The Idiot Grinch of Fake Lean

The title of this post does not adequately convey my frustration, and outright anger, at the idiots that give lean a bad name.  Our friend Dan Markovitz sent me a Wichita Eagle news story from a couple days ago unfortunately titled Efficiency Leads to 20 Jobs Cut at Global.  After reading it I had to take a drive to cool off and clear the steam from in front of my eyes so I could write a somewhat intelligible rant.

The president of Global Engineering and Technology, Finley Nevin, is eliminating 20 out of 265 positions at his company, while the company is growing, and claiming he had to because of lean.

Nevin said the job cuts come from implementation of lean manufacturing practices at the 16-year-old company, which designs, builds and installs interior components for aircraft.  "Right now, our aircraft order backlog is excellent," he said.

"It's sort of a Jack Welch approach to try to make us a better business," Nevin said Tuesday, referring to the former General Electric chief executive. "We've gone through, looked through everything, and there are some areas we don't need."

And of course he waited until Christmas to do it, and then bragged about the accomplishment to the paper.  Where do I begin?   There is so much wrong here that it is tough to get my thoughts around it.

First and foremost, Mr. Nevin doesn't have a clue what real lean is all about.  I'm sure he believes it simply a set of tools that remove waste, which is an unfortunately common interpretation.  And similarly he has a very narrow understanding of manufacturing accounting and believes he must remove labor to achieve savings, so he fires people at the first glimpse of a "savings" opportunity... without even thinking about the off-balance sheet value of those people.  What could that knowledge have contributed, and what was lost?  What new ideas, new products, process improvements, and new market opportunities has the company forfeited in order to save a few bucks an hour?

One of the primary pillars of lean is "respect for people."  Unfortunately this is often forgotten and we sometimes need a course correction to remember how important it is.  There's a reason why Toyota, and many other "real lean" companies, have never laid off.  They leverage the value of employees freed up by lean improvements to further improve and grow the business.  One characteristic of companies that truly attempt lean is that they make a formal commitment to their employees that no one will lose their job due to lean improvements.  Implementing lean is hard.  Basically you are asking employees to remove waste and improve efficiency, which puts their jobs, and thereby their family's income, at direct risk.  That's scary.  Think about that for a moment and you'll realize how important the commitment from the company is.

Secondly, Jack Welch is not exactly someone to be admired or emulated, especially in an organization that embraces true lean manufacturing.  He is pretty much the antithesis of "respect for people."  His management philosophy calls for force-ranking and then culling the bottom 10% of any organization, each year.  Regardless of the fact that there's still value in those employees, perhaps their lack of contribution is due to poor management or being pidgeon-holed into the wrong position, or maybe the entire organization is high-performing.  For this reason many of us believe Jack Welch is a turkey. 

Thirdly, there's the backlog.  Traditional companies believe this is a good thing, and panic when the backlog disappears.  But almost by definition a backlog is a customer service issue and is contrary to lean.  From the perception of the customer, which is how true lean companies look at all activities, the company has consciously made a decision to delay a delivery to the customer by not providing sufficient resources.  The lead time is unnecessarily long, creating unnecessary supply chain risk, requiring unnecessary intermediate or transition inventory.  Laying off "excess" employees when there's a backlog just further reduces the value to the customer, not to mention basically being a contradiction in terms to begin with.

All around the Wichita area many other companies are trying to implement lean, and now have to deal with employees that read the paper and will wonder if they should support the concept.  Mr. Nevin's ignorance may have singlehandedly hurt the competitiveness of the entire central Kansas industrial sector. 

Comments

[Jon Miller]

Nice post Kevin. I hope a lot of employers read it.

[Barry "aka the Hillbilly"]

Very Unsettling story, Keep up the good work Kevin

"It's sort of a Jack Welch approach to try to make us a better business," Nevin said Tuesday"

I don't know what you do after that, maybe just set the whole damn place on fire and leave! Then you could write a book that would top Jack the Vulture's. You could say how you not only destroyed the Employees morale, but you also went ahead and destroyed all of the companies facilities. In today's world, you might even end up on Oprah! Likely end up lecturing at MIT in your retirement I suppose.

The fact that these people are doing anything related to Aircraft is also unsettling.

I will take issue with one small thing Kevin, just to make a point. Toyota has in fact shed employees in the past. In the 1950 to 1952 restructuring, they had to let many people go in order to salvage the company. I am sure you know this. But I wanted to say something about this.

In Japan even today there is a sense of responsibility for your family of employees. The company president many times takes full responsibility for serious troubles and resigns. This is what happened at Toyota, Kiichiro resigned. I am sure it was not easy to resign from the company that his father had given him the grub stake to build, but that was what he did.

When Toyota's fortunes improved he was given the opportunity to return. Kiichiro died at a fairly young age and before he could return. As I also recall, Toyota attempted to contact their former employees and offer them a new job. That seems to be an honorable way.

I believe that sense of responsibility by company management for the FAMILY of employees is something that is missing in many companies today. Somehow Japan has managed to maintain that longer than we have in America.

Employees are smart, they can sense this lack of respect for their plight by Executives. It leads to a lack of trust, and that creates all kinds of other problems.

Something has changed in American Management in the last 50 years with respect to Honor and a sense of responsibility.

People like Jack and Nevin are a dime a dozen now days, and that shouldn't be. It's harmful to our country.

[Mike Sterling]

Truly pathetic. We should all email that reporter (email address at the end of the Wichita Eagle article) to tell him to do a followup.

