Unleashing the Entrepreneur in Every Employee
In many industrial work settings, employees are simply viewed as cogs in a machine, I.e. cost of goods sold. It’s a longstanding tradition that dates back to Frederick Taylor and Henry Ford. But that perception sells people short. And it does a disservice to employers and employees alike.
Empowering Assembly Line Workers
This factory was the highest volume production facility in the company. More than 25,000 units were manufactured and shipped all over the world every day. And it operated three shifts around the clock with a workforce that included 300 union employees. Even though the company had historically reduced unit manufacturing cost by 10% every year, the conventional wisdom was that this level of productivity couldn’t continue.
This was too big a problem for a few managers to handle on their own, we needed to elevate the role of every employee by instilling an entrepreneurial mindset. In other words, we replaced three hundred human cogs in a machine with a team of operational entrepreneurs constantly looking for ways to improve their “piece of the business.”
We knew it would take time. So we started to weave entrepreneurial education into the way we ran the factory every day.
What’s In It For Me (WIIFM)
The good news was that we had a gain sharing program in place. The bad news was that no one in the factory really understood it. The program was so ineffective at driving engagement, that some employees thought there was a mistake in their check when the gain sharing was paid out!
The conventional wisdom from management was that you could never get the union employees to understand the business. After all, there were some managers who didn’t understand the business and they had college degrees. How were you ever going to get the ‘uneducated’ assembly line workers to get it?
I looked at it in a different way. Many people in the factory had successful businesses on the side. They knew how to cut costs and save money in their personal lives. Many found a way to put their kids through college on $10 per hour. They knew how to establish a budget. Some were leaders in their community. Further, they knew the factory so well that they could tell well before final inspection if something was not quite right. There was no rational reason why they couldn’t help run the business and profit from the improvements.
Our challenge was to create an environment where the employees didn’t check their brain at the door.
Turning everyone into a small business entrepreneur.
So we started to share all of the key metrics – how the metrics were calculated, the contribution of the metric to the gain sharing formulas, what the employees could do to influence the metric – at our regular work group meetings with employees. The result? Our employees understood the big picture on our operational and financial performance as well as an MBA would.
Next, we helped everyone calculate the financial impact of his or her daily activities on the factory’s profit and loss. Then we empowered them to run their workstations like a small business with full accountability for results. That’s why I handed out calculators to everyone on the line so they could track the profit and loss for their work area every working day.
The costs of this empowerment program were insignificant. But it paid dividends in many ways. Workers were more engaged. They actively contributed ideas for improvement. And they responded to the notion that they were intelligent business people, not just mindless parts in a machine.
Proving the Value of an Empowered and Entrepreneurial Workforce
By taking concrete steps to build an empowered, entrepreneurial culture, we made measurable progress on all of our key metrics.
- Our employee satisfaction rating made the leap from 56 to 70%, which represented the highest union workforce score in our company.
- After several years of successful cost reduction initiatives, we still found ways to save an additional 11.4 percent a year, contributing a total of $28 million to the bottom line over a two-year period.
- Thanks to the outstanding consistency of our daily production and on-time delivery performance, we reduced our finished goods inventory by fifteen days of supply, saving the company more than $5 million in the process.
- Read more about this transformation in The Factory Case Study.
It all proves that you can take a well-run operation and raise the game to a new level if you take a fresh look at the situation. Gather the right data. Find innovative ways to energize the work environment. And remember that the human resource is the ultimate X Factor in business.
- America’s Biggest Entrepreneurs: High School Dropouts (economix.blogs.nytimes.com)
- Are Entrepreneurs Born or Made? The Case for Entrepreneurship Studies (grasshopper.com)