THE SECRETS OF OPERATIONS

MANAGEMENT

An Operational Excellence E-Book

By Tim Mclean

FOREWORD One of the most important roles in any business is the operations manager. Often this person manages the greatest number of people and can have a huge impact on the success or failure of your business. So, what are the characteristics of a great operations manager and how do you find one? Equally, in a high-pressure role like this one, how do you make sure you have the right person and they are performing? This white paper will try and demystify some of the key questions around this important role in your business. ABOUT THE AUTHOR Tim Mclean has had a 25 year career focused on improving the operational performance of manufacturing business. Tim’s spend 16 years as an operations manager working for major companies across the chemicals, coatings, packaging and printing industries. His roles have included Operations and Supply Chain Director at PPG Coatings in Australia as well as General Manager of major packaging businesses for Carter Holt Harvey and Amcor. Tim has had a passion for Lean and continuous improvement since he was first employed as Continuous Improvement Engineer in the late 1980’s. In 2004 Tim turned this passion and experience into a business, establishing TXM Lean Solutions. TXM is now a leading global Lean consulting companies with consultants in Europe, North America, Australia and China and projects in over 20 countries globally. Tim is the author of two books, “Grow Your – Grow Your Profits: Lean for Small and Medium Sized Manufacturing Enterprises” was published by Productivity Press in the US in 2014 and is a practical guide to achieving operational excellence in a growing manufacturing business. Tim’s second book, “On Time in Full” was published in 2017 also by Productivity Press. This book shares Tim’s three decades of practical experience in optimizing operations and supply chains to deliver customers what they need, when they need it. Tim is a sought after speaker who brings practical common sense insights on the challenges facing operations leaders everywhere.

TABLE OF CONTENTS FOREWORD ...... 2 ABOUT THE AUTHOR ...... 2 TABLE OF CONTENTS ...... 2 1: WHAT MAKES A GREAT OPERATIONS MANAGER? ...... 3 2: HOW DO YOU RECRUIT A GREAT OPERATIONS MANAGER? ...... 7 3: FIVE CAREER LIMITING MISTAKES THAT OPERATIONS LEADERS SHOULD AVOID ...... 11 4: HOW TO AVOID THE SENIOR MANAGEMENT REVOLVING DOOR IN YOUR BUSINESS ...... 13 5: SEVEN REASONS NOT TO FIRE YOUR FACTORY MANAGER ...... 18

1: WHAT MAKES A GREAT OPERATIONS MANAGER? So, what are the signs that you have hired a really effective Operations Manager or General Manager in your business? They Prioritise Safety First and Then the Customer As an Operations Manager, they have a very direct responsibility for the safety of the people who work in your business. This responsibility translates to you as the business owner, CEO or Director as well. Therefore, the first thing a new Operations Manager is likely to do is to identify, assess and address any immediate safety issues. This also demonstrates their commitment to their team and provides them a chance to demonstrate that they are committed to the standards they set – so production never comes before safety. Next to safety, an Operations Manager should recognise that any business must always meet the needs of its customers. This means that the Operations Manager will address quality and delivery issues, before leaping in to cost cutting. It also means that an Operations Manager will use positive language about the customer and be curious to learn what customers really need and value from the product or service the business provides. They are Humble and Put the Team First Often, we look for Operations Managers who are bold, tough, confident and decisive. These characteristics can be useful, but in my experience the best Operations Managers constantly give the limelight to their team. When talking about the projects and achievements of their area, they will use “we” and “us” more than “I”. In presentations, they may often let their team present and take a back seat themselves. They will also stand up for their team and support them, even at some cost to themselves. However, they will be decisive, fair and consistent in managing the performance of the individuals on their team. They will value the experience around them and look to develop the people they have before turning over key roles. However, they will also be prepared to challenge complacency and entrenched views, which may include challenging some of your long serving subject matter experts. If you want to learn more, pick up a copy of “Good to Great”, by Jim Collins and read about “Level 5 leadership”. The TED Talk “Why Good Leaders Make You Feel Safe” by Simon Sinek is also a great explanation of what good leaders do. An Operations Manager who displays these traits will earn the respect of their team rather than expect it. This earned respect is typically rewarded with the team confidently following the direction the Operations Manager set and makes the team more at ease with deviating from “the way we’ve always done it”. Because, they are humble, they good leaders admit what they don’t know and ask for help when they need it. This should not be seen as a sign of weakness, but in fact is a sign of strength. It takes strength to reveal one’s weaknesses and vulnerabilities and ask for help. Rather than criticising or rejecting such requests, you should welcome them and try and provide the help and resources needed. They will also be respectful of others in the business. Behaviour like swearing, shouting or belittling staff have no place in the under any circumstances, especially from leaders. They will Develop People and Won’t Feel Threatened by Peers and Subordinates In fact, they will actively develop their senior team members and provide them opportunities, including allowing them to step up in to the Operations Manager role during holidays and travel. They will be comfortable allowing their team to make decisions and take full responsibility for aspects of the business. They will support their team, even when their decisions go wrong (they will never throw a team member “under the bus”). However, they will ensure that their team also takes accountability for the decisions they make and the responsibilities they take on.

