Get Staff Involved In Quality Initiatives

PROCESS IMPROVEMENT

Get Staff Involved In Quality Initiatives by Mike Bolton

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ow can a lean quality improvement staff help its CEO drive to new levels of business performance without the typical Six Sigma level budget? When faced with this question, my company, ATC, headquartered in Oak Brook, IL, decided to get people excited about going beyond the basics required to do their jobs. We took on this task at a time when many people said it was difficult to expect high levels of loyalty from employees, and we did it by closing an obvious but easily overlooked gap in any quality improvement effort: the lack of true ownership and enthusiasm for improvement by the people who do

In 50 Words Or Less • Employees often lack enthusiasm and a sense of ownership when it comes to an organization’s quality improvement efforts. • ATC decided to challenge its employees to solve the company’s quality problems. • In the first year, its employee driven teams saved the company more than $3.5 million. 62

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the work every day. This engagement gap in quality improvement has become even more acute with today’s tough economy and the undermining of employee loyalty caused by downsizing, mergers, acquisitions and frequent restructuring.1 By challenging ourselves to think differently about quality improvement and trusting frontline people, we reversed a fiscal year profit problem, implemented hundreds of customer service improvements and engaged more than 700 of our employees in stretching themselves to solve problems. Even more impressively, we did it rapidly and with minimal outside consulting support, using a combination of change acceleration and quality improvement tools.

The Need for a Different Approach ATC has been operating in the public transportation services industry since 1935. It employs more than 6,000 people and operates transportation systems in places such as Phoenix, San Diego, suburban Atlanta and Las Vegas. The company manages about 100 million passenger trips per year in both transit (for schools, hospitals and municipalities) and paratransit (for handicapped and elderly passengers) systems. It’s a tough business, as operating margins are thin and profitability depends on the consistent and effective application of standard practices across our widely dispersed, autonomously run

locations. Our success or failure depends on the attitudes, skills and commitment of our employees. Our merger with a global transportation service firm in 2000 and the economic downturn created an urgency for us to take a more aggressive approach to quality improvement. We considered Six Sigma but did not believe ATC could afford the training time and consulting fees, given our budget constraints. Our CEO, Jim Long, believed we needed to begin with an all hands on deck approach. “Most of our operating costs are in the direct control of our employees on the line,” he said. “We need to get each one of them thinking about profitability and doing better what they already know how to do.”

Choosing a Methodology Long suggested we look into a quality improvement approach he had first been exposed to at Waste Management, a giant trash hauling company. The workout approach uses a set of tools and processes built on a model for rapid change and was first used by Jack Welch at General Electric.2 What appealed to Long about the approach was its speed, simplicity and employee focus. The basic principle of the workout approach is a belief that the people closest to the work can make big improvements in business performance when provided with simple tools, accountability for action and fast decision making by management. While I agreed with Long that we needed to get our employees directly engaged in solving our profitability challenge, I had some concerns. First, prior experience had shown me the dark side of large-scale change initiatives that included a lot of activity and fanfare but showed little in the way of documented results. My second concern was based on my observations of our regional operations. I believed turning each of our locations loose to find cost savings and service improvements could create more variability and risk in our operations. It’s an age-old dilemma in quality improvement efforts: How do you encourage local entrepreneurial spirit to take ownership for problems, yet still exercise enough control to avoid the waste in too many different solutions for the same problems? After investigating various workout approaches, each with a different methodology and amount of time, consulting support and risk, we decided to go

with a system called Action Workout developed by Leap Technologies because it offered the right blend of speed, flexibility and control. Action Workout is a rapid improvement system that uses a combination of leadership events, small employee teams, rigorous deadline management and a strict results documentation process. Because

How do you encourage local entrepreneurial spirit to take ownership for problems, yet still exercise enough control to avoid the waste in too many different solutions for the same problems? it’s designed to work in 60-day timeframes, we believed this system would allow us sufficient time to test, refine and expand as we deployed (see “Action Workout Process” sidebar).

