Minimum Wage vs. Minimum VIABLE Wage

Yesterday President Obama gave a speech encouraging the raising the minimum wage. People have a difficult time living on minimum wage in the USA. However this is the wrong, or suboptimised, discussion. The minimum wage is simply the least amount of money that an employer may pay a worker according to law. The actual minimum wage is whatever a worker is willing to accept, taking into account the possibility of off-the-books benefits, under-the-table cash (i.e. tax free payments), illegal employment status of the worker or simply desperation on the part of the employee. There is very little that is edifying about the discussion of a minimum wage, what we need is discussion of a minimum VIABLE wage.

What is a minimum viable wage? It is the lowest wage that is in the best interest of all stakeholders including employee, customer, employee, and the environment. Anyone who has tried to manage a business that involves more than a couple of steps in the service-delivery chain using the lowest cost labor has realized that you get what you pay for, or less. Low quality, high turnover, late deliveries, lack of continuous improvement erode the bottom-line far more than the savings from labor cost. This is not viable.

People who are not paid a viable wage do not come to work with a sense of security, much less a sense of motivation or commitment to their employer and larger team. Customers served by minimum legal wage employees receive service that is proportional to the level of engagement, motivation and professionalism that $8-$15/hour will buy.

In minimum wage environments, the company culture tends to become fraught with mistrust, fear, disrespect for low-status individuals, lack of human development, inability to use minds to find innovative solutions, and other contributors to stagnation and decline.

What we need is a national conversation on a minimum viable wage. It requires collaboration. It requires long-term thinking. It requires understanding of total cost. It requires real leaders. Mr. Obama, 24 months should be plenty of time if you find can gather the right team of rivals to shepherd this discussion.

The cost of not involving people

To build on the previous post, one company I know went through the trouble of quantifying the cost of non-involvement at the time the company was sold. We're talking a billion dollar company that tripled its value in four years. Over the period, they had a strong people involvement in waste reduction program and they found overall that manufacturing cost as a percentage of sales reduced by 7% whilst materials, R&D and overhead remained constant - 7% that corresponds to the 7% increase in EBITDA (in percentage of sales) over the period. EBITDA overall increased by 60% over the period.

The interesting part of the analysis is looking at the situation plant by plant. In the 6 plants least involved with improvement efforts, as measured by operator involvement and speed of improvement, the percentage of manufacturing costs over sales varied from 5% increase to 12% decrease. In the second group 6 plants group of high involvement efforts, manufacturing cost to sales reduced by -9% to -30%.

Rigorous estimates such as these are rare, but the company explicitly considered that improvements in people engagement and customer satisfaction directly led to a $ 600 million increase in company value. Hard results obtained from "soft stuff." Why so many senior managers simply shrug off cash potentials of this magnitude remains a vexing (and enduring) puzzle.

La démotivation des équipes : tout le monde y perd

Aujourd’hui, quand on parle avec des personnes qui travaillent en entreprise, ce qui se dégage fréquemment des échanges c’est le sentiment de démotivation qui les gagne et leur difficulté à avoir encore envie de contribuer aux projets de l’entreprise.

Vendredi dernier, je recevais un mail d’une personne qui témoignait de cette situation. Cette personne travaille depuis quelques années dans une équipe de plusieurs dizaines de personnes sur un projet considéré, à un moment, comme important pour l’entreprise. Jusque là, malgré des conditions de travail parfois difficiles, toute l’équipe s’était fortement investie avec une véritable envie de porter loin ce projet, ils y croyaient. Et des résultats commençaient à apparaître selon eux. Mais il y a quelques semaines, la direction a décidé d’arrêter ce projet.

Au-delà de la décision prise sur l’arrêt du projet (des projets s’arrêtent tous les jours), qu’est-il en train de se passer concrètement pour cette équipe en terme managérial. Rien ou pas grand-chose. Rien n’est en effet prévu pour que le travail réalisé dans le cadre du projet soit intégré par l’organisation. Rien non plus pour que les nouvelles compétences acquises par l’équipe puissent être reconnues et prises en compte pour la suite. Rien non plus d’ailleurs pour les aider à trouver un nouveau poste. Next…

Ce peu d’attention et de reconnaissance portées par l’organisation aux personnes et au travail qu’elles ont réalisé pendant la durée du projet n’a pas été sans conséquences sur les membres de l’équipe. Aujourd’hui, ils sont démotivés, défiants vis-à-vis de leur management et en en posture de retrait par rapport au travail. C’est ce que me décrivait mon correspondant dans le mail reçu la semaine dernière.

