Operational Performance Case Study

STRATEGY, EMPLOYEE ENGAGEMENT, AND OPERATIONAL EFFICIENCY ARE THREE SEPARATE
FUNCTIONS. SAYS WHO?

By: Trent D. Wunstel | Principal Harmer | Wunstel

In 2015, I worked with a Goodwill agency that reduced unplanned absences by 75% in 4 months. This business unit was mostly a production line where attendance is critical for success. In this case study, I present leadership tools to combat the systemic issue of absenteeism that is found in many organizations. But more importantly, how to instill accountability in your organization.

I’ll discuss three simple tactics that showcase how you can engage employees (Employee Engagement) on a daily basis with your long-term strategic intent (Strategic Management) that results in vast productivity improvement and employee growth and satisfaction (Operational Excellence). Our most recent Goodwill agency we worked with asked us to pass this information along to you.

 

Download Goodwill Case Study

 

Problem Statement: Absenteeism in the workforce. According to The Bottom-Line Killer, a publication of workforce solution company Circadian, unscheduled absenteeism costs roughly $3,600 per year for each hourly worker, and $2,650 each year for salaried employees.

(Applicable) Strategic Annual Goals:
• Create highly engaged team
• Enhance workforce effectiveness and engagement
• Enable managers to perform as highly effective leaders and coaches
• Establish a culture and baseline for organizational agility

Targets (Quantifiable Outcome of Strategic Goal):
• Decrease turnover by 30%
• Reduce temp agency usage by 40%
• Reduce expense/revenue ratio in eCommerce business unit by 20%

Does this project that decreases absenteeism align with strategic annual goals, and does it help meet targets for this organization? YES!

Background: In January 2015, I was asked to step in to lead and restructure an eCommerce unit that was in dire straights. The unit had just lost their Director, Manager, Assistant Manager, Administrative Assistant, and a third of their workforce overnight due to unethical behavior. This eCommerce unit was focused on production aspects of getting product processed, online for sale, packaged, and out the door to the customer.

Three Simple Tactics to Monitor, Control, and Reduce Absenteeism
Preface: Insert your problem or challenge in the place of absenteeism and you will have similar results.
We had great success, but it wasn’t easy to get started. When I first started working with this unit, absenteeism was a major issue. For example, multiple team members routinely skipped work every Friday (without pay), and there was never a consequence from management. For the most part, managers were afraid to enforce any policy or document a bad behavior because the policy was ambiguously written and team members knew how to take advantage of the system.

Example: With a unit of only 25 team members, there were 54 unexcused absences in my first month working with this team. When I became involved with this department I let the team know that we were losing over $20,000 in productivity because of our absentee issue. Once we made absenteeism the hot topic in every huddle and applied a few tactics from a simple strategy, we begin to see a dramatic decrease. Four months later we had our lowest month of unexcused absences with only 4.

I was successful in my previous position (different employer) with the same approach we used here. I am confident in this approach. In my humble opinion, you will not get results on a positive reinforcement (attendance recognition) tactic alone.

You need three areas of focus along with pigheaded determination and discipline:
1) Accountability: Write and deliver clear expectations from formal policy and communication.
2) Metrics: If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it. Learn how to easily monitor and control the metrics for absenteeism and cost associated.
3) Reward your MVP’s (Most Valuable Player): Boost morale and engage your workforce with recognition and rewards that are easy, affordable, and effective.