Global Best Practices With Local Execution We crafted an overall game plan to deploy small teams in each of our branch locations to find and implement profit improvement solutions. Prior to the team launch, we invited all our regional and location managers to participate in a two-day leadership alignment meeting at our corporate headquarters. The meeting was the key to our eventual success in two ways: 1. It allowed us to get everyone to accept the need for change and the urgency to take action. It’s an obvious step but one that’s easy to overlook or merely give lip service to. 2. We made it a work session by getting everyone involved in an exercise to identify and QUALITY PROGRESS

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prioritize a set of profitability performance drivers (similar to defining the Xs to fit the Y in a Six Sigma project). Performance drivers are any parts of the system that impact performance on a key company scorecard goal. The key drivers of profitability at ATC included route analysis, manpower scheduling, overtime labor hours, parts inventory cost, preventive maintenance, attendance, safety and accidents. We prioritized the drivers based on a speed to results criterion, looking at which drivers offered the best combination of profit improvement opportunity and confidence that we could improve performance without a major investment in time and capital. We took the speed-to-results approach to priority setting because we needed to get some quick wins to build widespread support and limit our risks. Our leadership team agreed our initial focus would be to drive safety improvement, reduce accidents and overtime, and improve preventive maintenance. We backlogged the other performance drivers for future attack. Using the prioritized performance drivers, we broke our leadership group into subteams and asked each to define a set of best practices for one performance driver. We were looking for each subteam to come to consensus on the critical few actions that keep costs in check and increase service quality on each priority performance driver. We knew these best practice roadmaps would not be empirically validated end points for running our business; however, they provided us with a platform for launching what we decided to call our “get better, faster” initiative. This initiative would still involve the launching of local branch teams, as we originally planned, but now it had a more focused purpose: to implement the best practice roadmaps developed at our leadership alignment meeting. Each team would be led by a location manager and involve five or six employees as action champions responsible for brainstorming and converting good ideas into action. Each team would focus on improving one key profitability driver at its location (choosing from the prioritized list developed in our leadership alignment meeting) and be guided by the associated best practices roadmap for that driver. A key to the strategy of coordinating global action for profit improvement was to balance top64

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down direction with local discretion. We wanted each location to take ownership for the results. Encouraging the teams to localize the best practices paid big dividends in enthusiasm and creativity for the tough task at hand. Another key to our success was putting a 60-day clock on the start and finish of each team’s assignment. According to research provided by Leap Technologies, time is an enemy when an organization is relying on frontline managers and employees to drive improvement.3 Leap says 60 days is the outside limit for getting to completion with such teams. Beyond that, team motivation and quality of work decline rapidly. The idea that employee motivation is highly perishable was further substantiated by research published in Incredibly American: Releasing the Heart of Quality.4 This book provides a fascinating look at the psychological drivers of quality improvement. It offers great insight for designing quality improvement initiatives aimed at the frontline of any organization.

The Goal: Save Money While Maintaining Service Quality We launched our first wave of teams in January 2002. We preceded the launch by training team leaders in the 60-day workout team process and mandated the sponsor for each team (typically the regional manager) also attend the training. This one-and-a-half-day training session ensured universal discipline for using the unique team improvement process in a box provided as part of Action Workout. It is literally a kit with everything the team needs to complete its assignment, including guidebooks, posters, worksheets, sticky notes and pens. The kit helped us conduct short, 90-minute weekly team meetings. We certified 10 workout team coaches to serve as process managers and administer the tracking system put in place to monitor progress and capture results. Again, this up-front investment ensured discipline and momentum. Within just a few weeks, we started to see results. Here are a couple of ideas put into action: • The defenders of safety team, Mesa, AZ. This team concentrated on reducing accidents per 100,000 miles driven. The team’s goal was to reduce ancillary costs resulting from drivers’

Action Workout Process Step 1: Step 2: Step 3: Step 4: Step 5:

Define the scorecard target. Identify and prioritize performance drivers. Develop best practice roadmaps to guide local improvement. Launch 60-day workout teams to localize best practices. Document results, refine best practices and redeploy team.