They will work hard to develop peer relationships and invite feedback and involvement of peers. They won’t about peers or criticise peers (especially to their team). They also will not tolerate “them and us” attitudes in their team that can erode relationships between functions and impact customer service. When Things go Wrong, They Ask Why Not Who A good Operations Manager is not going to spend hours whining to you about their subordinates or their peers. Their focus will be on the process, not the individual. When things go wrong, they will ask why and seek to find and address the root cause of problems. This can be difficult and time consuming at the start, when there are many problems (its much quicker just to someone!), but it in the medium term it is an investment of time you must make if your business to sustainably improve performance. They Set, Maintain and Improve Standards Excellent performance is achieved from establishing well thought out standard processes and then continually improving these processes. An effective Operations Manager will therefore focus early in their role on establishing standard processes and ways of doing things. This can include standardising the organisation of the workplace with 5S, standardising key tasks with standardised work, standardising business processes in the key business value streams and establishing formal or informal service level agreements (SLAs) with the functions with which operations interact (e.g. sales and purchasing). In doing so, they highlight the importance and required level of respect between internal suppliers and customers. Having set the standard, the effective Operations Manager will work to maintain the standard. They know that the “standard they walk by is the standard they accept” and so they will never “walk by” something that is not to standard without taking action. They will also expect you to comply with these standards as well. Therefore, if you have got in to habit of walking in the workplace without personal protective equipment or not observing 5S standards, expect to be told to comply – and make sure you do! Sometimes this focus on standards can seem like bureaucracy and slowing things down and you are allowed to ask “why” things are being done a certain way. The effective Operations Manager will be comfortable with having their processes challenged and be able to explain why the standard needs to be followed or work with their team to improve the standard. However, they will always expect that there is a standard and that it is followed.

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They are Well Organised Operations Managers often have to juggle a broad range of responsibilities. Therefore, it is important that the person in that role is well organised. You should see this in a well organised desk and that shows signs of some kind of a system to manage daily activities and projects. Ideally, the Operations Manager will have a system of regular routines or leader standard work. These will be written down and tracked. You should be able to get some evidence of this being followed such as a tee card board or checklist. Beyond themselves, they will also expect their team to be well organised. Therefore, expect them to get their team members to develop their own plans and their own lists of daily routine tasks. They Have a Plan with Clear Simple Actions and Goals When your new Operations Manager starts, one of their first priorities will be to understand the business strategy and the role of operations in delivering that strategy. They will develop a plan for operations to support the strategy, while seeking your input and the input of the team along the way. They will quickly identify the few

critical metrics that drive operational performance and set challenging but realistic targets for these. These goals and the plan will be systematically communicated throughout the operations team so that every team member in operations knows their individual or team objectives and how they can contribute to improved performance. Importantly they will focus on the simple things first, getting the basics right before they start introducing more complex changes. They quickly identify the one or two key metrics that drive operational performance in the business and focus on improving those rather than introducing a huge range of metrics. Ideally, they will reinforce the plan and the objectives every day with a Lean Daily Leadership Process that provides feedback to their team and seeks their input on problems every day. This structure of short daily meetings will cascade up the organisation and they may encourage you to lead a regular stand up meeting or conference call at senior management level to help set the overall business direction and address high level problems. They Don’t Substitute Money for Brains Many Operations Managers are engineers. Engineers love technology (that’s often why they became engineers!) and get excited about robots and fancy data acquisition software. However, a good Operations Manager, will not be constantly presenting you with shopping lists of capital investments and software tools. Instead they will focus on trying to get the most out of the assets and tools they have. When they do come to you with a request for capital it will be supported by a strong business case, will be well thought out and will align with the operations plan and business strategy. You Won’t Find Them in Their Office Very Often The Operations Manager role is often the lynchpin of a manufacturing or distribution business. They typically have the most staff reporting to them and the greatest number of interactions with peers. Therefore, a good Operations Manager will spend a lot of their time out and about. You might find them out in the workplace, interacting with their team and observing the process on a workplace walk. They could be meeting with peers, running a daily stand-up meeting or having an on-site meeting with suppliers or customers. They will generally be on site (beware of the Operations Manager who always finds a reason to be out of the business), but even when they are in their office they will be rarely alone. Despite this, they may allow themselves a bit of solitary reflection time during the day to catch up on issues and plan future actions. This is often at the start of the day, around lunchtime or at the end of the day. If you see this, avoid getting in the habit of “just dropping in for a chat” at these times, but instead schedule regular structured catch ups in their office. Another mistake to avoid is over-loading your Operations Manager with transactional work. They are the key leader in your business and the person who will drive improvement in your business. They are also, typically, a fairly expensive resource. Therefore, tying them to their computer doing purchase orders, production schedules or stock adjustments is a waste of their resource and will prevent them doing their effectively. Get a clerical staff member on half an Operations Manager’s salary to do the transactional work and focus the Operations Manager on leading their team and driving improvement. They Tell You the Truth – Not Just What You Want to Hear It is nice to be told how great you are and how right you are. We all have an ego and are all susceptible to . However, a good Operations Manager will be prepared to give you challenging, considered constructive feedback and you need to be prepared to take it. You also need to be prepared to for the fact that not every idea you have will be regarded a good one. The Operations Manager should be comfortable with your presence in the business and on the shop floor, but it is best that these shop floor walks occur with the Operations Manager, at least at the start. Avoid the temptation to establish a “back channel” of communication with long term employees as this will strongly undermine your Operations Manager and make these long-term employees believe that they are “untouchable” because they have a “direct line to the boss”.

Conclusion There are many other attributes of a good Operations Manager, but if your new person is demonstrating most or all of the ones I have listed above, even if short term performance is not where you would like it to be, then it will pay to stick with them.

