Lean management is popular today, especially because its implementation leads to enormous cost reduction, combined with improved quality and increased service level. Interestingly, a (very) long-term orientation may be seen as the basis of the lean philosophy, while HR policy is its heart. So, embracing lean, allows HR to take the lead it actually deserves.
The lean philosophy is all about long-term success. The goal of the company is to provide the next generations of workers (team members) with a decent income. This is only possible if the company succeeds to be innovative responding to changing customer demand over time and as long as the company’s cost level is competitive compared to the market. Cost reduction is not a goal per se; it’s a means to keep the company healthy.
Another requirement for long-term success is to maintain a positive image, and to be seen as an important contributor to the community’s well-being. For Toyota, the two main pillars for long-term success are:
- Continuous improvement
- Respect for people (inside and outside of the organization)
Based on a solid long-term strategy, Toyota has been able to build and deploy new assembly plants even in Europe and the US, while others have been moving their production facilities outside these geographies. For the same reason, they own one of the world’s most powerful product development centers, which already in the 1980′s started seriously developing energy efficient vehicles. Today, this same long-term view on development is evident with work that has begun on a car that cleans the air, rather than polluting it.
Lean’s entire toolkit is related to empowered teams: teams of colleagues who together are authorized to add value to the company and its clients for decades. The role of HR is to facilitate for the organization the building and maintaining of these empowered teams, guaranteeing that all team members are involved with constantly contributing to both production and process improvement. In addition, HR is responsible for providing opportunities and experiences in many different areas of the company. Organizations want to retain well-functioning team members within the company forever. They are extremely valuable and allow the company to flexibly respond to changing customer demands and producing further cost reduction.
That’s why team members at Toyota are still contracted for life, after an initial trial period of two years for familiarization as an outside contractor. During this life-long contract, they will be working in many different production lines, departments or facilities of the company. One could say they are actually part of a high potentials development program throughout their entire career and not only at the beginning of their career. Team members learn to always be working on continuous improvement. In the lean philosophy, this is called kaizen. The possible higher costs of older personnel (which are not as natural as they may seem), can be compensated entirely by lower costs of training, higher productivity and better results in continuous improvement efforts.
HR taking the lead
Today, organizations in the West have a lot to learn from Toyota in embracing a long-term strategy, with a central role for the development of talent. Such a long-term strategy relies on the organization’s team members to produce and deliver products and services which are really wanted by the market while maintaining an interesting margin, even when competition increases. This will certainly inspire new and current employees.
The HR strategy is then focused on providing a sustainable improvement of production. To do so, it’s useful to define the HR process itself as a production process that can be improved. View HR as a production process with the goal to deliver just the right amount and quality of talent in the years to come. Looking through your lean spectacles, this notion allows you to redesign the HR process. This positions HR to take the lead it deserves in the board room, at management levels, and among team members.
Adopting a companywide lean strategy leads to typical lean success such as cost reduction and improvement of the company’s competitiveness in an ever more globalized market. You will reduce the costs of operations by deploying your permanent team members exactly where demand is highest, instead of having some specialists on the bench in one department (where demand is low) and hire contractors elsewhere (where demand is high). You will also make use of flexible personnel such as contractors for fixed trial periods and contractors to cover high peaks. The organization will also maximize the productivity of your senior talent, eliminating the waste of labor potential.
A lean strategy within the HR organization also leads to rationalization and continuous improvement of the HR processes. Reducing the costs of recruitment for existing positions (normally a factor of 7), minimizing the cost associated with hiring errors, reducing the costs of orienting new hires and eliminating the cost of additional external coaching and training are key goals.
A lean strategy also responds to some other current trends: the call for sustainability, worries about demographic aging and the post-crisis job mobility (expected to start peaking any moment now). Sustainability is provided by building an ever more innovative organization, where team members work continuously on the delivery of good products and on the development of better processes. Demographic aging is faced by retaining your talent way longer and maintaining their optimal levels of productivity. The post-crisis mobility won’t affect you, if you’re prepared to enter long-term commitments with your team members instead of spending time and effort on the job hopping crowds.