accidents. These costs include mandated drug and alcohol testing, remedial training and possible days off for injury or suspension. The team brainstormed ideas based on the best practices roadmap, which directed the team to examine the root cause of accidents. The team zeroed in on the failure to perform preshift vehicle inspections and ended up developing and implementing an incentive program called “red dot.” A small red sticker was hidden among the 25 to 30 checkpoint sites on each vehicle prior to each shift. The driver was recognized for finding the red dot during the preshift inspection and became eligible for a larger prize in a subsequent drawing. The red dot program, along with other accident prevention actions, is projected to save ATC more than $10,000 per quarter in ancillary accident costs in just the Mesa region. We plan on implementing these actions in all regions and expect the savings to multiply. • The budgeteers team, San Jose, western region. This team worked on overtime expense reduction. Overtime is our biggest variable expense and is one of those black hole profit drains. Hundreds of things can delay our drivers, most of them resulting in overtime pay. Using the best practices roadmap, this team examined daily vehicle tracking as a means of controlling overtime. The team sought better ways to control causes of delay, including vehicle routing, fueling methods, maintenance tim-

ing, drivers’ schedules and reporting accuracy. It eventually came up with a simple system to track every vehicle and every driver, every day. This vehicle manifest pointed out the key causes of overtime: overscheduled routes, poor scheduling of vehicle fueling and cleaning, and lack of first-level management follow-up on drivers posting unusually high overtime. The team developed and implemented six action plans to eliminate the problems and projected more than $285,000 in savings for the year based on a 50% reduction in overtime hours. In total, 21 teams finished their projects within the 60-day timeframe. They implemented 141 profit improvement action ideas that generated more than $1.8 million in positive bottom-line gains through cost avoidance and revenue gains.

Lessons Learned Though we were excited with these early results and eager to start the next phase, we took some time to get our wind back and harvest lessons learned. We conducted a listen, learn and leverage meeting that brought together all team leaders and coaches along with the executive leadership team. The meeting featured a gallery walk with posters highlighting each team’s results. This exercise was motivating and enlightening. While every team had performed well, some were clearly a cut above and a few trailed behind. We made sure to recognize everyone involved in the sprint, but we also awarded top gun status to the QUALITY PROGRESS

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teams that produced the biggest documented gains and implemented the team process most effectively. For our teams, effective implementation means the use of the quality improvement tools embedded into this particular process—especially tools for documenting action plans and financial results, including an action checklist modeled after the define, measure, analyze, improve and control discipline of Six Sigma and a simple set of formulas for quantifying the financial impact of actions. By emphasizing a balance of results and process, we achieved our numbers goal and captured the learning to improve the next wave of teams. We also polled all team leaders and coaches on what worked in the first sprint and came up with the following key insights: 1. Think carefully about team member selection. At the beginning, we selected team participants based on performance and potential. That was good because we involved a number of highly motivated players. However, some teams lacked the knowledge or experience necessary for their assignment. Our reliance on

Our reliance on resident know-how as a driver for success means engineering the mix of team members to fit the assignment. resident know-how as a driver for success means engineering the mix of team members to fit the assignment. 2. Accountability and follow-through are tough values to introduce into a culture. While we like to think of our company as results focused, the newfound discipline put us in a new ball game with respect to spotlighting accountability. With weekly individual assignments and local and up the chain reporting, it was difficult to hide. For a lot of our employees, particularly at the midmanagement level, this was new and unsettling. We should have 66

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better prepared them for the heightened personal responsibility. 3. It’s better to have the financial staff in the game rather than on the sidelines. We attempted to get our financial staff on board early. In fact, our CFO was one of the early sponsors. The mistake we made was not getting the rest of our controllers and financial analysts directly involved up-front. Because we didn’t involve them until the wrap-up stage of our first wave, they had some catching up to do. In planning for the second phase, we got our financial staff in the game early to work with the teams to calculate and document results.