2: HOW DO YOU RECRUIT A GREAT OPERATIONS MANAGER? So How Do You Recruit a Great Operations Manager in the First Place? I put my head together with George Dimopoulos from Persona Executive, one of the most experienced and capable manufacturing recruiters I know. We came up with some simple steps that will hopefully enable you to find the right person for your business: Decide What the Job Is That You Are Recruiting For Often, I find companies recruiting for key line roles are not exactly clear what the role is that they are trying to fill. Is the person expected to be a hands-on leader on the shop floor or to lead and develop a team below them? Will the person be expected to manage all operational functions including maintenance, supply chain and quality or will these fall under others? Therefore, the first step is actually to define the role. How does it fit in your organisational structure, who will report to the role and what are the boundaries of the Operations Manager’s responsibilities? What are the objectives of the role and how will you measure success against these objectives? George suggested. “Think about your business plan and the improvements you would like to see in the next 1-2 years. Then tie the critical skills and experience to these outcomes.” In defining the role there are several key mistakes to avoid. Don’t create too wide a span of control. Ideally a maximum of six or seven direct reports enables the Operations Manager to give all his team enough support and avoids creating paralysis whenever the Operations Manager is not around. Don’t expect your Operations Manager to also be your Lean Co-ordinator, Project Manager, Production Manager or Buyer. The Operations Manager is a key leader in your business who is primarily responsible for the safe and efficient running of your operations. If they are bogged down in tasks like those, I describe it will reduce their effectiveness in leading your team.

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Be Clear About the Kind of Person You Need Once you have defined the role, it becomes a lot easier to decide the kind of person who will meet that role. Think about technical qualifications such as level of experience, academic qualifications and industry expertise, but also think about the kind of person you want. What will be their personal attributes? My article on “What Makes a Great Operations Manager” can help here. What kind of things might be “red flags” that show you that the candidate is unsuitable? Think about your business culture and the kind of people who have been successful in your business in the past. What were they like as individuals and what specifically made them so successful? If you can define these characteristics it makes it easier to look for them when you interview potential candidates. George suggested that you think about two concepts to help identify an achiever mentality: • Scope, scale and resources – when screening candidates, look at the scope of their control in previous roles, the scale of the operation they managed and the resources available to them to achieve the desired outcomes – these need to align with your business to ensure a successful fit. • Trend of growth over time – look at the candidates’ achievements over time – do they trend upwards? Are they driven through individual contribution by the candidate? Or by candidate’s leadership of a team? Or a combination of both? Getting the mix right will ensure a successful fit.

Don’t over-emphasise industry experience. Everyone’s industry is unique, but when you get too specific you reduce the available candidate pool too much. Therefore, asking for “a minimum 10 years’ experience leading a sheet metal fabrication operation” or “a minimum 5 years’ experience in hardware wholesaling” might seem like a good idea, but will eliminate the overwhelming majority of potential candidates. It can also mean that you are recruiting from competitors, which can be problematic. An experienced operations manager should be able to learn your industry and so it is better to keep the net a bit wider at the start. Consider What You Can Offer a Potential Candidate Why would a good Operations Manager want to join your firm? What do you have to offer? This is not just about salary and benefits or career opportunities, but it might also be about the work environment, your business’ culture or the unique challenges of the role or industry. Be honest about what you have to offer. One of the key problems that companies have with new hires is that the reality of the role often does not match the promises made in the recruitment process. If you are a small, privately run business and cannot offer a career path, be open about that. Not everyone wants to be the CEO and you don’t want that ambitious person anyway if you can’t offer them that role. However, an Operations role can offer many challenges and perhaps the plans that you have for your business will offer the right person the learning opportunities and career growth they need within the role. George emphasises this point by saying, “Top candidates will likely have a couple of opportunities available to them and you need a strong value proposition. This is even more important than salary.” Be Realistic About Salary It is nice to save money, but as the old saying goes “if you pay peanuts you get monkeys”! Get advice on the appropriate salary for the role and don’t try to save money by offering less. They candidates that apply will probably be unsuitable, if you get anyone applying at all. Even if you are successful, a good Operations Manager will soon work out their true value and you will find them either demanding you pay them what they are worth or (more likely) they will just leave. Use a Recruiter Who Actually Understands Operations You can manage the recruitment yourself, but in most cases a senior role, such as an Operations Manager, will involve the use of a recruitment consultant. Recruitment is one of those industries that does not get a lot of respect and much of the criticism is deserved. Many recruiters do not understand the roles that they are trying to fill and simply aim to “sell” a candidate in to role to “close the deal” and move on. Therefore, it pays to do some research and select a recruiter who has a proven track record and understands the role you are recruiting for. Often this might be a smaller boutique recruitment company, rather than a big company. When you find this recruiter, then treat them with respect and don’t run a beauty contest pitting multiple recruiters against one another for the same role. All this will do is that the serious recruiters will stop focusing on your role, while the high-volume recruitment companies will just throw candidates at you in the hope that one suits. Make the Most of the Interview If you are not highly experienced in recruiting, it pays to do some interview training. Learn how to ask questions that get the candidate to open up about their actual experience, rather than just talk in generalities. Get them to share specific examples and make sure that they tell you what their role was in the achievements they describe. Look beyond what they achieved and notice how they talk about the way they achieved it. This will reveal their management style and personal values. Be prepared for the interview and make sure you have read the candidate’s resume thoroughly. It pays to have more than one person in the interview, and to have more than one interview. That way you provide the candidate more than one opportunity to reveal themselves and you get different people’s perspective on the

