iSixSigma

Lean? or Mean?

I was privileged to speak at a conference in San Francisco last weekend, sponsored by the American Society for Clinical Pathology. The topics focused on leadership in the clinical (medical) laboratory. After giving a presentation on 6S, I served asa panel member for questions submitted from the audience. One of the questions asked, “What can we do when our leadership tells us we have to do Lean Six Sigma so we can cut employees from the payroll?”

Our panel, in an unrehearsed answer, all chimed in: “That’s not Lean, that’s Mean!!!”

Althoughsome hospitals have been using Lean and Six Sigma for the past several years, it’s stillrelatively new in healthcare. With the threat of decreasing reimbursements from national and private healthcare insurers, and increasing demand for services, you might think lean was a natural fit for improving quality while decreasing costs. However, there were many at the conference who had experience of consultants offering toprove that they coulduse Lean and/or Six Sigma todecrease “the payroll burden.” In those cases, quality seemed to take a back seat to so-called productivity.

Now, my lean training didn’t come directly from a Toyota sensei, but I’ve been informed that, at Toyota, the Toyota Production System is not used to generate layoffs; that the employees who are no longer needed in a certain part of the organization are redeployed, with some becoming dedicated to full-time quality/process improvement.

Can I ask our expert readers to weigh in on this? What should our response be, when confronted by consultants whosell Lean (and Six Sigma) as a way to cut the payroll? Or am I hopelessly naive, in today’s environment, to think that we can retain “respect for people” as an aspect of any process improvement methodology?

Comments 12

  1. Ian Furst

    I’m on the health care primary care side (4 clinics, 50 staff, I’m a surgeon) Sue and we’ve been doing Lean Six since 2003. I think a lot of consultants read about Jack Welch eliminating the bottom 3% (can’t remember if that was the number) and take it to heart. While it was one leadership technique, I’ve always thought that if I stood a 3% chance of loosing my job each year (because of performance) I’d leave on my own.

    In the past 5 years Lean Six has absolutely increased our efficiency, and because we are fee-for-service it’s increased profitability. More importantly it’s improved service to the patients and cut our wait times massively. In the same time, we’ve grown 10-12% per year, reinvested in capital improvements and re-invested in our employees.

    While all other costs diminished we’ve held employee costs constant (as percentage of revenue) but introduced holiday bonuses, yearly COLA’s, increased raises and made our clinic a better place to work. It’s meant decreased employee churn and improved performance. Obviously, lean six may mean staff cuts but, for us, reinvesting in our employees has just accelerated the lean changes, profitability and patient satisfaction. I’ve blogged about some of the changes at http://www.waittimes.blogspot.com . If you can mention/link to my blog I’d appreciate it. That’s one experience — let’s see what everyone else says.

  2. Stephen C. Crate

    What a great question. I am not an official representative of our Department so this comment comes from me personally as a citizen. I did participate in a significant part of the initiative and it has paid off.

    We started the Lean Government initiative in response to 5 year projections that our budget would be reduced significantly. By conducting the Value Stream Mapping long before we were forced to reduce our labor force we were able to reduce with true respect to our employees, through attrition. We have had no layoffs like some public agencies and I think that demonstrates the power of the lean process. I agree that organizations that use it as a cutting weapon misrepresent its true motive and could be called mean. Thanks

  3. Sue Kozlowski

    Thanks Ian for your comment – I enjoyed your post about your "big new office" on your blog site, and will definitely recommend it to my colleagues! James, I love the LAME acronym – I was trying to figure out what MEAN could stand for, and got as far as Mixed-up Efforts All for Nothing, or Minimally Effective Activities for Negativity. The governmental approach that Stephen mentions shows great foresight in studying the process BEFORE the crisis hits. Thanks to you all for your insights.

  4. Rich

    Labor cost out and process improvement go hand in hand most of the time. Here are my thoughts on the exceptions to the rule: 1. Visionary leadership in an expanding market uses LSS to grow market share. 2. Barrier to market entry is LSS

    Otherwise, LSS will always reduce labor, the question is how to reduce without a RIF? I feel the answer is "poor workers self selecting out", basically they resign and a properly designed project can do just that, create an environment that culls poor performers and raises up the best.

