When business conditions are challenging it is very tempting for leaders to begin micromanaging their team in an effort to generate results. Michael Yates explains why it is smart to avoid the temptation to tamper.
What can we say about the state of the US economy? It is certainly better than it was through most of 2012-2013.
There are the continuing pressures from investors and other stakeholders to increase revenue and decrease costs and improve the performance of the company stock. That is nothing new. What is different, though, is the cumulative effect of the financial scandals, movement of full time to part time workers, persistent high unemployment, political gridlock/bickering over legislation (healthcare) and the reluctance of companies to hire or expand their labor force (full time employees).
These have been the persistent business themes during the economic downturn of the past four years. New legislation and stricter guidelines for corporate governance and accounting are making top executives personally responsible for some company statements. The last four years of staff reductions has put a strain on the remaining personnel — especially employees who have daily customer contact trying to provide good customer service, increase sales and improve their customer retention.
Dr. W. Edwards Deming, the Father of Quality Management, was very familiar with situations like this. During the 1990’s there was a lot of emphasis placed on process management skills and the importance of Process Discipline and Voice of the Customer. He told managers and supervisors how the impatient expectations of the marketplace focused management’s attention on direct costs (capital expenditures, payroll costs, operating expenses and quarterly profits).
This approach often ignored many of the indirect costs produced by this kind of short-term obsession (customer service/turnover, employee apathy, erosion of brand equity, increased acquisition costs to replace former customers).
What Dr. Deming said to us then is just as relevant today. Micromanagement and a management style of only focusing on short term profits can have costly consequences.
In tough times, getting immediate results often requires actions that will adversely affect longer term strategies and systems. For example, reacting to an immediate problem with one customer may result in disrupting service for others. Often a high revenue customer can also be very high maintenance.
Management must continuously balance their resources to insure that one large client does not consume all the key resources resulting in poor service to other clients. Dr. Deming called this process “tampering” because the intent was good — to fix an immediate problem — but it often lead to unforeseen consequences that require a more expensive “fix” at a later time.
When you’re in a rush to get quick results, remembering the Law of Unforeseen Consequences is the last thing on your mind. He also noted the prevalence of “heroic recoveries” — everyone pulling out all the stops to deliver despite some glitch in the systems — consistently bad systems will always overwhelm good employees. Not only can that customization result in unintended consequences for other customers; such high profile action may lead key customers to expect one or two each week!
Constant customization can become an expensive enterprise with unrealistic expectations. Heroic recoveries can become “addictive” to the employees with daily customer contact and can put expensive demands on support people and systems trying to deliver on customized promises. You need to deliver good customer service while maintaining continued customer value (brand equity, sustainable revenue + profits, good customer referrals).
Dr. Deming emphasized a system that gives management early warning signals. Then, instead of “tampering” or relying on “heroic recoveries,” managers can see ahead to make sound decisions that maximize short-term benefits without compromising the future. If you have a process that provides useful “early indicators” that lead to sound business planning, you won't have to rely on "tampering" and "heroic recoveries" to meet customer needs and financial expectations. These early indicators must address both customer service and future customer value.
Customer service measures how well we have done in the past providing our customers with a good, positive experience while customer value should measure what are the customer’s future needs to continue to use our product or service. Customer value will measure “future buying potential.
Tampering"(micromanagement) is very expensive for the organization. It has been shown to increase costs as much as tenfold compared to staying the course with an existing, sound process that delivers consistent customer value. We all understand the cost of "heroic recoveries." Every employee in the company has a Net Asset Value. Good leadership allows managers to enhance and improve this Asset.
TAMPERING SYMPTOMS:
Everyone is working hard, but there is still a lot of rework and firefighting by many employees.
Customer complaints are increasing while employee dissatisfaction is increasing. Employees are tired. Employee morale may become an issue if this process is allowed to continue.
You have a well written business plan but having consistent problems executing key strategies. How are you measuring the key indicators of your business plan? Who are the operational owners of these key business indicators? How do you reward success?
You are playing a lot of “catch up”. You are reacting to the marketplace-not being proactive.
There is a lot of cross functional bickering and fighting. Functions are not sharing key information and new ideas with each other. Silo management is commonly practiced.
Employees are implementing their view of the game plan (often missing key elements). They often see what affects them directly, only to mess things up for others (sub-optimization).
Michael Yates is a Vice President – Senior Consultant with The Frontier Group. His practice specialties are Executive Coaching, Emotional Intelligence, and Change Management Services. He offers the means to look ahead and anticipate how strategies, managers and people are working in the real world, avoiding "tampering" and "heroic recoveries”.