candidate. When two of you are interviewing a candidate, prepare beforehand and be clear on what your respective roles will be in the interview. It can pay to have one person asking most of the questions and second person mainly focused on observing the candidate. In a good interview the candidate does about 70% of the talking so keep the background about your company brief and focus on what they have to say. Always ask whether they have any questions as this will reveal how much they have thought about the role and your company. George suggests opening a conversation with the candidate about the specific outcomes required and ask the candidate whether they have achieved anything similar and how they would approach it? What problems do they foresee, and would they get around it? Always Check References Never hire someone without speaking to referees. Clarify the relationship of the referee to the candidates and make sure that they are someone qualified to give you good insights on the person you are considering. Ask the referee open questions, rather than ones that can be answered by a yes or a no. Referees will usually be reluctant to tell lies, so be prepared to ask them whether they would re-employ the candidate and if so, why. Ask the referee to be specific and give examples of the way the candidate has worked in their business. Double check the candidate’s reason for leaving as well if you can. George says, “Remember to verify the achievements stated in the resume or at interview. Don’t rush the reference, ask about how development needs were identified and how the candidate developed over time.” George also points out that when evaluating reasons for leaving it pays to remember two likely scenarios: – some people are running FROM something and some people are running TO something. So, it is worth trying to work out what they are running from or running to! Take your Time and Get the Right Person Often recruiting seems “urgent”. You feel that you simply cannot go another month without the role being filled. However, never rush recruitment. If you find that a recruitment cycle has not yielded a suitable candidate, don’t hire an unsuitable one, start again. Review the role, the advertisement and the salary and try and see what you can do to make the role more attractive. Perhaps open the role up in terms of length or type of experience or qualifications. Re-write the advertisement if necessary and consider using other recruitment channels or perhaps another recruiter for the second round. However, keep going until you get the right person. Hiring an interim manager can often take off some of the pressure to hire someone. Once You have Found the Right Person – Act Quickly “Playing hard to get” might seem like a good approach on the dating scene, but it is a disaster in recruitment. Once you know the person you want to hire, act swiftly. Keep communicating to the candidate regularly – even daily, giving them updates on the progress of approvals, contracts and starting dates. A communication vacuum or excessive delay can lead good candidates to take matters in to their own hands and accept another role – sending you back to square one. Plan a Good Induction and Introduction to Your Business Every new recruit needs support when they start their new role. Make sure that you have planned the new manager’s first day and first few weeks. Ensure that basics such as their computer, office accommodation and IT access are in place. Allow for plenty of your time to induct them in to the business, introduce them to their peers and team and explain to them in detail what you want for the role. Set clear goals and targets but give them time to develop their own plans too. Set regular focused catch ups (rather than just water cooler chats) to discuss their progress and the support they need from you. Be open to their ideas and the things they feel they need to succeed in their role.

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Conclusion Deciding who to recruit is the most important decision you will make as a manager, so it is important to do it well and thoroughly. Take the time to get it right and you will make your job easier in the long term and greatly improve your business. Get recruitment wrong and you will simply be facing a “management revolving door” in a few months’ time. To contact George Dimopoulos, email [email protected]

3: FIVE CAREER LIMITING MISTAKES THAT OPERATIONS LEADERS SHOULD AVOID Managing operations is tough, whether you are in manufacturing, service, distribution or resources. You are responsible for ensuring that the wheels of the business keep turning, and when they don’t the fingers get very rapidly pointed at you! Senior leaders in Operations often have the largest proportion of the workforce reporting to them. They need to balance improving performance by ensuring that day to day operations run smoothly. I spent 16 years as an operations manager in manufacturing and learned many hard lessons. Since starting TXM in 2004 I have worked with dozens of operations leaders across numerous industries. Unfortunately, we see a lot of operational leaders who make life difficult for themselves with some simple mistakes. These can have some very bad consequences for the businesses they work in and for the managers themselves. Top Five Operations Mistakes Made by Leaders Trying to be Hero There is a worrying tendency among many operations leaders to want to prove themselves. To these leaders a result is only worth achieving if it is achieved through their own intellect and personal endeavour. As a result, they fail to get help and often reject help if it is offered. Of course, in some cases they do succeed, but they often take on too much, set expectations too high and fail. This is particularly the case with a major change project such as restructuring, relocating a factory or warehouse, implementing Lean or implementing a new software system. As an operations leader you are responsible for achieving outcomes. Whether you achieve these outcomes “all by yourself” is not important. Often the cost of the resources needed to ensure that change is done well are insignificant compared to the damage that can occur to the business when change is poorly executed. So, next time you feel the urge to “go it alone” on a major change, remember that you are not helping the business, you are just helping your ego. In fact, you may be putting your business (and your career) at unacceptable risk. Managing Down Operations leaders like to be “hands on”. It is good to be visible and aware of what is going on, but if you find yourself approving every purchase order, checking every labour roster and dealing with every issue, you are probably managing down. By this I mean doing the work of the leaders that report to you. This might sound like being helpful, but the result is that you will frustrate and dis-empower your team. It will also mean that you will be too busy doing everyone else’s job to do your own, meaning that your performance will suffer in the eyes of your manager. Instead, manage by exception. Take care to hire the right people on your team, give them clear accountability, regular feedback and let them do their job. Hiring the Wrong People The most important decision you will ever make as an operational leader is who you give a job to. Get recruitment right, support those good people you hire or promote, and your job will become a lot easier. Therefore, don’t rush into recruitment. Be very clear on the role you are hiring for and the type of people needed for that role. Don’t rush into taking the wrong person. It is better to advertise again to hire the right person. When you hire someone, make sure to support them to get started, to understand the role and understand your expectations. Then give them regular (daily if possible) feedback. If you make a mistake and someone does not work out, move quickly, transparently and decisively to move that person on. When you have to terminate an

