Implementing lean in manufacturing is a tough but rewarding endeavor. Companies often report at least some turnover during the process. Is this normal? What (if anything) should managers and lean coaches do as part of the change management process to prevent losing team members?
When times get tough, companies look for ways to improve operational efficiency to protect profitability. Changes in the economy or market conditions usually lead to a resurgence in implementing process improvement programs. Communications associated with those programs often proclaim that as companies get started with continuous improvement, the initiative will improve product quality, employees’ work life, and their skills. If that’s the case, why do improvement journeys often result in turnover and frustration? What can companies do to avoid it? Should they even try to avoid turnover, or is it perhaps a good thing?
I conducted a poll in the fall of 2020 to examine turnover associated with Lean implementation. More than half the companies that responded experienced significant organizational disruption. That’s a lot, especially combined with the turbulence associated with any change program. It can feel like an overwhelming issue to tackle.
Once I realized the magnitude of the concern, I started thinking about the cost of replacing those team members. The Society of Human Resource Management (SHRM) estimates that the cost to replace an employee is 90-200% of the annual wage. Companies embarking on Lean budget for engaging a consultant, training costs, and perhaps even establishing a Lean department. I have yet to see a company anticipate and budget for the cost of turnover.
Companies implementing lean in manufacturing can do two things to address potential turnover associated with the initiative:
- Pinpoint the company’s true objective
- Get the people “right” before you start
Strategy #1: Pinpoint the Company’s True Objective for Lean in Manufacturing
Leaders should ask themselves: What’s our real objective? Do we really want a lean culture, or are we just implementing tools like automated data collection?
There’s no single, universal understanding about the definition of Lean. If this is news to you, conduct an internet search and see how many definitions pop up. It’s quite confusing and often a topic of considerable debate.
Industry often describes Lean as "eliminating waste” or “minimizing waste while maximizing productivity.” These definitions sound like reducing costs is the only reason why companies implement Lean. For those organizations with a singular focus on reducing waste, implementing Lean tools for financial gain is the focus. It's a quick fix, which some companies may genuinely need to pull out of a difficult financial position. Of course, a manufacturing company can benefit from this focus on tools, but it’s a "whack-a-mole" approach to improvement that’s unsustainable. I’ve been there; back-sliding inevitably occurs, which is frustrating and demotivating to all involved. It’s also the point when employees you don’t want to lose decide to self-select out.
The opposite approach focuses on improving employees and “leading with respect.” This method involves educating and empowering employees to improve their work and deliver higher quality to the customer. It requires more collaboration along with leaders who genuinely “get it.” It’s a sustainable strategy that requires a long-term investment.
Using this method, the organization will achieve systemic improvements, but they are perhaps not as easy to quantify as something like a quick-changeover kaizen. One example from my past is an initiative that involved improving the production planning system for a large manufacturing facility. The service benefits were huge, but perhaps a bigger improvement was evident in employees' daily lives. We quieted daily chaos and eliminated the frustration that went along with it. What’s more, the success became a springboard for future improvement.
Recommendations for Lean Objectives
- Determine the reason for change: is it to improve the workforce and quality of goods, or is the objective really to cut costs?
- Get the management team on board and aligned around the objective. Focus on mid-level management since this is where much of the turnover happens.
- Communicate consistently and honestly throughout the organization.
Strategy #2: Get the People “Right” Before You Start Lean in Manufacturing
What do I mean by “right?” – Figure out what the right positions should be given the processes, and decide which people should be in those positions. If the company’s objective is cost-cutting, there will be motivation to eliminate jobs. Figure out what the organizational structure should be even before you start the Lean initiative. If organizational whittling needs to happen, do it upfront and in a respectful manner. We are affecting people’s livelihoods with these decisions.
Recommendations for Getting People “Right”
- Address poor performance using the company’s standard process before implementing Lean.
- Assess and adjust the organizational structure before starting Lean. If it's impossible to eliminate jobs before starting, be transparent with the organization and the incumbent regarding your plans.
- Understand that some people will be uncomfortable with the pace of change, even with honesty and transparency, and may self-select out. If the company treats them with honesty, a respectful departure is possible.
Final Thoughts on Team Turnover While Launching Lean in Manufacturing
Team turnover when launching lean is more common than companies think. However, companies that are honest about the reasons for change and take steps to get the organization “right” before starting can minimize disruptions and costs associated with untimely employee departures. Get executive sponsors and mid-level managers aligned around the initiative objectives. Then ensure clarity throughout the organization regarding the reason(s) for improvement. Transparency, honesty, and the right people in the right roles can go a long way toward ensuring program success when implementing lean in manufacturing.