Greetings from 32,000 feet above Salt Lake City, Utah.
Today, I visited a factory with one of my clients who is a key supplier, and I took an incredible tour led by the materials manager, Bob. In this plant, the materials manager isn’t a senior executive or even a top manager. But Bob’s passion for his operation and understanding of his company’s goals were most impressive and instructive.
Here are some highlights. Before our tour, Bob outlined his operation’s six core values:
- Service to the customer
- Cost (his operation is a cost center, not a profit center)
- 5S. It stands for sort, straighten, shine, standardize and sustain. Far more than just housekeeping, it’s a system for workplace organization that gives employees a sense of ownership, involvement and responsibility.
Bob explained he and the other two shift leaders run a five-minute huddle every day. The agenda is short.
The five-minute daily huddle
He starts with a safety review, asking his team to relate examples of good safety practices in use and if they’ve observed anything that raises a current safety concern. If time allows, they will also discuss one or more of their other core values.
I noticed several exemplary practices, clearly borne out of careful planning. First, they do have a safety culture. Bob explained they acquired many tools, such as their machine tools, or even the robotic packagers, specifically to improve worker safety and reduce injuries.
A 5-gallon pail of lubricating oil can weigh more than 50 pounds, so back injuries used to be very common. Not anymore.
Another standout observation was the factory’s cleanliness. Making beautiful fasteners is actually dirty work. Steel requires lots of petroleum for lubrication. That means splashing water and oil. Yet this plant was immaculate. Nonetheless, Bob still apologized, saying it wasn’t up to his personal standards.
Hire the right people and offer incentives
I told Bob I was so impressed with everybody I met at his factory. Despite a tight job market with employees hard to find, they hire only one in every 25 people interviewed. Even in a tough hiring environment, they haven’t relaxed hiring standards. It’s their key to hitting operational goals every year.
I asked Bob about wages for the production workers. A plant floor worker earned about $20 an hour last year, but each also received a 2014 bonus check of about $4,500!
I asked him how bonuses were calculated. Guess what? Bonuses tie back to the organization’s six core values. Workers first need to meet their cost budget, which typically means a 5 percent improvement over the prior year. Then they must receive no deductions for problems related to the other five core values. If they hit those targets, the company splits the amount saved over budget 50-50 with employees, with everybody awarded an equal share.
I teach this stuff every day in my planning work. That’s what made this experience so cool and personally validating: meeting rhythm, identifying core values, simple but repetitive cascading communications, and hiring the right people. But here I got to see it all come together to substantively impact an operation.
Sometimes I get client pushback: “We’re getting too big to run daily huddles,” or “I have to settle for C players because there just aren’t any A or B players available.”
But this big operation, a Fortune 500 company that produces almost 10 million units per year, continues to stay true to its core values and maintains high employee standards.
Yes, indeed, I love it when a plan comes together!
-As a serial entrepreneur, business and community leader since 1983, John Howman has led a variety of businesses, from technology to consumer products companies. He leads two groups for TEC, a professional development organization for CEOs, presidents and business owners. He can be reached at JHowman@AlliedCG.com.