employee that usually involves a failure of your recruitment and management of that person as well as their failure. Therefore, before you go and hire again take a little time to work out what went wrong, so you don’t repeat the mistake. Do as I Say Don’t Do as I Do As the leader, you set the example. If you are out the front of the workplace every five minutes having a chat and a smoke, don’t expect your team to stay on the job at their . Swearing and shouting will result in it becoming part of the culture. If you walk around without Personal Protective Equipment, then don’t expect anyone to wear it. I have seen all these things and worse demonstrated by people who call themselves leaders. The most fundamental nature of leadership is that that you lead, others follow. Therefore, if you don’t comply with the standards you set, no one else will – and don’t expect anyone to respect you either.

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Getting Stuck in the Office It is very easy to get trapped in your office. There is always one more email to read, one more report to write or one more coffee to drink! However, if you are permanently locked away in your office your staff will see you as uncaring and disconnected. You can also open yourselves up to embarrassing and career limiting situations when your lack of knowledge of your business is exposed. It is only by getting out in the workplace that you get to see what is really happening in your business and get to “feel the pulse” of your people. Structure regular walks through the workplace every day. Make sure you walk with the member of your team who is responsible for that area. That way your employees get to see that you are supporting your managers. It is also an ideal time to provide that feedback to your team as you walk around. I could probably go on. If I listed all the mistakes I made as an operations leader, I would probably fill another few pages! However, these are perhaps the most common ones I see, and they are relatively simple to address. Hopefully they help you build a long and successful operations leadership career!

4: HOW TO AVOID THE SENIOR MANAGEMENT REVOLVING DOOR IN YOUR BUSINESS One of the biggest operational issues I see in growing businesses (and in quite a few large businesses as well) is excessive management . Some businesses seem to have an endless revolving door of managers coming in and out of the business. When this happens, improvement tends to stall as every management change means that the business has to “start again”. Back in 2000-2002 I managed a packaging business for two years before a restructuring led me to volunteer for a retrenchment package. I was disappointed at the time, because it is had been a great job and I really thought two years was not long enough to make a sustained difference. However, I subsequently discovered that my two years made me the longest serving General Manager of that business. Over the last 20 years that business has had at least 15 leaders. This may sound like an extreme example, but it is not. I regularly come across businesses who have changed their key line managers everyone to two years. It seems that in some businesses, being the General Manager or Operations Manager is a high-risk occupation! In an earlier blog I talked about how companies cannot recruit their way to success. However, I think the problem of turnover of senior line managers needs particular attention. Why Senior Line Leaders Fail I think the most important point to make here is that they usually don’t fail! They more often don’t get given the opportunity to succeed. Here’s the typical pattern: A new manager is hired. On day one they are regarded as the answer to all the business’ problems. Expectations are sky high and everyone feels positive, especially the directors. This lasts for a few months until the business encounters its first crisis. It might be a quality issue, not meeting deliveries on time, the loss of a customer or a disgruntled employee. The directors of the business are shocked at the crisis. Surely once they hired the new manager, these problems would stop? They start to worry that the new manager is not a “superhero” after all. They visit the business and talk to some long-term key staff. They don’t like what they hear. There are lots of angst-ridden discussions among the directors. “Have we got the wrong guy?”, they ask themselves. They usually don’t discuss their concerns directly with the manager involved in case honest feedback causes the manager to “lose motivation”. They then decide that they need to get more involved in the business again. They start regularly walking the floor, attending meetings and talking to those long-term employees that they trust. The staff are relieved to see the directors back involved in the business and share their concerns. The directors try their best to stay “hands off” and let the new manager do their job, but the directors’ very presence in the business sends a clear message about their lack of confidence in the new manager. The new manager attempts to continue to manage, but their authority is now critically undermined. Staff may (or may not) have good will towards them, but the directors own the business, don’t they? Staff are canny enough to know that the directors will be around long after the new manager is gone. Management team meetings become a façade as all the staff know that the manager is on borrowed time (they have seen this movie before). Inevitably more crises occur because staff are reluctant to follow the manager’s directions, but the directors are still trying to be “hands off”. As a result, there is no direction and the staff become passive and don’t take any action when they see problems arising. The directors get further and further involved, the authority of the manager is totally undermined and eventually the manager is fired or resigns. The directors then recognise that they made the wrong choice of manager and go back to the recruitment market and “try and get it right this time”. If this sounds like your business, then read on!