A l’arrivée, le système aura donc produit des pertes à tous les niveaux : pour les personnes, une perte de motivation et un désengagement vis-à-vis de l’entreprise ; au niveau de l’organisation, une perte des connaissances acquises par l’équipe-projet, une perte liée à la vie du projet (recrutement, formation, réalisation, mise en place dans les entités sur le terrain mais sans suite), et une difficulté à mobiliser les membres de cette équipe sur de nouveaux projets.   

Cet exemple est en définitive l’illustration de ce que décrivent les enquêtes récentes sur « la qualité de vie au travail » : confrontés à des projets qui s’accumulent, se superposent puis sont remplacés par d’autres, les salariés se sentent de plus en plus en difficulté. Ils se mettent alors à résister aux transformations imposées par les dirigeants – comme le pointe Michael dans son post du 30 novembre.

A l’inverse de l’exemple ci-dessus, j’ai aussi eu la chance d’assister à de petits « miracles » en termes de motivation d’équipe et de performance associée. Je me souviens d’opérateurs en établissement auxquels il avait été demandé d’optimiser l’organisation de circuits de livraison. Personne au Siège de l’entreprise ne pensait qu’ils y arriveraient : ces opérateurs étaient trop indépendants pour se mettre d’accord collectivement, trop attachés à leurs pratiques personnelles, pas assez compétents par rapport à l’expert normalement mandaté sur ce travail. Seule l’équipe managériale locale y croyait fermement. Les conditions de soutien et de confiance aux opérateurs étaient, de fait, déjà en place au sein de l’équipe et le défi juste à la hauteur.  

Quelques semaines plus tard, avec des étoiles dans les yeux, les opérateurs nous ont présentés leurs propositions. Le résultat de leurs travaux était meilleur que ce qui avait été envisagé de manière optimale par l’expert.    

How to fail well

The biggest waste is not failing, it's not doing. There is a famous tale of a patrol lost in the fog in the mountain that found its way home following a map, only to discover it was the wrong map. In uncertainty, the wisest thing to do is get on your feet and walk - carefully. The cost of not doing so is often much greater.

I'm a great believer in failing - thankfully, since it happens to me often enough. In the same vein, I believe that one learns from one's mistakes, not from one's dumb-stupid-baka errors. Making mistakes is the only way to deal with uncertainty (as the alternative is do nothing). Errors occur when you ignore something fairly certain, but that you haven't seen (or wanted to look at).

Failing well is essential to moving forward in an increasing uncertain and unpredictable work environment. In the past ten years, everything from technology, to footprint, to jobs is changing. Planning is all very well when we can forecast with some degree of confidence, but to keep planning when we know the plan is wrong is a little bit weird, not to say dangerous. So how to fail well?

1. Don't do anything stupid: there is enough uncertainty going around not to try and do something radical and different in a known area. A few years ago I found myself on a beach in Brazil, in what was the middle of the winter for me in Europe. I thought, what the hell, and I went for a swim, got carried away by the undertow and saved by the baywatch. Embarrassing - I really had a moment thinking "this is it, goodbye." Now, that was really stupid. They were SIGNS telling to watch out. Ignoring gravity, demographics, or expertise is not innovative, it's just plain dumb.
2. Start with what is at hand and fail quickly: don't think it through, just do something with what you've got! Thinking about it usually complicated matters with all sorts of unlikely scenarios. The point of doing rather than thinking is to explore. We now have many opportunities to do things virtually, so it's pretty low cost to get something done - respecting rule number one: don't do anything dumb that would bankrupt you or take unreasonable risks.
3. Rope in others right away: don't fail alone if you can help it. By collaborating intensely with two or three people, chances of success increase dramatically. The questions is often to find the right people and to get them to participate to whatever nonsensical idea you're about, but several heads are definitely better than one.
4. Change your mind often: the point of doing is learning, not succeeding. Failing is useful only if you do learn, which means changing your mind and abandoning your original plans to follow where the experiments and your team mates lead. We're not wired to find changing our minds easy, so we need to learn to appreciate every time it happens.
5. When it works, do it again: I have a great friend who is a movie producer and explains Hollywood thus: no one ever knows the recipe to what works, so as long as people pay to see a movie, keep doing sequels, which is the way you build a franchise… until audiences get bored for it. The flip side to an open mind is to be disciplined about repeating what works without chasing something else and building it further with the tools at hand.

