Training with a Purpose
Training as a strategy to improve productivity and drive operational excellence
PROCESS VERSUS TASK TRAINING
Training is often viewed within the context of assisting employees in the completion of tasks as part of an individual’s duties. However, training from a strategic perspective is often overlooked. This changed in the mid 1990s when many organizations, in the US, began to define training with a purpose to improve operational excellence. Such training required “process thinking” and was a fundamental shift from the traditional “task training” an employee received to support their job. Strategic training requires a process view of the organization. It demands employees understand their role in the context of a process and how they are part of a larger system. When training is thought of as a strategy to support operational excellence, productivity benefits are realized.
As an example, the financial function within an organization responsible for reporting month end financial data was always late. This led to a number of difficulties in managing production and inventory. This uncertainty affected productivity negatively. Management implemented a software solution and provided task training to employees so that they would learn how to complete new tasks. Unfortunately, the capital investment did nothing to reduce the reporting time and productivity improvements were never realized. As an alternative, training was provided to the director and key employees in process thinking, mapping and charting. After the training was completed, the team mapped the existing process, collected and analyzed data, and developed an understanding of the process. Through this exercise, they identified a special cause event that accounted for 80 per cent of the delays in month end reporting. The team discovered an inexpensive solution and improved productivity. In the case described, a “special” cause event was the root of the problem for which a solution was found that improved productivity. When training teaches employees how to use “process thinking” concepts and tools to identify a “special” cause event, the opportunity to identify a remedy increases and negates new capital expenditures.
WHY IS PRODUCTIVITY SO IMPORTANT?
In table 1, the period between 1996 and 2006 saw GDP increase by 3.8 per cent and 3.6 per cent in Canada and the US respectively. The increase in Canada’s GDP is largely explained by a 53 per cent increase in hours worked whereas the increase in US GDP was explained by a 78 per cent increase in productivity. Why did productivity drop in Canada? Essentially, the exchange rate difference made labour cost effective at the expense of productivity.
John Tylak P.Eng, a former manager with a large Canadian manufacturing company in Southern Ontario said, “We never thought the Canadian dollar would be at par with the United States. By the time it reached 85 cents, we were no longer productive. Poor productivity cost us $1 million for every cent the Canadian dollar increased.”
Manufacturers cannot use currency as a means to offset poor productivity. This is further evidenced in productivity statistics shown in table 2 where the contribution to output per hour worked is shown. In Canada, a 1 percent growth in output per hour worked is explained by the contribution of capital deepening at 0.9 per cent; a measure of capital investment. Whereas, a 3 percent increase in output per hour
worked in the US is the result of a 0.9 per cent increase in capital expenditure, 0.4 percent increase in labour skill, and 1.7 percent increase in multi-factor productivity growth. Multi-factor productivity growth is a measure of technological progress and organizational change. It is significantly affected by an organization’s ability to utilize strategic training to improve productivity.
My experience shows that training in the US has concentrated more at the strategic level with an objective to achieve operational excellence through productivity gains. I believe this explains the increase in labor composition and multi-factor productivity growth that contributed to large productivity gains in the US compared to Canada. In Canada, a continued decline will impede competition with the US and may affect Canada’s long term standard of living. To improve productivity, training should be viewed as a strategic initiative. Training should target skills that develop “process thinking” and create new knowledge to improve productivity.
WHY WE NEED PRODUCTIVITY TRAINING?
When process problems are excessive, they cause productivity shortfalls in on-time delivery, quality and cost. This leads to financial instability and excessive “fire-fighting”. When “fire-fighting” becomes a habit, the culture of the organization accepts poor productivity. This illustrates the period in Canadian manufacturing between 2000 and 2006. When an organization accepts poor productivity, the behavioral intentions of customers will change. Customers will seek reliable suppliers that can demonstrate on-time delivery, good quality and price. Training at a strategic level with a focus on “process thinking” is an excellent way to change old habits and foster a culture of productivity improvement.
TRAINING, TECHNOLOGICAL PROGRESS, AND PRODUCTIVITY
Technological progress can be realized through advancements in current production equipment. Often, these advancements are the result of new knowledge acquired through systematic investigations using “process thinking” tools and methods to resolve problems, improve productivity and eliminate the need for new equipment.
Since 1995, a positive shift in US productivity improvement began that favored technical training to improve productivity without the capital expense. US companies realized that productivity through investment in new production equipment is not without risk since the user’s base knowledge in such equipment is minimal at the point of purchase. When old equipment cannot meet customer expectations, companies rely on the supplier of such equipment to resolve their productivity problems. This results in sub-standard product and contributes to additional labor and higher costs. In the US, technical training programs were developed to teach employees how to conduct a systematic investigation with a goal to improve productivity. The training addresses three key questions:
3 STEPS TO OPERATIONAL EXCELLENCE
1. How do we measure our operational problems?
2. How do we identify and manage continuous improvement versus capital investment projects?
3. How do we conduct a systematic investigation?
The first question required the computation of a metric that described the relative health of each cost center within an organization. A common productivity metric is overall equipment efficiency or OEE. This measure of effectiveness and efficiency may be decomposed into three components, availability, performance, and quality. Individually, these metrics ask the following questions. Does the process avail itself to perform work? Does it do so at the required rate and does it yield right first time products or services?
When OEE data are collected across time, statistical methods can measure the degree of alignment between expectations and the ability of the business process to meet those expectations. When the data suggests the business process cannot meet expectations, management must have a fundamental understanding as to whether or not the problem is the result of a “special” cause event or “inherent” to the overall technology of the business process. If productivity shortfalls may he traced to a special cause event, then a systematic investigation will often yield a remedy that improves productivity. When poor productivity is inherent to the business process, then capital investment may be required to improve productivity. As such, management training in fundamental performance measurement and statistical process control methods is critical. Such training helps management look at OEE data and evaluate risk with a goal to separate continuous improvement projects from capital investment projects.
In most cases, the technical knowledge required to address problems is beyond the base level of an organization to resolve. Increasing organizational knowledge is achieved by using a robust protocol to discovery. For example, the Define, Measure, Analyze, Improve, Control or DMAIC protocol used in Six Sigma is an example of an approach that is used to conduct a systematic investigation. This protocol communicates how problems are characterized and optimized and what statistical and quality or “process thinking” tools are used in each stage of the protocol.
When we carry out a systematic investigation, not only do we benefit from productivity gains, the work is often rewarded with a federal tax refund! To learn more read the following: SRED Tax Incentive Program.
TRAINING WITH A PURPOSE
Strategic training is a collaborative effort between management and the technical levels of an organization. When management can identify their productivity problems and develop a training protocol that teaches employees how to conduct a systematic investigation using “process thinking” tools then technological progress and productivity improvement is achievable. Now this is training with a purpose!