower cost to the organization. And that cost may be physical—it may be helping out the bottom line - or it may be perceptual - such as improving working conditions for employees (and in turn, helping them be more productive)."
Not everything has a process, and Tom admits that sometimes companies or employees handle incoming requests 'randomly' or with a great variety to the 'process' each time. Depending on how and when a new request is received, it may be processed in a wide range of ways.
Tom says that even in these situations, there are typically several key processes that can be identified as consistent and commonplace in the everyday work environment. These processes, then, are the main focus areas for Lean implementation.
"The main idea in Lean is tightening up your everyday processes, which frees you up to spend more time on other areas of productivity."
How does Lean define waste?
One of the fundamental principles of Lean is the need to identify waste in the organization and to make it visible. Once visible, the waste can be addressed.
Using Lean thinking, waste can be categorized into seven different areas:
- Waiting (i.e. waiting for key information before processing paperwork)
- Over-production (i.e. producing more than what the customer actually needs)
- Over-processing (i.e. providing more detail than is needed to process a request)
- Motion (i.e. information/tools needed to complete the job are not close at hand)
- Inventory (i.e. too many supplies or product on-hand... does not match demand)
- Rework (i.e. work must be corrected due to errors or incomplete data)
- Transportation (i.e. re-locating work or moving product unnecessarily)
Part of the Lean process is identifying and understanding why this waste hurts your business. In many manufacturing environments, inventory is looked at in a positive way. ('If I have product ready to ship to the client, customers will receive faster service and be more satisfied.') In reality, Tom argues, inventory is cash sitting on a shelf in your warehouse - it's money the company has already expended, but is not getting any return on the investment... so it's waste!
The other dangerous thing about inventory, Tom warns, is that products are often changed and updated. The old inventory then becomes obsolete or must be reworked with a loss in profit for the company.
"The same thing goes for a more office-type environment. Marketing collateral, new-hire packets, training materials—anything physical can also become 'inventory' if there's too much produced & not enough used. In an ideal Lean setting, only the amount needed is actually produced—and it's produced right when it's needed."
What about intangible waste?
There are many additional types of waste found in an office-type environment, yet they tend to be 'invisible'—and thus can be hard to identify. It's often in the computer, or the time we spend processing business.
The first step, Tom advises, is to make waste visible. Metrics can help identify these areas of waste—for example, look at the time it takes to fill out and process a personnel requisition:
- Is all the information on the form actually needed?
- How soon does the processing need to be completed?
- Is there an approval process holding things up?
- Is there value being added by each step?
In office & support functions, putting some simple measures in place to identify waste and make it visible can make processes more likely to be improved. Tom suggests keeping track of the number of open personnel requisitions, the aging of REQs, the number of REQs waiting approval, etc.
"While Lean implementation typically starts with operations, it can and should evolve into support functions. Lean began in operations because of the huge benefits of developing efficiency. As it evolved, Lean impacts all functions of a business. The concepts can easily be moved from the factory floor to an office or service environment."
To Push or Pull?
Another key principle in Lean is limiting production to only what the customer needs—when they need it. This is called a 'pull system'. Conversely, a 'push system' is producing deliverables before there is demand. In manufacturing, making product in large quantities may seem cost-effective; therefore, product is often made before a customer is ready to take it.
In an office environment, employee training can be conducted in both systems. For example, supervisory training may be pre-scheduled & 'pushed out' to managers; while new-employee orientations might be offered as an e-learning course and 'pulled' once a new hire is ready.
Tom recommends asking some important questions in order to identify how your current processes operate, and what the most efficient system is for your business:
- Who are your key customers?
- What are their needs?
- What process do you have in place to consistently deliver quality to the customer? Are these processes effective, or could waste be eliminated?
- What expectations do you have of your suppliers? Have you communicated these expectations? Do you measure them and hold them accountable?
Why is Lean important to HR?
To be considered partners, HR professionals need to understand the direction the organization is moving and help lead the way. Tom recommends starting by understanding the concepts, and then gaining practical experience. Many organizations are afraid to implement Lean due to a fear of the unknown and stepping outside their comfort zone.
"Lean is all about trying to improve something, seeing if it works, and making on-going corrections and improvements. Start small! Not everything has to be changed at the same time. Look at a few critical areas or pain points and analyze those first."
Even without an organization-wide implementation, Tom encourages that HR can still implement beneficial changes. He advises HR to identify and talk to internal customers—to find out what they need and how well it's being provided to them today.
Then look at the processes for delivering on those needs:
- Is there a process?
- Is it being well-utilized?
- How could it be improved & made more efficient?
- Are there steps that could be eliminated?
Productivity will improve with just these basic analyses in the HR function. Lean first requires the awareness and desire for change; secondly, it takes discipline and commitment to keep the improvements rolling. For successful implementation, it really takes buy-in from the entire organization, starting with the senior-most leadership. If a company-wide initiative isn't possible, Lean can be implemented at a department or unit level - and those individuals can act as examples, or 'champions' of Lean for the company.
"Lean—just like an effective HR team—starts with treating employees with respect. It's not just putting tools in place—or a philosophy. It's building a foundation where your employees are treated as real assets... and they are the ones that come up with ideas for improvement. The people doing the work know best where the problems are, and how to correct it."
Where management needs to step in, Tom suggests, is to help with the investments and the connections between departments. He states that if you can get an environment with open sharing of information, visible & identified waste, and management that is listening and helping workers become more effective - then that's the foundation of a very successful lean implementation.
Where and how to start?
After receiving a Lean inquiry, Tom gathers a fair bit of background information to get a full understanding of the company's situation. He asks:
- Who and what are driving this initiative?
- Does this organization have previous experience with Lean?
- At what level and what type of business environment would the implementation take place?
- How comfortable are the affected employees with empowerment, working in teams, and coming up with ideas?
- What does the management structure look like?
- Is the senior leader(s) on-board, or do they need additional information? Do they understand what their role is in Lean implementation?
In a brand-new situation, Tom especially wants to understand the culture, and if it will support the tools Lean will implement. He typically schedules separate meetings with the senior level management—and their direct reports—to clarify their roles in the Lean program roll-out. This happens both before and after the training.
In addition, Tom plans a debrief for 60-90 days post-training to see what's been implemented & what needs to happen to keep the Lean implementation on-going. In some cases, Tom may recommend not starting with Lean tools, but rather other training (like Change Management) to prepare employees and the workplace environment for successful Lean implementation.
"Another important piece in the program roll-out is populating the environment with some 'change agents' or 'Lean champions'—these individuals will be responsible for driving the change in their organization. These individuals are known and trusted among the employees and have been educated about the Lean program."
Ultimately, Tom's goal is to ensure the Lean program is successful and sustainable. Whether an organization is looking to implement a company-wide Lean initiative—or they want to refresh an existing program—or simply are just curious to learn more, Tom encourages all questions. After all, knowledge is power!