So, What Went Wrong? I see companies play this “movie” over and over again, hiring and firing manager after manager. In the meantime, their business goes backwards, good staff leave and complacency, poor culture and resistance to change becomes entrenched. So why does this happen? There is a quote we like to use that is attributed to a senior manager at Toyota: “We get brilliant results from average people operating and improving brilliant processes. Our competitors get mediocre results from brilliant people working around broken processes. Then, when they fail, they hire even more brilliant people.” This really sums up the problem. If your underlying business processes and culture are broken, no matter how good the person is that you hire, they will inevitably fail. The fact is the business crises that you expect your new manager to address will inevitably continue. They are just built in to the DNA of your company. Of course, you may get a short-term reprieve with a new manager, this can be just random variation (crises don’t occur every day) or can be the “halo” effect because everyone is just a bit more on their toes because of the new manager. Inevitably though, unless your underlying processes and culture are addressed, you will have another crisis and/or performance will fall back to its long-term trend. Culture is Not Easy to Change Often the root cause of the problems in your business is tied up in the culture of your business. This is the unwritten assumptions, values and expectations that guide everyone’s behaviour. These cultural norms have often been established by the directors and founders of the business over many years. They are maintained by your long-term loyal staff and are not readily changed by a new manager. There are many examples of counterproductive cultural practices. Some we have seen include a cavalier approach to safety, a willingness to accept near enough is good enough on quality or a preparedness to promise the customer anything they want, regardless of whether it can be delivered. A common one is a culture of short cuts, where a failure to follow correct process is accepted or even commended, if it “gets the job done”. This may be seen as “bureaucracy busting” and “being responsive” in a small company but can be disastrous as your company becomes larger and less skilled staff adopt the culture of taking short cuts. The new manager will not be able to change the culture of your business on their own. The directors will need to help them on this. They will most likely see the cultural issues as soon as they start and therefore the directors need to invite challenging feedback about the cultural issues that need to be addressed. The directors then need to support them by consistently sending the message to staff that the old ways will no longer be acceptable – and demonstrate this in their own behaviour.

Learn How to Lead Culture Change through Changing Every Day Behaviours

It is Not Just About Results Naturally, when you employ a new senior manager, you will want to see improvement in financial performance. However, if you want long term change, you need to address how you are achieving those results. This means your business process. Therefore, as well as measuring your manager on financial metrics, you also need to measure them on how they are improving the way you do business. These things may not lead to immediate bottom line results, but this does not mean they are unimportant. Typical processes that might need addressing include your core order fulfilment process, manufacturing processes, warehouse processes, quoting process, new product development/introduction process, HR processes and financial processes. Standard ways of working are a key to defining the new baseline standard for all people to follow. Value stream maps can be incredibly useful in understanding the root causes of your

process problems and developing solutions. They allow you to move past the “tribal knowledge” controlled by the long-term staff and start making decisions and designing processes based on facts. Encouraging the new person to confront the standard work and to expect that all staff perform standard duties is the key to breaking this cycle. The challenge is the directors need to change first. It is likely that your new manager will need help to redesign your business processes, so be prepared to support them with investment in the advice, resources and tools they need to make that change. Remember that the managers’ job is to lead the business, not to get down in the details of facilitating team workshops on process design or developing the capital budget for a new warehouse or production line. The challenge as directors, is that you may need to be prepared to support a manager who is not getting short term results and may even be facing a few crises, if he is clearly taking the steps needed to address the cultural and process issues that might be causing the crises. On the other hand, you may need to correct a manager who is getting short term results, but not addressing the underlying issues in your business. What to Do When Things Go Wrong All this stuff is easy for me to say, but as director of a medium sized business myself, I know how hard it is to stand back and watch things going wrong. Therefore, you need a strategy to deal with the situation when things go wrong. When the new manager starts, give them one to two months to learn the business and their role. Then they will need a plan. Share with them your strategic goals for the business and the overall outcomes you expect from their role. Then ask them to develop a plan of their own. Encourage them to work with their management team on this. Once this plan has been developed, be prepared to (respectfully) challenge and negotiate it. When the plan is agreed, then you need to schedule regular (ideally weekly or at least monthly) catch ups to review progress of the plan (not the current business results). This then gives you a means to track how the manager is working towards the longer-term goals in your business as well as responding to short term issues. Often businesses employ a senior manager as part of a succession plan for the owners. In this case, I don’t think it works well when you, the owner or executive director, completely exits the business when the new manager is appointed. Unless you have plans to become a completely silent owner and maybe move overseas, you are going to want to have some ongoing involvement. Otherwise if you disappear and reappear when there is a crisis, it will be seen as you are losing confidence in the new manager. You need to define what your ongoing involvement will be and have a clear agreement with the new manager on this. You need to define when you will be in the business and what your role will be. You might want to have regular walk arounds, but it is better to do these with the new manager, so staff see you aligned with them. When staff contact you directly with grievances, direct them back to their manager unless they are reporting something unethical or illegal. Don’t encourage “back channel” communications as this can be very destructive. When something does go wrong, you need to ask “why” not “who”. Ask “What should have happened? And how did this situation arise?” Expect a thorough root cause analysis and corrective action plan incorporating both short term fixes to get things back on track as well as longer term corrective actions to prevent it happening again. You can then follow up the implementation of these corrective actions with a weekly review in the weeks following the crisis. Judge your manager on their ability to identify the root cause, develop credible corrective actions and then map out and follow a plan to implement those corrective actions, rather than on the crisis itself. Also take note of how they engage their immediate team in solving the problem and implementing the solution. If you are holding them accountable for implementing the overall plan, you should see them holding their team accountable for implementing the various elements of it.

