There is a common misconception that accountability enforcement is about punishing people. However, accountability enforcement doesn’t have to be about punishing people. Proper accountability enforcement is about aligning people’s collective efforts to achieve a greater goal for an organization. In order to align people’s collective efforts, certain conditions need to be met for accountability enforcement to produce positive results.
Conditions necessary to enforce accountability:
1. Clearly defined goals
In order to hold people accountable, there has to be a goal they pursue. At the beginning of a month or a week, all team members need to have a goal they are working to achieve. This can example be a productivity goal. The goal must be defined in at least two levels. An overall goal, which shows collectively how much a company is expected to achieve. Individual or group goals, which shows how much work each person, group or shift is expected to achieve in order to collectively attain the overall business goal. Take a warehouse for example; you can have an overall productivity goal which dictates how fast orders need to be fulfilled. This goal can be broken down into individual productivity goals for order pickers, loaders, and replenishment personnel. This allows each group of warehouse workers to know how fast they need to operate without being a bottleneck to operations.
2. Operational visibility
In order to hold people accountable, leaders need to have visibility into their operational activities. Moreover, employees need to be able to readily see how much work they are accomplishing and where they stand in relation to their goal. This gives employees a chance to judge their performance and correct it if it falls short of expectations.
3. Informed stakeholders
People need to know how their contribution impacts the overall performance of the business before being held accountable to a goal. Moreover, people need to understand the impact of their actions on their performance for fair accountability enforcement. For example, if an employee knows how much 30 minutes of idling lowers their productivity, they are unlikely to slack. Accountability enforcement works best if people clearly understand the performance management system. It is necessary to ensure all team members understand the performance management system used to enforce accountability.
Accountability enforcement doesn’t have to be a witch hunt if you set up conditions that allow people to have better control of their performance. In the long run you get better results if you rely more on positive reinforcement other than negative consequences. Even if you have few stragglers, give them a couple of chances before you unleash negative consequences.
Global multinationals generate a lot of mixed emotions from people. To some, large corporations represent all the things wrong with capitalism. However, we are going to focus on the things which give these companies operational competitiveness.
Business giants have a global reach employing hundreds of thousands of employees. They have the most complicated operations. The big question is; what do these companies do to achieve operational excellence that allows them to thrive?
Business giants invest heavily in technology. They then use technology to create competitive advantage. Technology allows them to automate repetitive tasks, track operational activities, control operations, foresee bottlenecks etc. Moreover, they use technology to quickly solve complex operational problems. Technology allows business giants to have well run operations.
Business giants always ensure they have complete visibility of their operations. Visibility allows these businesses to grow and maintain their size without jeopardizing control of their operations. This ensures operational reliability. Moreover, visibility allows business giants to generate immense cost savings. This is because visibility helps them remove inefficiencies from their operations.
Business giants consistently enforce accountability. Accountability allows for these business giants to maintain high operational standards across their entire operations. Consistently enforced accountability reduces the likelihood of operational failures such as accidents, unnecessary downtime, misplaced inventory etc.
To stay competitive, small business must follow the ways of business giants. This can be done by adopting best practices such as investing in technology among-st other things which have proven to be a recipe for success.
What is it?
Operational visibility is the ability to objectively track and monitor all operational activities within your business.
Conditions necessary for business growth:
What happens if you grow without having operational visibility?
Operational visibility gives you control of your business. If your business grows without operational control, there is potential for the following to happen:
Having operational visibility does not automatically set you up for growth. There must be a deliberate effort to use visibility to establish operational control. Complete operational control will then establish conditions necessary to accommodate growth.
What is it?
Operational visibility is the ability to objectively track and monitor activities within an organization.
What is the connection between operational visibility and costs?
Operational activities make up a significant portion of business expenses. How operational activities are carried out ultimately affect costs incurred by a business. High efficiency operational activities correspond to low expenses. While low efficiency operations are expensive to run.
How to achieve cost control using operational visibility?
What happens if you don't establish a connection between costs and operational activities?
Overtime, it becomes harder to objectively explain and control business expenses.
What is it?
Operational visibility is the ability to objectively track and monitor activities within an organization.
Why does it matter?
What happens if you don't have operational visibility?
Overtime, controlling operations become increasingly difficult. This leads to;
When should you start to worry about visibility?
Once a business has 40 employees or more, the management team slowly starts to lose visibility. At this point, the management team needs to rely on visibility tools to maintain control of the business.
What is the connection between operational visibility and KPIs? Visibility is the ability to track activities within an organization. KPIs on the other hand, show performance of an organization. Performance of an organization reflects its activities. If KPIs are representative of activities within your business, then KPIs give you visibility. If your KPIs neglect to show performance in certain areas of your business, then they don't give you complete visibility.
When do KPIs fail to give you visibility?
