Thursday, 4 February 2010

Managing waste takes leadership

By a strange coincidence, twice this week I have received settlement cheques, only to be told subsequently to tear them up and that they will be replaced by ones that take account of Vat. What was going on? And what has this to do with systems thinking and leadership?

In both cases the settlement system was flawed but could have easily been remedied by managers accepting responsibility for inspecting, measuring and improving the system rather than inspecting, measuring and improving the workers.

In my latest book I discuss the various forms of waste in organisations that result from this misplaced focus. When I am required to phone or write to a call centre about a mistake I am wasting not just my own time but theirs too. When managers have to come to the phone to help the agents out, they have their managing hat on. But when they are learning from this and improving the system so that the mistake doesn’t keep recurring (entailing more waste), then that is a different kind of activity, arguably one that calls on some motives and qualities of leadership (making tomorrow fitter than today).

In case you are interested in the more egregious of these two cases, my car had been written off when a large oak branch fell on it under the weight of snow. I received a cheque in settlement of the ‘market value’. As I am Vat registered (they knew this), I needed to ask whether the amount was inclusive or exclusive of Vat, and whether I should treat the amount as vatable income and hand over Vat on the amount to HM Revenue & Customs. So, had they added Vat; or had they deducted it, entitling me to reclaim the amount? (The latter turned out to be the case, though they had forgotten to make the deduction when writing out the cheque – hence the instruction to me to tear it up - once I had alerted them by my call!). The insurer did not provide their Vat registration number on their letterhead to back up their position. All this took time at both ends to sort out.

As John Seddon never ceases to point out (see yesterday’s post) if managers spent time listening to the range of callers’ queries, they would learn all they needed to about the ‘failure demand’ (calls which happen only because something didn’t go smoothly first time), to work out what aspects are predictable and therefore preventable, and thus be able to see where to improve the system. Monitoring call centre workers’ activity rate misses the point.

The main act of leadership here is that required by organisations to question the role of managers.