Maintaining Momentum And Sustaining the Gains We launched our second wave of teams within 30 days of completing the first phase. This time we deployed 24 teams with new team leaders and members but with the same coaching and leadership structure in place. This approach gave us an infusion of fresh talent while maintaining continuity and consistency. The results from the second wave were more impressive than the first. We implemented 157 action plans and projected more than $900,000 in fiscal year gains. As in the first wave, these profit improvements resulted from frontline actions to reduce accidents and injuries, save on maintenance costs and eliminate overtime hours. Though the second wave was a success, we learned that sustaining the gains from our earlier efforts was just as difficult as finding new solutions. For example, one of our second wave teams developed a simple vehicle parts log to track parts ordered to complete maintenance repairs. This idea provided an immediate solution to the problem of duplicate orders and excess inventory. Coming out of the first best practices campaign, we had tasked our location managers to implement this parts log in every maintenance shop. It didn’t happen. Why? Our location managers were overloaded with improvements to implement. Therefore, we refocused the strategy in our third sprint, which was rolled out in the fall of 2002. We launched 25 teams but focused this third wave on the locations with the biggest opportunity for profit improvement. We also limited the menu of

team assignments to the top three in terms of prior results. This focusing strategy helped ATC sustain results by getting its slower improving locations up to standard and allowing its higher performing locations time to clear their plates of improvements in action and prepare for similar 2003 campaigns.

The Power of Employee Engagement By the end of 2002, we had completed three sprints as part of our “get better, faster” improvement initiative. Of the 72 teams we launched, only two failed to complete their assignments. The 70 teams with results had an average cycle time to completion of 48 days. In total, the teams produced more than $3.5 million in cost savings and engaged more than 700 of our 6,700 employees. In retrospect, the best practices approach was the right choice for improving our profitability through an employee driven quality improvement effort. We not only reaped the cost savings we needed but we also improved employee morale while maintaining our quality service standards. Our initiative easily reaped a tenfold return on investment in out of pocket expenses for training and support.

The Road Ahead Nonetheless, we have no illusions about what’s still in front of us. We have more work to do in upgrading our people’s skills and capabilities. We have recommitted ourselves to the sprint approach and launched three more waves of workout teams in 2003. These three waves included 50 teams and resulted in an additional $2 million in savings. We plan to launch three waves per year and the next wave started in January 2004. We have also added a new capability called rapid process breakthrough to our quality improvement toolkit. This tool applies the principle of lean design from the manufacturing world to complex, cross functional business processes, such as demand forecasting, route scheduling and manpower planning. It operates in the same 60-day sprint timeframe as a typical workout team but requires a larger team and more analysis. We will be using these powerful tools to simplify and improve our more complicated core processes. One thing we are absolutely convinced of is the power of engaging frontline employees and the discipline of improving in 60-day spurts. By insist-

ing our leaders define best practices and challenging our employees to take action, we’re getting a much bigger return on our biggest operating expenses—the payroll and benefits costs that support our workforce. For organizations with large employee bases and scattered operations such as ours, the engagement oriented approach to quality improvement provides a way to move quickly and minimize risks associated with any large-scale change effort. For senior leaders looking to get better quickly by tapping employee know-how, we suggest operating with what Leap Technologies calls the 1/10/60 rule. This means designing the quality improvement initiative using a one-minute “what’s in it for you” message, attacking a simple process that doesn’t require more than 10% of an employee’s time per week and allowing a timeframe of no more than 60 days. Closing the engagement gap in this way has proven to be an energizing experience for ATC. It has renewed our spirit. As Jim Long recently commented, “In the past we tended to view employee involvement as a feel-good thing. Now we’ve tied employee participation in quality improvement right to the bottom line. That’s never happened before.” REFERENCES

1. William Kowalski, “Closing the Engagement Gap: The Key to Successful Implementation of Business Improvement Strategies,” March 2001, www.workindex.com. 2. “Letter to Shareholders,” General Electric Annual Report, 1997. 3. Richard F. Tucci, “The Evolution of Workout: From Town Hall Meetings to a Change Acceleration System,” Leap Technologies, 1995. 4. Marilyn R. Zuckerman and Lewis J. Hatala, Incredibly American: Releasing the Heart of Quality, ASQ Quality Press, 1992. MIKE BOLTON is vice president of business improvement

at ATC in Oak Brook, IL. He earned a bachelor’s degree in English from the University of Illinois-Chicago.

Please comment If you would like to comment on this article, please post your remarks on the Quality Progress Discussion Board at www.asq.org, or e-mail them to [email protected].

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