Turning the soft term “employee engagement” into hard operational results
Last week I was in London where I participated in Works Management’s “The Great Productivity Debate” which was hosted by WM editor Max Gosney.
Max began the event with some statistics from the Office of National Statistics that rated the UK as having low productivity compared to other European nations as well as the US.
When the participants were asked the cause of this low productivity in the UK, the conversation quickly centered around employee engagement. Participants had automated what they could, outsourced where possible and were now focused on the local workforce.
How the different companies engaged their workforce varied as much as their own manufacturing processes. But there were many similarities. There were two common threads of discussion for those companies that were successful. First is management spent time listening and acting on their employees’ suggestions every day. In their facilities it wasn’t a shock or a signal of bad news when a senior manager walked the floor. The second was that employees were rewarded for participation. The value of the reward seemed to matter less than the act itself and varied in terms of peer recognition, time-off or monetary rewards.
It was fortunate that the next day I was able to visit a client, Vaillant, a manufacturer of environment control systems. A company that has thrived not only through a long-term recession but also a significant downturn in its own market (housing). Their approach to employee engagement was the definition of the items we discussed at the event day before.
I could spend several pages on the unique methods Vaillant has employed to improve productivity and quality and increase on-time delivery, but for now, I’ll focus on how it is engaging its people.
Vaillant has developed its own Vaillant Perfection System (VPS) improvement methodology. A methodology of thirteen principles that is loosely based on the Toyota Production System.
The first two principals are enjoy your work and understand your value. Vaillant understands that if you don’t enjoy what you do, you won’t do your best. It also wants its employees to understand that they are a valuable part of the company and that if they aren’t working when they should be, the rest of the company suffers. These relatively soft principals yield hard results. Turnover is 0.6% and unplanned absenteeism is down 31% to 2.8% since beginning the program.
Vaillant sets an improvement goal each year in terms of performance and expects its people to provide the ideas to achieve that goal. They have set up a lifecycle system of ideas that shows progression from suggestion through implementation so it’s clear to all where they are to achieving that goal at any point in time. Creating a company specific methodology and setting a goal is easy. The more interesting part I saw during my visit was how the company supported employees in achieving the goal. I’ll highlight a couple of examples here.
In terms of educating employees on the principles, which borrow heavily from Lean principles, they close the loop in a way I have never seen before. At the end of the class, participants go on a Photo Safari of their own department. To graduate the class, each employee must take a photograph of a principal of VPS in action and then a photograph of something that isn’t supported by one of the principles.
Vaillant also has an interesting method of justifying projects. Vaillant found that the traditional method of financial ROI can become very department centric. For them, that traditional ROI method led to reducing cost or increasing value one department only to have the opposite effect in another as costs were pushed around the plant. Instead, Vaillant looks to see if the idea supports one of the principles in its VPS methodology. If it does, they apply the iceberg principal (the financial costs are just the visible tip of the iceberg) and look more broadly at how the entire system is affected. As an example it recently justified LED lighting. At first blush, LED’s couldn’t compare to fluorescents in traditional life versus purchase and operating cost comparisons. But when it looked at the cost of change-out in terms of maintenance labor and increased safety risks associated with maneuvering on high ladders around unforgiving production equipment, Vaillant realized that LED’s do make sense and made the change.
In terms of rewarding employees, Vaillant does a number of things to demonstrate their appreciation of employees. The one that stuck out for me was how it handles doctor visits. Because its turnover is very low and its workforce is aging, Vaillant’s employees are faced with an increasing number of medical issues. To reduce the impact on their wages due to more time spent out of work due to medical appointments, Vaillant implemented the following policy: For a general medical appointment, the employee must set the appointment up on their own time since there are options to make that happen. But when the employee must see a specialist or have surgery which is most often only available during working hours, Vaillant doesn’t want to impact employee’s pay for something out of their control. Vaillant’s policy pays up to four hours for time out of work on those occasions. Of course Vaillant expects something in return. It offer this flexibility expecting that the union will be flexible in accepting changes as Vaillant’s workforce needs change. The union finds this is a beneficial compromise.
After my week in the UK and spending a significant time discussing employee engagement with a number of companies, it is clear that those who are successful have evolved from occasional bursts of engagement activity and suggestion boxes into a significant commitment from both HR and Operations into treating their employees like expert consultants. Tangible activities include setting up measurable goals (both group and individual), providing the investments in tools and training, committing management’s time to the effort and finally rewarding when appropriate.