However, as Lean Consultants we can’t help but notice how many companies have the objective of recovering their former level of sales but doing so with fewer employees. We unabashedly support this approach for a variety of reasons.

If cuts were made during the economic downturn most likely some tough decisions were also made about tasks that could be eliminated without affecting customer service. (This is the classic definition of Non Value Added Activity.) The mere fact that business is returning is not a good reason to resume doing things that have been found to be unnecessary.

In some cases, investments in automation or systems have been made to reduce personnel costs during tough times. In other situations, ongoing improvements in technology, including new software capabilities, have allowed tasks to be done faster or with less human intervention. Again, as business returns there is no reason to rehire people into positions that have been made obsolete.

But more importantly, as Lean Consultants we have learned from experience that the period of recovery from an economic downturn offers some unique opportunities for further improvement. If employment was reduced during hard times, the period of business recovery is a great time to reengineer processes to grow without adding employees proportionally.

Since we are talking candidly in this Operational Excellence Insight let’s be more specific. A very common obstacle to any improvement effort (Lean or otherwise) is the concern employees have for their jobs or those of colleagues. For this reason we highly recommend a policy of protecting employees from layoffs due to Lean improvements. Let us be very clear that this applies only to Lean, not to lay-offs due to overall economic conditions, reorganizations, acquisitions, technology or terminations based on performance. Furthermore, employees no longer required in one area may be reassigned to other functions or areas. Many companies with great Lean success stories have adopted exactly this approach.

While this sounds altruistic there is very practical supporting business logic: Without such a policy it is difficult to engage employees in process improvement efforts that could jeopardize their jobs. And even if they do participate for one round, the odds of further support are almost nil. Since a foundation of Lean Six Sigma is utilizing the knowledge and skills of employees this would cause continuous improvement to grind to a halt.

But even with a no-layoff policy there often remains a subconscious reluctance for people to suggest or implement improvements that cause a team member to be reassigned.The situation is much different when a work team sees Lean improvements as a way to simplify their jobs and ease the workload so the same group can accomplish more. As a result, when planning for future Lean improvements, it is far easier to never hire excess employees than to face reductions in force at a later time. Running at minimum staffing levels (without creating unsafe conditions or unfairly overtaxing employees) helps drive the need for further process improvements.

For businesses that have managed to weather the last couple years of recession, there finally seems to be some glimmer of recovery on the horizon. Now the challenge is to regain former levels of output in a manner that allows them to be a more effective organization.

We are interested in hearing about your thoughts on this subject. Please visit our blog to add your comments by following the link: Our Blog.

We are pleased to announce the publication our newest white paper “Lean Six Sigma: Accelerating and Achieving the Real Potential of Lean”. In the paper our founder, Mike Donovan, explains how to achieve measurable bottom-line results and jumpstart your Lean initiative. Click on the link to download your copy of “Lean Six Sigma: Accelerating and Achieving the Real Potential of Lean". You are also welcome to browse the list of free white papers and other articles at Free Resources.

If you have a topic that you would like addressed, or an Insight you would like to pass along, e-mail us at: Jack.Rink@rmdonovan.com

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