Over the years I've notice that many things I have failed at (I mean, really failed, as in not getting the job, not getting the funding, etc.) have closed some doors but more importantly opened others which did succeed. The question then, in a turbulent , uncertain world, is how to work at opening doors that you can't see are there. The only way I know is to try it and fail... until it succeeds.

A Challenge to Lean Restaurants: Serve Me Less Food

I'm not picking on restaurants. The entire food supply chain wastes a third or more of the food from farm to table, not to mention the wastes in energy, fuel and labor within operations. But that scope is too broad. Let's keep it simple. Restaurants, a challenge: serve me less food. I don't like wasting food. It's immoral. It's wasteful. I don't need a whole basket of bread, American-sized portions or all-I-can-eat anything. The science is in. We can calculate the number of calories I need per day to be healthy. A food service customer experience that does not keep this in mind appears increasingly outdated. If it's too difficult to adjust portion sizes based on the customer Restaurants almost never ask if we would like a small portion, and sometimes specify "no changes please" on the menu, suggestion either pre-made batches or a lack of customer focus, both non-lean, non-agile behaviors. Restaurants, you can also ask whether my party is dining on business, and whether we would like to plan ahead on packing up 25% of our meal in advance to donate, since we will not be able to finish it nor take it to our hotel and eat it another day. Some restaurants do this already. Why not all?

People matter more than process

I've just had the privilege of writing a paper with two people I respect tremendously in my field… and to see it rejected by an academic journal. The editor's argument is the following: "I would like to point out that your paper went through a standard blind review process, where names and reputations are not part of the evaluation criteria. The three independent reviewers all converge to similar conclusions." The failure is all mine since I did most of the writing and the reviewers felt negatively about the style of the paper.

It's not the rejection that bugs me, as an author I've had my share of that, and, in this case I had never heard of this journal in the first place. It's the assumption that the "blind" editorial process is a guarantee of quality. In a confused, not stabilized field, WHO says WHAT matters enormously.  In this case, one of my co-authors created the field, the other, as a senior manager at Ford, has more knowledge of the topic than any one else. I've learned more in writing this paper than I had in years. WHO they are counts!

It reminded me of a development project where the project manager had perfectly followed the workflow, the gate reviews, the checklists to come up with a piss-poor product that flopped terribly on the market. Luckily the division manager gave the revamp to a gifted engineer most managers disliked for his messy ways, but who understood the product inside out, and he focused on one idea: simplification. The resulting product became a total hit, market share practically doubled.

When Bill Gates has a banal idea, which he often tweets about, it's well worth listening, because his idea might not be innovative, but his judgement is bulletproof and who he is give the thought credential. After all, everything the man touches works out. Action trumps thinking every day. Doing creates evidence. Evidence is better than intuition when it comes to learning.

Frederick Taylor has had the last laugh. back in 1911, he stated: "In the past the man has been first; in the future the system must be first." This might work for bureaucracy and Law courts, but when it comes to learning, clearly who the speaker is matters tremendously, regardless of the process. Who we choose to follow as Best In The World determine a large part of who we become. Sure, even the wise can drew up, and indeed do. But in a world saturated with information, choosing WHO we listen to REALLY matters!

Are we wasting lessons learned?

Can you help us think through our next steps in our Lean transformation? A large government department whom we have helped for several years within projects and training programs.  The leading guy within their Lean department explains how they are shifting from delivering capacity to a project to delivering a product to a project. This will help focus on the process and build in quality expectations. I was, at that moment, still wondering why I was in the meeting as I am only involved in coordination and planning for one of the training programs.

The next day  I find myself sitting in on a meeting with a company evaluating their Lean journey and possible next steps. This because I assisted a colleague with a broken leg during the last two days of a Kaizen week. After we talked about the results of the Kaizen week she asked a question: how do you keep focus on the process while we shift to a matrix organization? Ok, so this company is just about to walk the same steps that the previously mentioned government department already walked. No guarantee that they will end up with the same result if they copy this. I couldn't help myself sharing what the governmental department was doing.  Very insightful she said. But the governmental department will experiment on this approach, and pivot maybe. Maybe it is already been done by someone else, what did they learn?

So who is writing this stuff down? Or do we need to walk this path to learn it ourselves, with all of the delays, resistance and political wrestling matches within our companies. I am sure our gurus have seen it all so my question is….are we wasting lessons learned?