Thursday, October 1, 2009

Top Ten Policy Problems

Most policies suffer from two axioms: 1) The one who makes the policy is usually the first one who breaks the policy; 2) Poor systems generate more systems.

The first shows up most often with travel and expense policies where the management feels they're exempt from the new rules they just issued. The second: when we can't control things, we create another policy to try to control things.

The first part of the list:

1) Companies will often limit the purchasing authority of supervisors and managers when they want to buy miscellaneous, non-inventory items, yet they have the authority to scrap or disposition 10, 100 or 1000 times that amount of inventory items.

2) Some companies still make new employees wait to enjoy vacation time (up to a full year) yet they will enroll them on the medical insurance plan after 90 days...even though the medical insurance costs more than vacation.

3) Management will often have others' work checked but they don't give a second thought to the work done by the car mechanics, even when the brakes are being worked on.

4) A corollary to #3, auditors and customers often insist on 200%, 300% or more inspection yet they get really upset when someone offers to double-check their work.

5) Companies cut costs in expense areas where the cuts won't make a lot of difference yet ignore the major areas where the slightest cuts will generate greater reductions.

6) Companies make workforce reductions across the board rather than deciding which departments or facilities should be cut less or more depending on the strategic plan.

7) Companies will make workforce reductions even when it's still making profits. They will waste future profits when they re-hire.

8) Management tries to write a policy that can cover every situation for attendance, and ends up with a mess. Or they equate fair treatment with equal treatment, which are not the same thing. Fair treatment is what's appropriate for the person and the situation. Equal treatment ignores the person and the situation and makes it simple for management. If management ignores the equal treatment that the policy demands, then they are guilty of favoritism. If they ignore the fair treatment, then they are callous and maybe immoral in certain situations.

9) Poor management focuses on attendance policies rather than the work being done. Treat everyone like adults, not like kids or dogs who need a short leash.

10) Poor management focuses on efficiency, which is fraught with problems. One: it means nothing except as a comparison to the standard time. Two: the standard time may not have been rigorously determined. Three: efficiency has nothing to do with schedule attainment, i.e. on-time delivery. Four: it can create production problems (over-production, high inventory, late delivery, etc.); see Eli Goldratt's work on Theory of Constraints ("The Goal", his satellite series on TOC, etc.). Five: It becomes the entire focus of an employee's performance. Six: Management avoids moving personnel into areas where the help is really needed to meet customers' schedules for fear of losing efficiency. (Counter: realize that even if it takes the "new" person all day to get one part done, it's one more part that can ship to the customer and generate revenue. Otherwise, that person may be producing WIP inventory that's going nowhere.) Seven: High efficiency doesn't guarantee low costs. It means less time, but not necessarily better quality or material utilization or machine utilization (OEE--Overall Equipment Effectiveness).

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