How do we motivate a team with a high morale to engage in a much more effective and efficient way of doing projects? Specially when it has just won an important tender for the next 10 years? That’s the question we’ve been set to answer.
Team building sessions
The management of the Firm and the JV accepted to first invest in a fresh start through a series of team-building sessions. These team building sessions were intended to clearly mark a new beginning, to clarify the new rules of the game, and to lay a foundation for 10 more years of success through friendly cooperation and learning. But they were also meant to introduce a much more effective and efficient way of delivering projects.
So, we hired a couple of professional team building trainers and a nice location, to deliver program of a day and a half for all 200 team members in mixed groups of 20. The program included an introduction on the rules of the contract by the directors of the Firm and the JV, outdoor activities, an introduction to continuous improvement a Meet & Greet with members of the Boards of Directors of the shareholders, plus a good dinner and drinks at the bar.
Sense of urgency
In their presentation on the new rules of the contract, the directors told about the threat leading to the need to improve the delivery of projects: The competition eager to take over the business, investors hesitant to invest in new plants at higher production costs than elsewhere…. And they shared the opportunities in sight -if the team would succeed to really improve their performance-: More plants to be built in the region, and a long term commitment to allow all team members to make a living out of this business. Also, the directors were very clear about the mechanisms introduced in the contract to ensure this: No more bidding for every new contract, no time to be spent on making and evaluating these bids, doing everything reimbursable instead of lump sum…
As to illustrate the culture of long term commitment and transparency, also the details for profit sharing were clarified. The new rule being that profit is made when projects are delivered at a lower cost per unit than previous projects. This profit is equally shared between the Firm and the JV. Within the JV, the profit is equally shared among the shareholders. This mechanism puts a bounty on working as efficiently as possible, or on spending fewer hours per job. The shareholders only get their profit if the JV makes a profit too. Which is totally different from the former practice, when contractors used to bid together for a job, while making their profits by charging as many hours as they could to the lowest acceptable quality -sometimes even to the detriment of their peers or the client-.
The new mechanism is further reinforced by the fact that the JV has a right to purchase working hours at 90% of the actual cost from anyone of the shareholders. This drives the shareholders to always send their most efficient team members to work in these projects and to be reluctant to spend too much time on the work at hand. For the more hours the shareholders charge to the JV, the higher the cost and the lower the profit.
Quite an elegant way to put a premium on making fewer hours, rather than more! And also on the promotion of close cooperation. All this, of course, is only possible when open book accounting is applied.
These stories by the Directors proved to be a great introduction to discussions on the teams best practices in the past, and on learnings for the next period to come.
This blog is part of my Lean & Agile Implementation Journal