To implement lean, the HR organization has to take a number of actions. The most important ones are mentioned below. Sometimes all of these are needed or sometimes it may be desirable to start with just one.
- Agree on your HR mission, vision and strategy – In a lean organization, the mission of HR is taken for granted: It’s all about talent development and the idea that this is a controllable process. It is important to agree on this within the HR organization, to first internalize it, translating it into operational goals and making a sound linkage with the overall strategy of the organization.
- Identify your organization’s need for talent – Using scenario planning with managers and external experts, you develop a number of future scenario’s to gain insight into the amounts of talent (fixed, temporary, contractors) your organization will need within the next year, 5, 10, 25 and 50 years.
- Develop your own lean talent profile – The core of permanent team members in a lean organization is hired for life or at least for working life. This means that HR plays an important role in selecting the right people. People who, on the one hand, have a sound lean talent profile, and, on the other, sport sufficient affinity with your sector/industry and organization. Along with your HR team, you need to build your organization’s specific lean talent profile, in order to establish if people will fit into your organization.
- Redesign the recruitment and selection process – The recruitment and selection process needs to be designed for long-term commitment to and retention of talent. This results in a decrease in the numbers of people to be hired and increased engagement by current team members increasing the probability of employment longevity. Team members will not only be hired for the department with the vacancy today but instead for the entire organization. You will be selecting most of your permanent long-term talent from your pool of temporary co-workers. Who, in turn, are selected from your pool of flexible contractors and freelancers. A sound temporary personnel recruiting and hiring system is obviously essential. Apart from this source, you will be recruiting some part of your personnel directly. For both categories, you need a lean talent assessment. This way your costs of recruitment will be lowered considerably, ensuring you have the right people to execute your organization’s long-term strategy.
- Design a talent development program – For your permanent team members, you need a continuous talent development program. You will be constantly monitoring how well team members are performing their current tasks and how they are progressing on their talent development goals. You will constantly match these data with the organizational needs, making sound choices for your next step and program improvements. This monitoring can be done through a lean talent delta assessment. Your personnel will be both developing horizontally (from job to job on one level only) and vertically (along hierarchical lines). It’s important to make this a tailored approach ensuring that people feel at ease with the process. Individuals need to be dedicated to continue development in their own mobility within the organization. Through this you will you meet your retention goals. Thus, allowing you to have the necessary future talents in place in operations and in management. This development approach will give you a flexible organization, adapting easily to changing market conditions.
- Develop a PDCA model for developing a learning organization – In this permanent plan-do-check-adjust approach, the PLAN stage means making a blueprint of the desired organizational culture: needed values and the organization specific working method. In a lean organization, values have to do with a long-term orientation and with talent development and learning. Each organization defines its own specific set of values. The DO stage is done through the organization’s daily operation. Every quarter HR CHECKs if the organization is still sufficiently in agreement with the blueprint. HR will define and phrase recommendations for improvement (ADJUST). This way, we ensure that the organization continues to behave and to develop according to the desired culture of continuous improvement.
- Develop a post employment program – Part of the post employment program is a lean talent post assessment which helps retiring colleagues to design their next stage in life (be it as pensioner, be it within another organization, etc.). Retiring team members remain valuable to the organization. They can be deployed in an advisory role or in coaching for new recruits. Retirees may join a charity supported by the company. In short, retiring colleagues continue being a valued part of the community for as long as they like. This helps the company to retain its knowledge base and also to keep them as ambassadors of the organization.
HR taking the lead is essential for a healthy organization which intends to remain competitive and relevant during the next 50 years of its existence. Having HR taking the lead, allows the company to respond to demands for sustainability, to demographic aging and to post-crisis job mobility. This, however, requires a structured and well led change process. This is the heritage which today’s ambitious HR manager can begin to build now. Structured facilitation and the right choice for supporting tooling are essential to reach that goal. We offer you such facilitation, through training, consultancy and implementation. Contact us today, to make your organization future proof.