  5. JConsidine

    One of my favorite bloggers, Mark Graban, has a term for this: LAME: “Lean as Misguidedly Executes”

    There are several posts on his site that discuss this:
    http://www.leanblog.org/search/label/LAME

  6. Sue Kozlowski

    Thanks for your insight, Rich. I have come in to a couple of different situations in my pre-Black Belt life, where employees had been poorly managed and many bad practices were rampant. As we changed things to make them better, the poorest employees either did self-select out, or were so blantant in their disregard of policies that their termination was well within the company’s code of conduct.

    Even with the rapid pace of lean change, I have found that if we follow good practice ourselves as facilitators, it is more likely to have people opt out of the new process because they are out of their comfort zone of no supervision or lack of accountability, than because they can’t perform the new work process.

    And if we truly don’t need that many people to do the new process? Well, most organizations have at least some vacancies, and although we can’t transition a housekeeper to a nursing position, there are enough entry-level jobs in healthcare to at least offer training for a new position somewhere.

    On the Toyota website, there’s a story of how the company felt they had to have a layoff early in their history, in order to survive. The leaders then made a promise that they would never mis-manage the company again in way that would necessitate layoffs.

    I know that in the US we have a different culture than in Japan, but I sure respect that Toyota leadership principle!

  7. mohsen bagheri

    Hi

    i am mohsen bagheri.i study in IE in iran.recently i sent a proposal to cambrige university about how can knowleg managment improve healthcare.after that i gave accepted from thier.
    now im going to request you to help me by giving information about all things i can do.

    regards.

  8. Hanh

    Any consultants that are selling LEAN as the way to cut payroll may not be the right consultant for your organization. LEAN and Six Sigma are used to improve any process efficiency and effectiveness; hence improving your organization productivity and/or generate additional revenue. The result of the improved efficiency could mean eliminating excess resources for that particular process but not necessarily a payroll reduction.

  9. Mr CV

    Am I hopelessly naive or do consultants sell Lean and Six Sigma as a way to cut the payroll?

  10. Sue Kozlowski

    Well, when a consultant says "Lean / Six Sigma will help you reduce costs" it’s not a stretch for an exec to think "most of my costs are labor so Lean / Six Sigma will help me cut labor costs."

    And, in fact, a lean organization would have the fewest number of employees needed to produce error-free work in a continuous flow setting. BUT, it’s my understanding that Toyota has been successful not because they say "let’s minimize payroll costs by doing lean;" they are successful because they say "let’s minimize the effort needed to do high-quality work" and then high quality and reliability is achieved, driving customer satisfaction and loyalty, etc.

    My original post is based on hearing of some consultants who said that the organization would be able to reduce labor costs in particular area, leaving out the concept of re-deployment, cross-training, or other aspects of the original TPS.

    And it was distressing to hear about it in a situation where the consulting company promised to be able to reduce a certain number of positions, prior to any lean event being facilitated.

    So I don’t get upset any more when I hear people say that Lean doesn’t work. I just ask, "Tell me about your lean experience?" and then it’s evident within the first few sentences whether they really did lean, or not.

  11. Danny Tatum

    Many successful companies do guarantee employees that they will not be let go as a result of lean improvements.

    They do this not so much because they are social humanitarians, but because they recognize the negative impact on the overall initiative. I’ve deployed lean both ways; as a cost cutting (payroll slashing) tool and as a tool for growth. There is certainly a broad gap in the way that lean is received at the ground level and how effective the improvements are. How enthusiastic would you be to participate in a Rapid Improvement Event that may eliminate you or a coworkers paycheck.

    If you’re not doing lean to promote growth, explain this to management and encourage them to allow attrition to provide the payroll deductions and redeploy the enthusiastic new lean folks in the mean time. There are always people moving on. Some may even leave on their own because they can’t adapt to new lean methods. And that’s OK.

    It is also a good time for management to take a look at their performance review process and insure that it is in fact improving performance. Don’t let them get by with using lean efforts to eliminate the non-performers. This should be happening in the normal course of business.

  12. Sue Kozlowski

    I appreciate your sharing your experience, Danny. Clarity around the goals of a Lean or Six Sigma initiative is critical if it is to succeed on any level.

    Relative to your comment about non-performers, I get a lot of resistance the first time I say, "It’s the process, not the people!" Leaders tend to roll their eyes and laugh. However, by the time we finish our discussion, they get it – how many poor performers have been left alone to do what they want, for lack of standard work? Only when the process is shown to support the customer CTQs (critical to quality factors) should we look at the performance issues from a personal standpoint. And then, yes, non-performance should have appropriate consequences – training to improve, and moving onward if the improvement doesn’t occur.

    Thanks for your post.
    –Sue K.

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