Management by Results was a very hot topic when I was in MBA school, and it is still taught today. It made a lot of sense to not micromanage people, but to tell them what results they are expected to achieve and let them determine how to get there. This approach required a manager to be very clear in defining the end results and his/her expectations. Rewards for accomplishing the desired results were also part of this program. Management by Results would convey trust and allow workers to succeed without management’s intervention.
Management by Results did yield success and still does today. However, there is one problem they never told us in MBA school. At best it will only achieve short-term results and tends to cause employee behaviors contrary to teamwork.
Many contractors use this approach to some degree even if they never planned to or heard of it. They tell their project managers to get the job done right, on schedule and to make money. They are very clear on the expected outcomes, and then let the PM do the work. Often, the PM is a maverick and, while he does get the project done, the PM disregards many company policies and procedures, uses many workarounds and upsets the customer and the support functions within the company. Management rewards this behavior and it continues to the next project. At some point the PM upsets enough customers and/or employees and he leaves the company or has his future freed up by management. Management by results does not produce consistent results.
I suggest the 3Ps' management approach as an alternative. The 3Ps are: purpose, processes and people. All organizations consist of these 3Ps: People who work on processes to achieve the organization's purpose (this idea was first introduced to me by Peter R. Scholtes, consultant and author of The Team Handbook).
Managing by the 3Ps means having a clear purpose, engaging the people who make it happen (the employees) and focusing on the processes.
Management needs to clearly communicate to all employees the reason why the company exists, where it is going and how employees are expected to behave. In business school language, this is called having a mission (why we exist); a vision (where we are going); and values (how we behave). Even though it has already been written many times in business publications, it cannot be said enough: to be really successful long term a company needs to be clear on its purpose. It is almost impossible to sustain long term success when the employees have no clue where the company is going or why.
Having a clear purpose also means that management is clear on the company's customers; not by name, but by type. A contractor that only does negotiated design-build work has a very different customer base than do contractors who live by street bids.
When the company is clear about why it is in business, the direction it is going, and the right type of customers to serve, then the last part of this "P" is the scoreboard. Leaders define the scoreboard and share it with employees so everyone knows who is winning.
Management by the 3Ps demands that company leaders clearly communicate the purpose of the company.
Engage the people
People do all the work in a company. The customer will never be treated better than management treats the employees. Employees may treat customers worse, but never better than they are treated themselves. This is not about having "happy" employees, which is often what I hear contractors talk about. When I worked for a large mechanical contractor, we reached the conclusion that we were never going to make all of our employees happy all of the time. We also decided we didn't just want satisfied employees as a satisfied employee is very easily drawn away by the competition. We wanted loyal employees. We defined this as choosing us first over the competition, even when greater money is offered.
Loyal employees are those employees that feel valued and are actively engaged in the company. These employees feel trusted because management involves them in work related decisions and communicates the purpose for the company. Loyal employees can make a direct connection between their work and achieving the company’s purpose. They know how they contribute. Loyal employees are treated as peers, not inferiors.
For any company to survive over the long term, they must continuously improve how they do things. Engaged employees see continuous improvement as part of their job, not as something management imposes on them.
Focus on the processes
People do all the work, and all the work they do is a series of processes. To be successful a company needs to have consistent processes because that leads to consistent results. When every worker does his or her own thing, companies end up with nothing that is consistent including results. To get consistent processes we need to:
1. Define the steps of the process — the right way to do it. Create a standard process that produces a quality product or service.
2. Expect employees to follow the standard processes or to have clear reason for variance. It is OK to change a process to improve, but one cannot improve a process that has no standard way in the first place.
Management's role is to make sure the front line workers know the right way to do the process and how to go about improving it. A shop worker cannot just decide to fabricate a piece of material different than designed, even if he thinks it might be better. A clerk cannot decide to change the data entered into the accounting system. Just as processes must be consistent to be effective, the way processes are improved must also follow a consistent method.
It is very important that the processes make quality outputs. All employees must adhere to the same quality guidelines in their work, which are: Don't get it, don't make it, don't send it. This means don't accept an incorrect or incomplete product, report, timesheet, material or drawing. Send it back. Don't make, design, weld or install any incorrect or poor quality item. Especially, don't pass on bad quality work.
Your competition can buy the same equipment and material you use. The competitive edge comes by having more engaged employees and more efficient processes.
The 3Ps management approach begs some key questions of management:
- Do our employees know our company’s purpose?
- Are our employees loyal to us or just waiting for a better offer?
- Do our employees know if we are winning? Do they know the score?
- How do we know the front-line workers know what defines quality work coming to them and going out?
- How do we know our employees have the skills and training to perform their work correctly?
- How do we know we are doing quality work? (Note that the absence of negative feedback does not guarantee that we are doing quality work.)
How are you maintaining your competitive edge — by using management by objectives, which yields limited results, or the 3Ps, which have proven much more effective?
Dennis Sowards is an industry consultant and guest writer for Contractor Magazine. His company is Quality Support Services, Inc. and can be reached at [email protected] or at (480) 835-1185.