As an organisation grows so does the role and responsibilities of the staff. For fast growing organisations, the business owners quickly run out of bandwidth and hence have to delegate noncritical tasks & appoint key leaders to make sure the wheels keep turning smoothly.
In Small and Medium Enterprises, the most trusted & oldest employees are often appointed leaders. And why shouldn’t they? They have been with the company for years & have earned the trust of the owners; they know their jobs inside-out and most importantly they do things that are right for the company. In fact, so deep is the owners’ trust that on most occasions, the decisions & actions taken by these individuals isn’t even questioned.
On account of their expertise & owners’ trust, with passing time, these leaders become power centres for their respective domains. Nothing can move without their knowledge and approval. Generally speaking, this isn’t a bad thing as there is clear accountability on the department heads for their respective departments and this arrangement also keep the owners away from daily operational issues thus allowing them to focus on larger things.
It’s not too long before the chosen ones are well established in their domains and their way of working becomes as if set in stone. And before you know, the same behaviours that supported the organization and the department become roadblocks that slow things down. If corrective action is not taken at the appropriate time, the company may have to face grave consequences.
Let me show how this played out for one of our clients.
He is a 2nd generation business owner in the manufacturing sector and enjoys client loyalty due the quality of product offering.
The production supervisor at his factory has been with the organisation for more than 30 years. Having worked on all products over the last 3 decades, the production supervisor is an expert at what he does and enjoys immense trust of the business owner.
All production related decisions such as production scheduling, product prioritisation, order prioritisation, dispatch, factory labour, etc are managed end to end by the supervisor without any intervention from the business owner.
This arrangement worked very well as the business owner was freed up from the routine production related hassles and thus could concentrate on client acquisition, sales planning, industry research, etc. The efforts bore fruit as new clients came onboard and the company’s turnover showed a steady increase year on year.
So, when did the sailing become rough?
With increasing sales, production had to move up. The business owner added new machinery & staff and this should have technically catered to the increase in demand.
Alas, this wasn’t the case. Over a period of time, this is what actually happened:
🙁 Production delays
🙁 Missed orders
🙁 Partially fulfilled orders
🙁 Lost orders
🙁 Loss of credibility for the business and negative brand image.
🙁 Low morale in the team due to the constant friction between Sales and Production
🙁 Business owner constantly occupied in firefighting & struggling to retain customers
In fact, the situation became so dire that only 20% of the orders were being fulfilled within agreed timelines.
When the production supervisor was asked to come up with a solution to tide over these issues, he simply asked the business owner to double the machinery and workforce.
At this point, the business owner sought professional support to overhaul the current state of affairs, streamline the entire production cycle and transform it from being Person Centric to being Process Centric.
The following corrective actions were taken:
😊 The responsibilities of the Production Supervisor were broken down into smaller activities & tasks and many of them were delegated.
😊 A Production Assistant appointed to work under the Production Supervisor and keep track of all day to day activities at the factory.
😊 Production targets were set for each production unit.
😊 Hourly production tracking mechanism was introduced.
😊 Labour wages were linked to production
😊 An Order Tracking mechanism was introduced
- All orders were logged into a centralized system
- Production schedule was created with emphasis on actioning pending orders
- Sales staff was instructed to provide a delivery date to customers only after consulting with the Production team.
- Each order was tracked from receipt date to dispatch
- Visibility of order milestones was provided to Business owner, Sales, Accounts, Production and Dispatch teams.
😊 Workforce management was introduced at the factory. Agencies were also contacted that could provide temporary labour when needed.
😊 Weekly review sessions were introduced where the Business Owner evaluated the performance of Sales, Production and Dispatch teams. This forum was also important to share feedback, discuss roadblocks & challenges and take inputs & approvals from the business owner.
The following outcomes were achieved within 3 months of making the above changes:
- All orders pending for more than 20 days were cleared.
- 80% of the orders were dispatched as promised.
- Labour at the factory was reduced by 20% (from 84 to 67) by eliminating non-performers – with no impact to the daily production output.
- There was drastic improvement in staff morale as inter-department conflicts were eliminated
- Production Supervisor was forced to give up his set ways of working & adopt better practices & work techniques.
So, what are the key takeaways from the above case study?
Power centres are never beneficial in the long term. This system only creates a “Boss” and not a “Leader”. With great power comes great responsibility, so be careful who you make powerful.