1. When KPIs neglect certain areas of business. In some cases, businesses tend to assign KPIs only to major parts of their operations. Running entire portions of a business without KPIs limits visibility and control. In such cases, KPIs don't provide adequate visibility.
2. When KPIs are oversimplified/generalized. Sometimes businesses oversimplify KPIs for convenience. However, this can come at a cost of missing factors that influence performance. In other cases, businesses tend to generalize KPIs for all their departments. This is convenient but can miss important indicators specific to one department.
3. When the connection between KPIs and real performance breaks down. In some cases, KPIs don't get changed as a business evolves. Over time the connection between KPIs and real performance breaks down. In such cases, KPIs provide myopic visibility to operational activities.
For KPIs to provide you adequate visibility, you need to peg your KPIs to core issues affecting performance. If not, you at least need to understand how KPIs are related to real performance. For example, cost KPIs are popular in logistics management. To get the best out of logistics cost KPIs; you need to understand that productivity is the real cost driver and cost KPIs only show the impact of productivity. High productivity reduces operational costs while low productivity has the opposite effect. If your logistics cost KPIs are showing bad results, productivity is your culprit.
1. Visibility can reduce operational costs:
Visibility can help you notice inefficiencies in your operations. Inefficiencies lead to thousands of dollars in unnecessary expenses. Removing inefficiencies reduces unnecessary expenses. Without operational visibility, inefficiencies can go unnoticed.
2. Visibility can help you foresee bottlenecks in your operations:
Every operation has at some point experienced a disruption or bottleneck. Such a disruption can either be activities slowing down or operations grinding to a complete stop. When you have a bottleneck in operations your customers get unhappy. Moreover, you end up spending more to deal with the disruption.
Visibility can help your business foresee and stop a bottleneck before it becomes a problem. Visibility allows you to monitor how fast goods are moving in different segments of your logistics. The operational segment with the lowest productivity usually ends up being a bottleneck. If you notice activities slowing down in one of your operational segments, you can deploy additional resources to speed things up. This will allow you to avoid a bottleneck before it becomes a big problem.
3. Visibility creates a suitable environment for continuous improvement:
"You can't improve what you don't measure" is an adage that makes visibility necessary for continuous improvement. Visibility allows you to measure the performance of your business. Performance measurement creates a suitable environment for continuous improvement. If you don't have visibility, you can't objectively measure performance. Thus, you can't be certain if a process improvement initiatives are improving your business.
Visibility has more benefits than the 3 above. Visibility can also help improve reliability, accountability and operations management among other things. The most important thing to keep in mind is: benefits of visibility only come to life if there is a deliberate effort to improve operational processes.
Operational visibility is the ability to objectively track activities within an organization. The extent of visibility can vary as follows:
1. Complete visibility in which you are able to track all activities; and
2. Partial visibility in which you are not able to track all activities.
Example: Visibility in trucking operations (similar logic can be applied to other industries)
If you can readily access the answers to the following questions, then you have reasonable visibility into your operations.
1. How many trucks are available for use?
2. How many trucks are on the road?
3. How much weight are the trucks on the road hauling?
4. Where are your trucks heading to?
5. How much time will each truck take to complete the delivery process?
6. How many hours of work is each driver scheduled to work?
7. What is the maintenance history of your trucks?
8. How many trailers are available for use?
9. How many trailers are currently in use?
10. What is the current level of trailers, trucks and cross-dock utilization?
11. What are the operational activities at your cross-dock facility?
12. What is the current level of inventory to be shipped at the cross-dock facility?
13. How much are the operational costs?
14. What are your cost components and their relative size?
15. What is the current performance level in relation to performance targets?
16. How many shipping requests are in progress?
17. What are the details associated with current shipping requests?
18. What are the details associated with outstanding shipping requests?
19. How much revenue is being generated from current operational activities?
Being able to answer the above questions is one step towards attaining visibility. The second step is figuring out the accessibility of operational information. Thus, visibility can also be classified as real-time or delayed depending on accessibility.
Real-time visibility: the ability to get real-time information from operations. The best example of this is real-time information through dashboards. Another example is real-time access to operational data. Real-time visibility allows you to respond to operational challenges as they happen.
Delayed visibility: operational information is not accessible in real time. Most businesses are in this category. Delayed visibility does not allow a real-time response to operational challenges. Even with its’ shortcomings, delayed visibility is better than no visibility.
Businesses should not chase after full visibility without a clear strategy on what to do with the visibility. Visibility is only useful if it helps improve business outcomes. To get full benefits of operational visibility, it needs to be paired with other best practices such as accountability and a culture of continuous improvement.
"You can't manage what you don't measure" is an old adage that holds true for any business. Thus, you should measure and analyze all aspects of your business in order to manage it competitively.
