The “Multiplier Effect”
In a previous blog post describing the case of the high flyer, I described how many organizations survive on a narrow margin between their income and their expenditure. I also used a case history to show how, because of this, a relatively small reduction in sales had a significant impact on the bottom line of a corporate jet manufacturer and that this had resulted in significant recent staff layoffs.
I also mentioned the fact that, because of the multiplier effect, small variations in productivity can also have major consequences to the bottom line. In this blog post, I will use a case history example to show how a relatively small reduction in productivity caused by retention issues, changed the bottom line of a substantial tire manufacturing organization from healthy profit to a serious loss with long-term adverse consequences for the organization’s viability.
Before delving into the details of the case history, I want first to describe the difference between uni-disciplinary and multi-disciplinary teams. As we will see, this difference can be important when it comes to the damage that can be caused by even seemingly trivial talent retention issues. In a uni-disciplinary team, members undertake similar work. A Team of agents working in a contact center would be an example of a uni-disciplinary team. In a multi-disciplinary team, on the other hand, each member brings a different set of skills and knowledge and performs a different set of tasks. A surgeon working together with an anesthetist and special advisors in a medical operating room would be an example of a multi-disciplinary team.
It turns out that bottom line implications associated with productivity issues are different depending on whether they are located within Multi-Disciplinary or Uni-Disciplinary teams. Members of Multi-Disciplinary teams need to work closely with each other to resolve challenges and meet targets. Here, a failure to perform by just one team member can be particularly damaging. In an extreme situation, a single poor performer can bring the entire team to a halt. (Try operating on a patient without an effective anesthetist!).
Here, members can increase their workload and fill in for a poor performer. Such teams are therefore much more robust when it comes to maintaining productivity levels in the face of a single poor performer.
In most situations, teams are comprised of a combination of uni-disciplinary and multi-disciplinary sub-groups. A contact center team typically comprises agents and a supervisor. While the agents and supervisors can typically fill in for each other, this will not necessarily be the case where specialized teams are involved. The knowledge needed to handle an account issue in a mobile phone contact center will be significantly different to that necessary to help a phone user with a technical matter. What this reveals is that, pockets of specialized knowledge can exist in many areas of an organization and, when retention issues impact any such area, the bottom line impact can be significant.
The Case of the Tire Manufacturer
A few years ago, a well-known tire manufacturer ran into a serious quality control problem that led to deaths and long-term damage to a well-known brand. When this problem was investigated, it turned out that short cuts had gradually crept into the organization’s manufacturing process. It was also discovered that the organization’s quality control department had remained unaware that these changes were adversely impacting the quality of the product.
Further investigation revealed that the quality control department had been experiencing high levels of employee turnover with inspectors who worked on the production line. This pocket of high turnover was primarily caused by the fact that relations between the inspectors and the production line workers were poor. This state of affairs arose because the production line workers were on bonus programs that could be adversely impacted if an inspector rejected the quality of their work.
Some twenty years ago, the Japanese recognized this type of problem and, by changing their operating practices, took the car industry by storm and rapidly became a dominant player with a reputation for high quality. A common thread throughout the volumes that have been written describing how this was achieved, relate to the way in which they tackled the management of quality issues. It turned out that the Japanese empowered all of their production-line workers with controls that would allow them to bring the entire production line to a halt when a problem occurred.
In doing this, the Japanese created a culture in which the reporting of problems was encouraged. The result was that whenever a problem arose, employees from different locations and disciplines pulled together to come up with solutions.
At the heart of this solution, was an understanding that every employee is important and brings to the organization a unique combination of personality, perspective, skills, and knowledge. Teams that appear uni-disciplinary are, invariably complex. Because each member’s uniqueness becomes subsumed into the standard process of the workflow, it becomes hidden but can resurface in times of change and/or crisis.
As a direct result of this pocket of high employee turnover, the skills/knowledge base within the quality control department had been seriously undermined. Inspecting a tire is not easy, while automated inspection techniques can help, human intervention is also necessary. It takes significant skill and knowledge. Even significant flaws will not be apparent to the untrained eye.
Over a period of years, the conflict between production workers and quality control inspectors had led to a lowering of standards that ultimately caused multiple deaths. The brand name was irreversibly damaged and the profitability of the manufacturer was adversely impacted for many years.
During a recent Employee Retention Survey that we carried out with 11,000 organizations, we discovered that, when it comes to employee turnover, all organizations typically have two quite distinct areas of operations:
(1) A core area with long serving employees. This typically covers about 60% of the organization.
(2) One or more pockets with high levels of employee turnover typically covering the remaining 40%.
In addition, we found that because of this distribution, relying on a percentage based on the overall level of employee turnover within an organization can be misleading and can lead to complacency when it comes to talent retention. When we drilled down into data generated through the deployment of Talent Chaser’s Performance Appraisal and Task Action Planning Module, we invariably found that performance levels within pockets of high employee turnover were much lower.