Accountability
This is the hard one for most managers, especially when first implementing. But, it is necessary that you set the expectations to your team members in clear writing, make them sign it, and always reinforce your company policy in huddles, meetings, and emails. Your HR department will have to back you on this one. Teach your managers to separate the behavior from the employee, and stick by it. It is hard at first, you will lose a few employees, but your management decisions should be based on a long-term philosophy, even at the expense of short-term gain. Once you hold everyone accountable to the same standards, your staff and team members (especially star employees) will begin to raise productivity and hold each other accountable. It actually boosts morale. Be very clear in your attendance policy. Always adhere to the attendance policy and be impartial and equitable with all staff. This includes Executives to part-time volunteers. Here is an example snippet of an attendance and punctuality policy I find very effective that is CLEAR.
Four (4) or more instances of tardiness or two (2) or more unscheduled absences in a one-month period constitute unacceptable attendance and will result in a written Corrective Action Notice. A pattern of unscheduled absences of once a month or more frequently is also considered unacceptable attendance. Continued unacceptable attendance will result in dismissal. Each team member is expected to commit to meeting acceptable attendance standards. A no-call/no-show (NCNS) is defined as making no contact with your direct supervisor prior to the time you are expected to arrive at work when you know you will be absent. As noted above, this notification is
expected at least 30 minutes prior to the time you are scheduled to start work. If you fail to notify your direct supervisor within the first two hours of your scheduled shift start time, you will be considered to be a NCNS. A first time NCNS will result in a final written Corrective Action Notice. A second occurrence of NCNS will be considered a voluntary resignation (unless the Team Member is able to produce documentation that notification was physically impossible on the day of the absence). Managers will make one attempt to contact with the absent Team Member who no-shows without calling, however it is the Team Member’s responsibility to properly report
their own absence. Team Members are responsible for ensuring their supervisor has their current contact information at all times. It will be considered a NCNS even if the manager reaches the Team Member who fails to call first. For unscheduled or scheduled absences of more than 3 consecutive days due to medical reasons, the Team Member must present a release to return to work (fitness for duty) to Human Resources (HR) prior to returning to their work location.

Metrics
Once you set the expectations, you will need to measure performance. For example, for our eCommerce team, I created unexcused absences and absence opportunity cost as two of our major metrics for the department. I used a similar approach with a staff of 650 people at my previous employer, so I know it works no matter how large or small your team(s). We have major KPI’s and metrics on the wall for all to see in real-time. Expectations are clear, and I imagine the team members look at the results at least 40 times a day on a 70” monitor as they walk in and out of the entrance and exit. All KPI’s measures drill down to individual team names.
FYI, KPIfire.com is a great program for project management and strategy alignment that includes easy to setup metrics. No SQL programmer or IT personnel needed. If you have Kronos or ADP you can have automated reports sent to all managers of attendance metrics daily, weekly, monthly, yearly, etc. Use it. They give you the legal information you need for documentation and it is a time saver.
If you need a Balanced Scorecard for the team member level, give us a call. We have created templates for different Goodwill Agencies. For true transparency and accountability, don’t stop with organizational and business unit scorecards, continue to the team member! (This is a truly a secret sauce missing element in most Goodwill agencies)

This scorecard rolls up to the business unit scorecard. This example has production numbers, but we also have scorecards with attendance in other systems.

Reward your MVPs
This is the fun part. In a recent study, over 50% of companies studied that participated in rigorous employee recognition study had a return on equity and assets 3 times higher than that of other companies that did nothing. It is one of the easiest ways to increase productivity, operational effectiveness, and overall employee morale.

A few ideas:
*Praise where praise is due: For our small eCommerce (test pilot) team, we found the monthly meetings are a perfect time to give a gift card to our perfect attendance MVP. Genuinely praise their efforts and punctuality. Make this person the true MVP for a few months, and don’t be afraid to praise this MVP more than the normal “sales” leader or other recognition metric that normally gets all of the air-time. Once it becomes habit with the team you can re-center your focus on other drivers and KPI’s. Print out a picture of them and put it on the wall for all to see. It goes a long way. As for gift cards, nothing beats the Walmart, HEB, Kroger type gift cards. They can purchase true commodities they need such as food, gas, home goods, etc. The team seems to appreciate this more than something like iTunes or Best Buy. If the gift cards are for managers, directors, and executive staff, then the non-discretionary spending gift cards are better than the commodity gift cards. If you walk into the department today, you will see peer recognition (team member nominations) for our monthly and quarterly review notate how valuable the team member is they are nominating because of punctuality and attendance.

