Organizational Philosophy: Put People and Quality First

The philosophical underpinnings of an organizational culture often are either glossed over (“I know we say people are the most valuable resource, but orders are down, so we have to do layoffs.”) or ignored outright (“What’s the lowest level of quality that will be accepted by our customer?”).

However, there actually is a basic “thinking way” to which leaders must adhere to successfully transform an organization.

Part of making the decision for culture change is honest reflection – a very difficult thing for most leaders.

Can you stay true to the values that you are striving toward, even if it causes short-term pain? Many within the industry were surprised at the bold stance of Toyota’s plant in Texas, which manufactures the Tundra and Sequoia, when it was announced they would not lay off any employees during its three-month shutdown in the middle of the 2008-2009 recession. They also requested that suppliers do the same. The rumoured “cost” of this decision: about $1 billion.

Closely related to putting people first is the process of hiring, orientation, and training, something that is almost universally ignored or neglected.

How much time do you spend on your selection and hiring process, or do you outsource it? How about orientation and training? A day? A week? For organizations that put people first, these processes take as long as necessary to do the job properly.

Will you make the hard choices when it comes to shutting down or sending subpar-quality work on to your customer? I’ve often heard something along the lines of “Whack it and pack it ... hopefully the customer won’t notice.”

That also means no more poorly designed processes, equipment, and procedures for employees. All that stops when you make the decision to put customers (internal and external) first.

Think Change

Many of the leadership traits that have been previously valued by traditional thinking organizations in high-growth markets (1950s and onward) break down in slow- or no-growth economies. Many of the concepts that led to financial management, including amortization/depreciation and inventory as assets for future sales, are based on the concepts of growing demand, where extra capacity could always be used for increasing demand from the marketplace.

In addition to really putting people and quality first, here are some other differences in philosophy for a culture centered on improvement and innovation:

1. The centralized command and control management structure is replaced by a servant leadership system that guides the team. A strong strategy is required, but the entire organization is engaged with a structured performance management system to establish whether the current condition is working.

2. Decisions can’t be made from behind your desk or using reports, no matter how much data there is. Go and see the real place, real time, and real people to develop a deep understanding of the situation and turn that data into facts.

3. Perform cost cutting based on budget variances based on customer requirements, not the kaizen of processes.

4. The leader/manager is not the expert, but rather someone who shares their experiences to develop abilities and skills in others. This development is not a mechanical or explicit transfer of information, but guiding the learner into different ways of thinking.

5. Financial statements based on efficiency sometimes defined as the level of asset or people utilization, usually drive overproduction. Within an improvement and innovation mindset, the total system cost is more important than individual process efficiency.

6. A culture driven by accounting or financial management (pioneered by large corporations like GM in the 1950s) focuses relentlessly on rate of return, but what is the real financial payback of decisions? Replacing that with target condition thinking (which includes financial as well as other goals) allows leadership to not only manage the current condition, but continuously push toward a future condition that is better.