Benefits of measuring and analyzing your operations:
Analytics can highlight hidden inefficiencies in business processes better than simple human intuition. And for that reason, futuristic organizations have already incorporated analytics into their management practices. However, the challenge for almost all businesses is to generate valuable insights from analytics. Theoretically, it is easy to say that analytics adds value, but in reality, the “how” is more difficult. Below, you’ll find six steps to incorporate analytics into improving your business management. The goal of these steps is to reduce inefficiencies — in essence, this is the path to improving performance.
Step 1: Create a Credible Sales Forecast
Because your sales are influenced by myriad factors ranging from general economic conditions to your customers’ behavior, a credible forecast takes time to establish. For an accurate forecast, you must invest time to understand and quantify the impact these factors have on your business.
No matter how small your business is, you’ll likely find an overwhelming number of factors affecting your business. To avoid analysis paralysis, narrow your focus to a handful of variables that have the biggest influence on your sales.
Your forecast accuracy will probably be low the first few times you do it; however, that shouldn’t deter you. As long as your forecast accuracy improves over time, you are on the path to creating a credible forecast. After all, forecasting isn’t a science, but rather an art of predicting things as close to reality as possible.
Hitting a forecast accuracy of about 90% is usually good enough to prove that your model is credible. It’s not uncommon for demand planning models to take a couple of months to hit 90% accuracy, and some take years. However, don’t get hung up on 90%: The key thing is having a forecast that can guide you to make good decisions. A good forecast is only good until it is not — and thus, it is important to periodically update your demand planning model to reflect the ever-changing business landscape.
Step 2: Translate Your Forecast into Resources Needed to Fulfill the Sales
Once you have a credible forecast in place, you need to know the resources you’ll need to fulfill the expected sales. This step seems to be the most obvious one — but this is usually where most businesses fail.
Based on historical performance of your business, you should have an engineered performance standard. Use the engineered performance standard to deduce the optimal resources needed, such as labor hours and equipment.
The concept of having an engineered performance standard seems trivial, but such a standard is key to eliminating inefficiencies: An engineered standard implicitly establishes the expectation of how operational tasks need to be performed to avoid idle time. The absence of an engineered standard creates room for unnecessary idle time to affect your operations.
Step 3: Share the Plan and Clear Expectations with Your Team
After you have established the optimal resources needed to fulfill forecasted sales, communicate the information to your team. In operational plans don’t go beyond senior managers, even though such managers do very little to manage day-to-day operations.
You should also set clear expectations on what employees need to achieve to adhere to the plan you set. For example, if the plan says employees will need to put in 100 hours of overtime to fulfill expected sales, you must inform the shift supervisor. Most importantly, you should hold the supervisor accountable to overtime hours after the sales are completed. If they do better than the plan, give everyone involved a pat on the back. Otherwise, the supervisors will need to explain why they failed to stick to the plan.
Unfortunately, holding people accountable in the workplace can create negative connotations. Our version of holding people accountable focuses on understanding why the issue happened. Thus, an operations supervisor should be expected to explain why they used more overtime than they were allowed. A reasonable such explanation could be unexpected sales spikes or orders that were difficult to process.
Step 4: Monitor Operations Status for Forecast Deviations
Creating an operational plan is just half of the work. The other half is building a contingency plan in case the forecast is wrong. In fact, having a completely accurate forecast takes a lot of luck. In most cases, a forecast varies slightly from actual sales figures. If the deviation is small, you usually don’t have to do much to arrange more resources to complete orders. However, if the deviation is large, you might need to activate a contingency plan.
A contingency plan can take many forms, such as having an arrangement with a temp agency to bring you extra labor if there is a sales spike. What you don’t want to do is search for a temp agency for the first time when you see a sales spike. Instead, you’ll want to speak with an agency early on, so that if you need extra labor, all you have to do is make a phone call.
Step 5: Collect Feedback, Review Operations Data, and Make Improvements
After you have processed all the volume as per the forecast, collect operational data and feedback from all stakeholders. Collect feedback on the efficacy of the plan you created, how difficult it was to enforce, what went wrong, and how sales spikes and dips were handled. Use this feedback to improve how decisions are made in response to variation from the original plan.
If the forecast was off, identify the reason why you got it wrong and use it to improve the model. If performance was far below or above the engineered standard, identify why. You need to know if there was a labor issue, or if the engineered standard needs to be changed.
Try to avoid turning this step into a blame game. Remember, the most important outcome of this step is to improve the forecasting, resource planning, and operations management. Mastering this 5th step is what leads to process improvement.
Step 6: Repeat Steps 1-5
Your business operations will change as much as your clients and their needs change. Thus, you will always need to improve your forecasting model, performance expectations, and your response to market changes. If you make steps 1 through 5 part of your organizational culture, over time, your business will become more efficient.
Don’t let continuous improvement fall to the back burner — your business’ competitive edge relies on it.