*Team highlights: Department heads need to share stories and accolades to highlight these achievements at any all-company type meetings. They need to also share the success awards in company newsletters and other forms of communication.

*Yearly award: This is a huge hit. If you have 1000 employees or more, you will have a handful of employees that have perfect attendance for the year. This is where your CEO recognizes their efforts and gives them a larger gift. A few examples are $1000 Visa card, family vacation, three days off of work, etc.

*Daily spontaneous kudos: Insist that every supervisor work hard to catch a team member doing good as they wander around and engage with team members. When they do, have them point it out in front of the person’s peers or via departmental e-mail. (The more often the better, but beware…large smiles might take over your office if it is truly authentic.) This works well for team members who have had attendance issues in the past but have made a special effort to change bad habits. You are noticing the turnaround in behavior, so praise them for it.

*Milestone celebrations: Once we hit our goal of 10 or fewer unexcused absences in month what did we do? PARTY! I asked the team to decide what they wanted to do to celebrate this milestone, and that is exactly what we did. You would not believe the excitement when our crew left campus on a Friday and celebrated with our chosen activity. This was also a great time for team building activities and lined up nicely with our quarterly review. Win-Win. By the way, I left the team with a new challenge that day: never stop striving for perfection. This is only way to reach your objectives that may be years out.

In conclusion, you can change daily management actions and employee behavior to align with your 3-5 year strategic goals and your annual objectives and targets. This was not the only improvement project with this department. But, we were able to hit all annual targets of decreasing turnover, reducing temp agency labor, and reducing cost within four months. This department continued on to reduce E/R by nearly 40% and was 178% over budgeted net-income by the end of the year. This was possible by attacking a root cause problem with disconnected employees.

The next Goodwill agency I worked with had similar issues that revolve around accountability. We enlisted the same tactics to a new Goodwill agency and doubled our sales in 4 months.

Here are the actuals for our four month endeavor with the most recent Goodwill eCommerce unit.

(Sales do not include eBay, Computer programs, and other online platforms which all showed tremendous improvements)

The most impressive insight about this turnaround was the 2.5 year negative trend that reversed in only 1 month with fewer employees. Not only did we reverse the trend, we doubled sales in all platforms in four months. Was it all about absenteeism? No. But there is a root cause issue of accountability that must be owned by management for true, sustainable change initiatives to truly make a difference.

There are fundamental elements needed for success that crossover to any department within Goodwill. Do not take the core elements lightly, they will determine your future.

Quality Management System Starter List:

(All templates available upon request- Framework is I.S.O. certified)

• Job Descriptions = Define expectations & outline main duties. Quantify job assignments within your JD’s! CLEAR expectations.
• Training = Improved performance, consistency, employee satisfaction. No emmployee should start work without first being trained and certified.
• Training Records = Our policy: Set the employee up for success. Train, Inspect, Certify. No employee should start work without first being trained and certified. This includes volunteers.
• Process Management Checklist = Inspect what you expect. (Weekly audits)
• Reporting Metrics = Provide focus and clarity, help make decisions, drive performance.
• Reporting KPI’s = Communicate common goals and ensure goals stay aligned within the organization.

COMMUNICATION! (Set up on department Calendar)
• Daily weekly huddles: Talk about yesterday/today/HR news/rewards, daily goals, etc.
• Weekly management meeting: Adjust from last week’s issues, plan weekly goals and targets for team.
• Monthly Team Meeting: Spend 30 minutes with team clearly showing actuals from your monthly goal.
Share goals and objectives for the next month. Project updates. Reward MVP’s.
• Quarterly Review: Share Quarter over Quarter performance, alerting trends, forecast, new project information, team building initiatives.

What is the takeaway? Accountability + Clarity + Morale = Motivated Employee = Drastic Improvements!

For more information or tools, contact us: www.HarmerWunstel.com
Dallas (972) 638-7311 | Denver (970) 445-4760

 

Download Goodwill Case Study

 


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Operational Performance Case Study

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