When manufacturers are struggling with performance, they commonly default to looking at equipment for issues and solutions. But in reality, human capital issues could easily be the culprit.
The Nobel Prise winning psychologist Daniel Kahneman has observed how “we can be blind to the obvious, and we are also blind to our blindness.”1 He made the observation in reference to a study on focus from the book The Invisible Gorilla. In the study, participants were asked to watch a video of two teams running around passing basketballs and count the total number of passes of one of the teams. Somewhere in the middle of the video and all of the passing, a person in a gorilla suit walks into the picture, lingers for a moment, and then walks out. The astounding insight from the study is that only about half of the thousands of study participants actually noticed the person in the gorilla suit.2
Although the invisible gorilla study is focused on the immediate attention of participants on a task, the quote and general idaea of the study are relatable to issues that pop up in manufacturing operations. After all, in complex operations people at all levels often get so caught up in specific tasks and ways of thinking that they are no longer able to see the “gorilla” that is causing an issue.
Before we look at a couple of examples, however, let’s stop and consider what’s happening on shop floors and leadership positions since the COVID-19 pandemic hit.
Does this sound familiar?
If you’ve noticed that employee absenteeism and turnover have become a bigger problem since the COVID-19 pandemic started, you’re not alone. Virtually every leader we talk to is struggling with them in one way or another, but most think it’s a problem that’s unique to their organisation. But the reality is that absenteeism and turnover has been a big issue even before the pandemic for many manufacturing companies.
While heightened employee absenteeism and turnover during a pandemic aren’t necessarily surprising, the relative stability in leadership positions has been. When the pandemic started, it seemed like it would be a matter of time before there was a surge of highly qualified leaders available on the job market. But that hasn’t happened. It’s still hard to find good people at all levels. Especially great leaders.
Virtually everyone can agree that absenteeism, turnover and inexperienced leaders significantly hinder performance and throughput and drive up operational costs. But when it comes to what’s causing the issues, things quickly get murky.
Perception versus reality: 3 quick examples
Often times peoples’ job focus makes it very difficult for them to see the gorillas that are actually causing performance issues. Rather than stepping back and figuring out what the data says, they make assumptions and take steps, such as adding a line when throughput is failing to meet demands, that make the most sense based on their roles and/or influence within the organisation. It’s understandable because figuring out what’s actually going on can be difficult. Just consider these examples:
1. Adding a shift to compensate for low turnout
After struggling with low turnout, one manufacturing plant added a shift to make up for decreased output but didn’t think through the additional staffing requirements. After struggling to fill the additional positions, it turned to temporary workers and faced a new and challenge related to high turnover and constant training requirements. TBM conducted a one-week talent assessment and a three-day Kaizen with HR and Operations to get down to the root cause for employee turnover and a go-forward improvement plan. Through this assessment we discovered that their defunct or nonexistent hiring and training processes, along with an antiquated wage structure, was leading to volatility across the workforce.
2. Addressing high turnover with faster onboarding
A manufacturing plant was dealing with turnover well over the national average. Their solution to the problem had been to ramp up hiring processes and bring new people on board as fast as possible, but they didn’t understand why people continued to leave almost as fast as they had come on board. After a two-week review of plant operations, TBM determined that although the plant had an efficient hiring process, systemic cultural issues within the organisation were driving people away.
3. Disconnects between corporate and local teams
TBM had helped a manufacturing plant fine-tune its packaging lines, but it was hard to determine performance improvements because of 19 open positions across the lines. The manufacturer’s corporate team knew that it was hard to find people in the area, but nobody knew why, and the local team wasn’t asking for help because they thought they had things under control. At the request of the TBM consultant, the TBM Leadership Solutions performed a diagnostics on existing processes across operations and HR to try to better understand what was happening and why. After breaking down the KPIs and measuring all of the data, the Leadership Solutions team found clear disconnects between what corporate and local teams thought was happening versus reality. By conducting a market (competitive) analysis, changing the hiring strategy, restructured the talent and onboarding process, the plant was able to get to zero open positions in less than ten days and maximise throughput across the lines.
Getting to the heart of the problem
These types of performance issues can be related to all kinds of factors, ranging from a communications breakdown among leadership to a lack of clear visibility into human capital processes. One part of the problem is often related to the fact that leaders from operations and other teams view challenges differently and don’t get together to really try to understand what’s going on. Therefore, leadership teams may not dig deeper for other factors potentially causing employee absenteeism or turnover, such as the competitiveness of wage and benefits packages or career advancement opportunities. Another big problem is that manufacturers usually measure virtually every part of their operations other than the human capital component. And that makes it easy to blame issues on equipment or the job market or other factors you feel you have no control over. The actual root cause of these problems could be (and in most cases are) within your current leadership or talent acquisition and onboarding processes.
Measuring what matters for human capital
It’s important to pinpoint what’s causing absenteeism and turnover. Typically, we find issues across one or all of the following three areas:
- Talent acquisition
- Onboarding training
- Retention programme
In our experience, when you define and measure these areas and their impact on the shop floor, you might be surprised at what’s been hiding in plain sight, such as:
- The lack of a clear footprint in the organisation and community for helping to attract the best talent
- Leadership changeover approaches that cause frustration among employees (including lack of adequate training and leadership development for promoted managers)
- A lack of standard work for each role and/or insufficient training practises
- Non-competitive salaries or benefits
- Undefined career paths
- Cultural limitations
Ultimately, having a clear understanding of what’s happening with human capital enables you to find ways to control costs and optimise productivity and quality, helping you make the most of all of your people in good and difficult times.
What is the REAL root cause of your performance issues?
When manufacturing companies are struggling with performance, they commonly default to looking at equipment for issues and solutions. But in reality, human capital and employee retention issues could easily be the culprit. Especially in today’s manufacturing environment. TBM looks at performance issues holistically. Not only do we have 30 years of experience practising continuous improvement methodologies on the shop floor, but we bring our manufacturing expertise to your human capital challenges. That means, unlike other operations or human capital consulting firms, we know how to look across all of your business processes and teams to understand what’s really causing issues—including absenteeism and turnover—in your organisation and provide sensible solutions that drive immediate results.
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1Daniel Kahneman, “Thinking Fast and Slow;” Farrar, Straus and Giroux; 2011. 2Christopher Chabris and Daniel Simmons, “The Invisible Gorilla,” Broadway Paperbacks, 2009.
