Management

(Photo by Lewis Wickes Hine, New York Public Library)

Deming’s complete statement of Point 8 is as follows:

“Drive out fear.”

This is a prescription that Doug Hiatt, a quality assurance manager at Boeing, found bewildering. First, he couldn’t see how fear could be “driven out,” and, second, where dangers are real, he didn’t feel that fear was something to be avoided. Deming is not arguing, however, that external threats, like competitors, should be hidden from employees to make them feel secure. In the 1980s, I worked for a software company whose managers were invariably friendly and courteous to subordinates, and where management communication was mostly “happy talk” that made especially the younger employees feel comfortable. Then, overnight, one third of them were laid off. Their sense of security was false.

Deming is advocating giving employees a genuine sense of security, which is both difficult to create and easy to shatter. Nothing can create such as sense quickly, but we can think of all sorts of human resource policies that can have this effect if carried out consistently over many years. Deming does not give us any pointer, but, in the US in 2012, few companies even try, particularly in environments like Silicon Valley.

Deming feels that fear always leads to “impaired performance and padded figures.” While the fictional Darth Vader can scare a crew into building a fully operational death star faster, the record in the real world is mixed. There, the ultimate manager by fear was probably Joseph Stalin, as shown in his January, 1940 telegram to a plant manager telling him that, unless results were produced within a tight deadline, his management team would be shot. The performance of Soviet industry supports both of Deming’s assertions.

But even in the US, managers like Jack Welch, who introduced Rank-and-Yank  at GE, clearly feel that there is nothing wrong with making employees fear losing their jobs. Others like to quote Machiavelli’s “It is better to be feared than loved, if you cannot be both.” But Machiavelli’s world in 15th century Italy was more like the Game of Thrones than a contemporary manufacturing company. His prince is concerned exclusively with stabilizing his power, fending off rivals, and conquering more territory. Machiavelli’s advice is of limited value in areas like product development, marketing, manufacturing, or customer relationship management.

Intel’s Andy Grove was so famous for saying “Only the paranoid survive” that he wrote a book by this title, but the book is about business strategy, not about the way you treat employees. I had an extended project with Intel when Grove was its CEO; the Intel employees I worked with spoke of him with awe and respect, but never with fear. They trusted his steady hand steering the company and were not worried about being treated unfairly. Outside Intel, the company was perceived as secretive and aggressive, bordering on ruthless.

Does fear always impair performance? Stage fright can paralyze public speakers, stage actors or singers, but its complete absence is a sign of indifference to the audience that it doesn’t miss. The best performers are those who feel stage fright but are galvanized by it. Conversely, does the absence of fear always enhance performance? Academic tenure is the ultimate in job security. But do professors perform better once they are tenured than when they are on a tenure track pursuing it? Non-academics may be too quick to assume that they don’t. There is no valid general answer to that question. Some do and some don’t.

Deming sees a “widespread resistance to knowledge.” From the details he gives, what he means for individual contributors is that they are afraid new methods or new technology will make their hard-earned skills obsolete and threaten their positions; for managers, it is the worry that the investment in acquiring knowledge will never be recouped. These are two separate concerns.

The first fear is readily observed in organizations that hire people based on the immediate need for skills, as opposed to recruiting them for a career. If you know you are employed because you are the only one to know how to run a milling machine of a particular model, or navigate the user interface of a legacy information system, then you are naturally less than enthusiastic about the introduction of a way of working that requires you to train others to do your current job, or of new machines or systems that do not need your current skills. If company behavior over decades has built a foundation for this fear, you will not drive it out easily. It will require the establishment of new human resource policies, their communication to the work force, and their sustained practice over a long-enough period to build credibility with the work force

In operations, the managers’ primary responsibility is the output to customers, and employees do learn in the process of producing it, particularly if they rotate between stations. But even this form of knowledge acquisition is not free. It takes management attention to organize and monitor, each job an operator rotates into requires a learning period during which performance degrades, and there is always the risk that your most knowledgeable employees will leave. Other forms of knowledge acquisition include participation in improvement projects and experiments, technology watch, and formal training, in house and at public venues. All are investments in money and time, with  uncertain outcomes. Let us look at each in more detail:

1. Improvement projects. They should always have the dual purpose of improving performance in their target area and learning by the work force. Participation in successful improvement projects develops both technical and managerial skills, in a way that pays for itself through the performance enhancements.
2. Experiments. While experimentation is a normal part of product development, most managers do not make room for it in operations. A Lean Manufacturing plant, on the other hand,  sets aside space for it and encourage engineers or technicians to experiment with concepts, tools, machines, or systems that are  not  immediately applied in production. This is how they learn to be savvy buyers of technology, customize off-the-shelf equipment, or build from scratch machines that are not commercially available. You cannot write a discounted cash flow analysis to justify such an engineering sandbox, but you can see its impact in the proliferation of clever devices that enhance production performance on the shop floor.
3. Technology watch. This is keeping up with new developments in one’s current specialty, by reading the trade press, attending conferences, visiting trade shows, and going on plant tours. These are activities that a manager may find difficult to justify, on the grounds that they are not anything a customer would be willing to pay for. Yet, not doing them is a sure path to technical obsolescence.
4. Training. We discussed training issues in the review of Deming’s Point 6.

How do you “drive out” the fear of making the wrong decisions in this area?  This is particularly challenging when you break down functional silos and distribute technical specialists among the processes they serve, whose management owners rarely appreciate the need for them to stay current. If you are an extrusion engineer working for the production manager in a shop that makes extruded rubber parts for cars, you may be dedicated to making the lines perform well, but you will be isolated from professional peers. That is why some organizations either retain the functional silo structure while trying to make it work better using tools like A3 reports for better communication, or they adopt a matrix organization, in which the specialists maintain a “dotted line” reporting relationship to a technical manager whose job is to manage the maintenance and development of their skills.  A common strategy for IT in manufacturing companies is to outsource the technical work to a system integrator who is responsible for the technical skills of the contractors he sends.

Deming also describes as a loss from fear the inability to serve the best interest of the company because of rules or production quotas. It conjures up the image of Captain Queeg telling his officers how every rule in the book is there for a reason and has to be followed to the letter. Deming gives the example of a supervisor afraid to stop a machine for needed repairs because he might not fulfill his production quota. Of course, the machine breaks down and he can’t fulfill his quota anyway. But it is a dilemma. On the one hand, you want employees to use their judgement and break rules that are counterproductive. But, on the other hand, you don’t want them to think that shop operating standards and production plans are only guidelines. Finding the right balance is not easy between blind obedience to imperfect rules and absolute control by each individual of what to do and how much to produce. Here are a few pointers on how to do it:

1. The rules have to be few in number and clearly stated. The following signs show the rules governing the use of a public park in Paris and a swimming pool in Palo Alto, CA. Every visitor to the Luxembourg gardens is expected to know nine articles of small print; the Palo Alto swimmers, seven bullet points.

   

2. The purpose of the rules must be communicated, whether it  is regulatory compliance, safety, quality, etc. If no one can explain the purpose a rule serves, then it is a candidate for elimination.
3. A process must exist to modify or cancel rules that are obsolete, ineffective, or counterproductive. The Accidental Office Lady is a memoir of Laura Kriska’s years at Honda in Japan. As a young American college grad, one rule she found particularly objectionable was the discriminatory requirement for women to wear a uniform at work. She recounts how she used Honda’s NH Circle system to organize a group of co-workers and make a case for the elimination of uniforms as an improvement in office work, and got it approved by Honda management.

How do you recognize the presence of fear in an organization? Deming lists 14 different types of statements that he has heard from employees and considers to be expressions of fear. Following is a summary of his list:

1. The company may go out of business.
2. Supportive superior may leave.
3. Putting forth an idea may be perceived as treason.
4. May not have a raise at next review.
5. Long-term benefit may require short-term performance drop on daily report.
6. May not be able to answer boss’s question.
7. Credit for contribution may go to someone else.
8. Admitting a mistake may have adverse consequences.
9. Boss believes in fear; management is punitive.
10. System will not allow expansion of abilities.
11. Company procedures are not understood; employees don’t dare ask questions.
12. Management is mistrusted, and perceived to have a hidden agenda.
13. Inability to fulfill production quota (Operator or Plant Manager).
14. No time to take a careful look at the work (Engineer)