Some Warning Signs Recruitment always has a margin of error and so not every manager you hire will be a success. There are some warning signs that you need to be aware of that might reveal that you do have the wrong person and, at the very least should prompt some immediate discreet corrective action: • Failing to develop a team around them Is your manager building a high calibre team around them? Have they thought of their own succession? Are they giving their team challenging responsibilities or instead doing their job for them? Don’t go and ask the team what they think of their new manager, as this will undermine the manager. However, do take careful note of how they are working with their team. Listen to their language – is it all about them and what they is doing or is they sharing the credit around and talking about how their team is developing? If you have concerns, then you may want your manager to share with you a plan specifically around how they are developing their own team. • Refusing help This is a depressingly common problem, where we see managers who seem to believe that they have to do everything themselves in order to somehow prove their value. You need to deal with this ego trip fairly quickly and indicate to them that they will not get more credit for their success if they “go it alone”, but their risk of failure will be much higher. My view these days is that directors probably need to be quite assertive up front on this and make it clear to the new manager that you expect them to use the help and resources on offer even if they believe they can “do it themselves”. The ability to marshal internal and external resources to improve business outcomes is in fact a key skill of a successful manager. • and Sadly, this is quite common, and it does not necessarily come with verbal and screaming. It can be just quietly delivered threats and inferences about subordinates’ job security. This often occurs as the new manager comes under pressure in a crisis. A State Department official once described a senior US cabinet member as a “kiss up, kick down kind of guy”. Sadly, there are a lot of “kiss up, kick down” guys around. Finding them out is not always easy. Tell-tale signs can be apparently excessive effort at trying to impress you, blaming others (usually their team or peers) when things go wrong, taking credit for others’ work and belittling the contribution of others. They will also typically be reluctant to allow their team to have direct contact with you. Therefore, all communication will be through them. • Passive acceptance When things go wrong this kind of manager will wring their hands, be very empathic, but put things down to bad luck or fate. They will accept that things are as good as they will ever be and will blithely walk past situations that are clearly not right without comment. Often, they will blame external factors (the market, raw material prices, the union) for problems and will have no plan for how to manage these factors as they are “out of our control”.

How to Stop a Culture of Passive Acceptance in Your Business

If you see these warning signs, then the action you need to take is to give feedback. Set some clear goals with a defined time frame and follow up. Usually I like to get managers to put together a 12-week turnaround plan and then schedule weekly reviews to track their progress. Remember, do this discretely and don’t go asking your manager’s subordinates what they think of them.

While you have the manager working on their 12-week improvement plan you need to be self-disciplined and not introduce daily new priorities that will prevent them from delivering on your plan. At this point they are going to be feeling quite vulnerable and therefore may be reluctant to push back against conflicting priorities coming from you. Summary The “management revolving door” is a disaster for your business. Apart from the direct recruitment and severance costs of hiring and firing manager after manager, the revolving door will stall your business’ progress and prevent you from growing successfully. The constant changes of leadership will destroy staff morale and lock in poor culture. The impact on your own morale can also be significant as you try unsuccessfully to take a step back and build a succession plan, only to see your plans thwarted as yet another manager “fails”. Addressing the revolving door starts with a recognition that the problem is your business’ culture and processes, not the guy at the top. Many of these cultural and process issues have been created by you over many years as you grew the business, so be prepared to listen and be challenged. Some cherished practices may need to go before permanent change can be achieved. It is also important to be patient and recognise that the problems that you had before you hired your new manager will not miraculously disappear when they arrive on the scene. Expect your manager to develop a plan and work to it. Give them regular feedback on that plan. Be prepared to ride out the occasional rough patch as long as your manager is delivering on their plan and committed to delivering the fundamental cultural and process change that your business needs. Watch out for the warning signs on their leadership style, but again give feedback to them as soon as you have concerns and if things get bad, ask them to put together a plan to improve their own performance rather than simply reacting on an ad hoc basis. And remember, the old adage “praise in public, criticise in private” also applies to your managers, so be discrete about performance management and do not discuss your manager’s performance with their subordinates. Never forget that you and your manager have a common goal – their success and longevity in your business. Your efforts should therefore be focused on achieving that goal with them so that they have a long, successful and rewarding career in your business and you can take that step back or shift your focus to the long term future of your business confident in the knowledge that your business is in good hands.

5: SEVEN REASONS NOT TO FIRE YOUR FACTORY MANAGER Finally, just to reinforce the points in the previous article before you get to the point of actually letting your operations manager move on to a new career, please consider the following points.

As a former Factory Manager, myself and having spent the last decade consulting to Manufacturing companies, I have come to realise that the role of Factory Manager (or Operations Manager, Plant Manager, General Manager – title is not important) is one of the most challenging in business. They sometimes seem like Football Managers. The moment the team performance drops a little, the first response is often to fire the Factory Manager in the hope that a new person will lead to better performance. Unfortunately, in most cases firing the Factory Manager is does not improve manufacturing performance and often makes it worse. So, before you “push the button” on firing your Factory Manager, read our “Seven Reasons NOT to Fire your Factory Manager” The Seven Reasons Not to Fire Your Factory Manager It Will Cost Much More Money than You Think to Fire Your Factory Manager In this day and age, you can expect to pay a significant severance package as well as recruitment fees, in total between three- and six-months Factory Manager salary just to change the person. These direct costs are small compared to the cost to your overall business. Firing your Factory Manager and hiring a new one will typically take three to four months. Add to that the fact that it will normally take three months before the new person gets familiar with the role and starts making an impact. It is likely the new Manager will see different priorities to the previous person and so that previous improvement activities initiated by the old manager are likely to stop even if they would have delivered major savings. If you expected 10% productivity gains per year, the opportunity cost of changing the manager will easily equal 5% of your total business costs – which is the real cost of firing your Manager, not your severance and recruitment costs. Can you really afford to put improvement on hold for six months? Factory Managers Influence People, Not Performance It is correct to expect your Factory Manager to be accountable for the performance of the factory. However, in reality you will know that many things influence factory performance – the economy, suppliers, sales, changing customer needs, industrial relations etc. If your factory has a bad year, by all means withhold your Factory Manager’s bonus, but if he has a good plan and the support of his people, don’t fire him. Work with him to develop a plan for how to turn things around next year and how you can support him to achieve this. Set some clear milestones on the actions that you agree, rather than the outcomes. I would consider a failure to take the agreed improvement actions a more serious issue than a failure of those actions to deliver results. There is no doubt that a poor performing business needs to improve results but firing the Factory Manager when he is doing all the things you asked of him (but not getting results yet) is not the way to improve. Have you Got Broken Processes and a Broken Culture? Many businesses I see are perennial under-achievers. This is rarely because of one individual but is usually a malaise affecting the whole . It is linked to hard-wired cultural behaviours and norms and poor internal processes. These take a long time to change and changing them usually does not lead to exciting rapid improvement. However, the long hard grind of addressing every-day behaviours and improving processes needs to be done before your business can sustainably improve. Changing managers will usually stop this improvement, because before the Manager gets time to actually eliminate the wrong behaviour and embed better process he or she is fired, and everyone just goes back to “business as usual”

