Archives for August 2012

We Have Meet The Enemy & He Is Us, Dealing with Entrenched Policies & Procedures (Part 2)

On Monday, I introduced the topic of inefficient and outdated policies, processes and procedures using the cartoon character Pogo, and the mid-twentieth inventor and cartoonist Rube Goldberg.

After coining a new acronym (RGP3s) and describing some common characteristics, I ended with the obvious question, what is a manger to do about them?

First, be open to the possibility of their existence in your organization. Every company has some areas that need improvement. You cannot assume that something is “best practices” simply because it worked in the past. If a department is unable to keep up with current workloads, there are only two possible reasons. Either they are understaffed, or they are operating at less than peak efficiency. Adding staff adds costs. Improving efficiencies is likely a cheaper and perhaps faster alternative.

All successful organizations eventually reach a size where managers are not expected to be familiar with the application of every policy, process and procedure. Even if they are, RGP3s can be virtually invisible to the familiar (or complacent) eye. That suggests one of two possible approaches.

The first approach is to constantly challenge and encourage employees to identify efficiency improvement opportunities. Maintain an open and direct line of communication through brief but regular interaction. Actively solicit employee input and implement at least one idea every month. Publicly reward accepted suggestions in ways they value. That may mean an employee of the month plaque in the lobby, a front row parking spot or an AMEX gift card.

Unfortunately, relying solely on employees’ willingness to point out flaws has a major limitation, human nature! People seem to have a tendency to accept most things as they are. Furthermore, asking questions and challenging the status quo may be viewed as career limiting in some corporate cultures. That is not to suggest people are by nature lazy or apathetic. It’s just how things are.

The second approach is to bring in a fresh pair of eyes. A while back, I shared a story about an experience in a new job. On my second day, I was reviewing a lengthy payment report when I spotted something unexpected. About every 20 pages or so, there was an entry with a negative amount. Based on my still limited understanding, there was no reason for negative numbers. To make a long story short, I had stumbled across an internal control weakness that allowed certain items to be paid twice.

The point is that other people who worked with the report every day had undoubtedly noticed negative entries before. Yet they failed to follow through with a few simple questions. If they had, they might have closed the control weakness years earlier.

In closing, let me clarify what constitutes a “fresh pair of eyes”. It may mean a consultant. This outside resource could be an expert in your field, or someone well versed in common business practices and operations. An auditor or independant CPA with other clients in your industry may be a valuable resource, especially if the area of concern is one they review as part of their evaluation of internal controls.

In my example, a fresh pair of eyes merely meant introducing a new employee into the mix.

Either way, the path to improved efficiencies in your business may be as simple as finding someone unburdened by the “But we’ve always done it that way” mentality.

That mindset, Mr. Pogo, is the real enemy.

© 2012 by Dale R. Schmeltzle

We Have Meet The Enemy & He Is Us, Dealing with Entrenched Policies & Procedures (Part 1)

Students of American pop culture will recognize the title of today’s post as a quote from Pogo, the swamp dwelling possum in the classic comic strip of the same name. I use it to introduce a discussion of an all-too-common business phenomenon.

Owners and managers are often their own worst enemies when it comes to recognizing what I call Rube Goldberg policies, processes, and procedures (RGP3 for short).

What exactly are “Rube Goldberg” policies, processes, and procedures? Rube Goldberg was a twentieth century cartoonist, famous for inventing complex devises to accomplish the simplest of tasks. He was the inspiration for the 1960s game Mouse Trap.

Michael Hammer gave a perfect example of a modern day business mousetrap in Reengineering Work: Don’t Automate, Obliterate. A company required that the “corner desk” approve all overseas invoices. The policy had been in place for many years. It turns out it originated back when many customers were French, and when an employee who was fluent in French occupied that desk. However, the employee had long-since left, and fluency in a foreign language was not a requirement for assignment to the desk.

In other words, the original value of the policy was lost long ago. All that remained of the legacy were unnecessary costs and shipping delays.

This example exhibits several common characteristics of RGP3s. Those characteristics may include:

  • They are overly complex for their intended purpose.
  • They involve outdated technology.
  • They are not integrated with other systems.
  • They involve manual input of paper records.
  • They are labor-intensive.
  • They are non-scalable and unable to keep up with demand.
  • They are poorly documented.
  • They have been in effect for as long as anyone can remember.

In other words, they are inherently inefficient and outdated.

Yet with all these negative attributes, RGP3s seem to enjoy a sort of sacrosanct protection. Decision makers are reluctant to identify, let alone change them. Perhaps like an old pair of shoes or a childhood tradition we cling to in adulthood, we take comfort in our inability to remember life without them, even if we outgrew them long ago.

Although my RGP3 experience is mainly in finance and accounting, I am certain they exist in all areas of company operations including production, distribution and customer service.

So what is a manger to do about them? More about that on Friday.

Until then, have a great week.

© 2012 by Dale R. Schmeltzle

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