Overcoming the Four Big Cultural Barriers to Improving Your Business

The Factory Does Not Exist in Isolation I often jokingly refer to the role of Factory Manager as “Chief Bullet Catcher” – constantly “taking one for the team”. Unfortunately, when things go wrong in a manufacturing business, whether it is a quality problem, a late delivery or increased costs usually the Factory Manager will be the person everyone points at. In many cases the root causes of these problems can lie outside the factory in poorly designed or inadequately specified products, late supplier deliveries, unrealistic promises made to customers or last-minute material changes or modifications to the product. Sometimes the effect of these problems can be indirect, for example late material deliveries leading to schedule changes, leading to other products being delayed and overtime blowing out. Rapid unplanned sales growth might lead to hiring too many people too quickly meaning that training falls behind and in turn leading to defects or injuries. It is easy to say that the Factory Manager should “just say no” when requests are made that can’t be met, but from my time in the Factory Manager “hot seat” this is usually not an option and “just deal with it” is the usual response from above. Of course, when everything goes wrong then it is Factory Manager who pays the price! When things go wrong you need to look at the whole value stream and understand the root causes. These are rarely related to the failures of one or the other individual Managers. You Create a Culture of Impunity I often wonder what the temperamental star footballers think when their manager gets fired. What do they learn from that? My guess is that they learn that they can do what they like and if the Manager does not like it then they can complain about him or stop scoring goals and he will be fired. The same will happen with your people. By firing the Factory Manager, particularly if you do it more than once, you send the message that Factory Managers are “temporary staff” who only need to be listened to by your long-term employees when it suits them. This becomes a very damaging cycle, where long term employees can refuse to change and engineer the replacement of the Factory Manager if pressured to change. As a result, your business will remain stuck in a rut. Are You Expecting Too Much? We all want to see change happen quickly and most people who get to the role of Factory Manager have healthy egos and believe that they can make change. However, there are limits on what can be achieved with the resources available. In my own experience, one of the most challenging times in my career involved managing the ownership change of my factory, negotiating a new labour contract, closing two and consolidating them in to my factory AND implementing an SAP system all in 18 months with no additional resources (in fact fewer resources than we had prior to the acquisition). We achieved it all, but we lost a lot of ground on improvement and safety and quality suffered. Fortunately, I didn’t get fired (that time!), but I was so burnt out and frustrated by the end of the 18 months that I resigned and joined another company instead. Is the Problem Really You? I have worked in or worked with hundreds of businesses over my career. I have encountered many businesses where the Factory Manager has been changed many times. In one example the business had seen 14 Factory Managers in 17 years, in another the Factory Manager had been changed eight times in seven years. If you are falling in to this pattern, you really need to stop and think before you fire the current person. You need to ask yourself a series of questions including:

• What are my expectations for the role? Are they realistic and do they match with the available people? For example, I often see businesses struggling with trying to get a good Supervisor to act like a General Manager or a good GM Operations

to act as a supervisor. Different roles require different types of people, so you need to be clear on what the role is and what it requires (and what is not required) so you can hire the right person. • How will my job change when the Factory Manager arrives? Many business owners and CEOs are very hands on in their businesses. Once a professional manager is employed, they struggle to let go of this hands-on involvement. This often means that the factory is being pulled in two directions at once. You therefore need to really think about what your role will be, how you will extract yourself from the business and discuss with your new manager during the recruitment what you want to still be involved with and what his or her responsibilities and metrics will be. • What went wrong last time? If your last person did not work out, you need to really think about the factors that contributed to this failure, beyond the person themselves. Problems are a chance to learn and improve your business and failed recruitment is no exception. If you place all the blame at the feet of your last manager and do not reflect on the role you or the culture and processes of your business may have played, you can be certain to repeat the mistakes again. So, When Should You Fire Your Factory Manager? Despite all this there will be circumstances when the person you have is wrong for your business and you need to move them on and look for someone else. If there is a problem with ethics or unacceptable behaviour, such as fraud, sexual , risk taking or abusive behaviour (assuming you have properly investigated) then you must act quickly and decisively to remove the offending Manager. Beyond those reasons, I see one other main reason to fire your Factory Manager. That is a failure or refusal to learn. Factory Managers need to be agents of change, they need to be constantly seeking improvement in their business and seeking to improve themselves as leaders. A Manager who believes he or she has nothing to learn, fails to reflect on and learn from his mistakes, who others for his faults and who blocks rather than promotes change should not be a manager at all. If your Manager is like that AND you have provided him or her the opportunity and the coaching to change (and he or she has not changed) AND you have considered my seven points above, then it is time you started to look for a new Factory Manager. Hopefully, after having read this white paper, you will be in a better position to find the right person for your business next time.