[Sanjay Kulkarni]

I can understand your frustration and anger. The concept of removing people under the garb of new technology has been the easy way for managements for years, even if this time and again proves ‘penny wise and pound foolish’ subsequently. How can you make up for the loss of undocumented organizational IP that leaves the organization with them. And it also gives a handy tool to labor unions to oppose the new technology. If I remember it was the Guru Peter F Drucker who once said to the effect that new technology makes old skills obsolete not the old people.

About ten years ago, when I was assigned the task of starting a CAD center in my company, my condition to the management was that this should be not used for reducing the manpower. Then the ‘powerful’ Library Assistant – twice my physical size but always friendly with me - started the rumor that CAD was being implemented to reduce manpower. I gathered the courage to talk to him and explained him that this was not true. And also gave him a subtle warning to stop spreading such rumors. He was so angry with me that he never spoke to me again till I left after three years. Draftsman were shifted but none was asked to go because of CAD.

- Sanjay Kulkarni, Pune, India

[Ana Ferreira]

Great wrap up of what lean is and should be, and of what most continue not to understand about it.

[anonomous]

My spouse works at this wonderful company. The upper management is just as wonderful as you state in your writings. The employees that were "laid-off" were told of their lay-off and escorted to the door immediately. Yes, it did the company wonders to have this done at Christmas, and everyone else are afraid they will get the same treatment.
The upper management of this company are worried about one thing, "how much money can we suck out of this company without having to pay any into it". The entire family of Finley are supported by this company, and they all live well, not one even bother to come into work, why should they, they get paid regardless of whether they show up or not. They are always asking ways to get the production to speed up, and when they are told they need to buy supplies, because it is hard to build without supplies, they don't want to spend the money. The only way to get a promotion at this place is to be a good drinking buddy of one of the management. No, I'm not making this up. You don't need experience, or even know how to do the job. Just be fun to go out and drink with, and it shows in the way the company is run. The one exception to this is the shop foreman, he is well liked and the people know he cares about them. Unfortunately, he doesn't have much power to do much. Company loyalty? They have as much as the company have to them, zilch.

[Gene Mermis]

It appears that this issue needs some factual information. First of all I would like to thank our local press for twisting the facts to make a heart pulling story. It has never been nor is it the intention of GETI to utilize Lean Manufacturing procedures to eliminate jobs within our organization. The purpose behind Lean is to improve efficiencies, reduce cycle times, and eliminate waste costs. I will not get into the reasons why GETI eliminated several positions last December except that they were not related to Lean Manufacturing procedures.
GETI will continue with Lean Manufacturing procedures and utilizing employee input to improve our operations. GETI knows that the employee’s are our greatest asset and we value their dedication to their co-workers, the organization, and our customers. Since this story was released the management has addressed the article with the employee’s and our customers to assure them that our Lean procedures had no input in the elimination of those positions.
To address the anonymous spouse’s comments regarding management qualifications and advancement opportunities. To operate the three GETI facilities the upper management consists of 11 managers, two of these managers have MBA degrees and three of them have bachelor’s degrees. The manufacturing experience between the six other managers range from 10 -20 years with several hundred hours of additional training and certifications for their positions. Seven of these managers worked their way up through the company ranks. Breaking the management team down farther GETI has four Foreman and nine lead personnel, all of these individuals have earned their positions through their hard work and dedication not by knowing the right people or socializing.
Regarding Finley Nevin, you will have to search hard to find a more caring person. I know that he appreciates and respects each of his employee’s. Before any one can judge him they must have taken the risks and endured the hardships that he has faced since he founded the company 15 years ago. Once you have ran your company for this long and created over 220 jobs that have allowed individuals to support their families we will compare your actions to his.

[Barry "aka the Hillbilly"]

I suppose that without knowing the reason for the elimination of the positions in December, that it really isn't possible to form a different opinion of the company.

It seems rather convenient for management.

Regardless of the reason however, it simply is not a good idea to let people go after a lean transistion has started. It just sends the wrong message.

[Barry "aka the Hillbilly"]

And the TWO MBA's don't impress me either !

[jon w]

so only 5 of your upper managers bothered to go to college and you're proud of that? that explains a lot. there is absolutely no excuse for a growing company to lay off and destroy families just before the holidays. nice try but you just reinforced how pathetic you really are.

[Mark Graban]

We often bitch on these blogs and boards about how companies are run by MBA's and people with no shopfloor understanding or experience. I wouldn't turn and criticize these guys for having managers with common sense education or those who came from the ground up, if you will. We can criticize them for many things, but "respect for people" says we shouldn't criticize their lack of education.

[Bob "aka bob bitchen"]

Well Well Well what a bunch of shit. Regarding Finley Nevin it's funny how I worked there for 2 years and that man never said any thing to me. Not just that I know these managers and some of them can't even work on a farm let alone work on aircraft. I do agree with the fact that GETI has some good employees. Just think of one thing Finley. The employees of GETI don't work for you. They work hard for one man and that is not you.Nor do they for you Gene Mermis! As far as upper management goes.What a joke.I supose most all of the aircraft companies are like this. So it doesn't suprize me.I do agree that this kind of thing is what makes the good old USA in the shape it is in.I noticed that it was never said who got laid off.I can almost bet it wasn't any of these so called managers.It's hard to lay off the ones kissing a little ass.Isn't that right Gene.Don't worry Gene you are still the best in your own world.
I am sorry to hear this news and think it is a shame.It is a shame that it takes that many managers to get all that work done.
My advise to the people that still have jobs.Just leave a six pack on Gene's desk, and everything will be ok.
Oh Jon W it's not the lack of education. It's the lack of whats right and whats wrong.Thats why this company will have a slow and painful death.

[Barry "aka the Hillbilly"]

I agree with Mark and will make one more comment. It's the MBA's that would concern me the most.

Just because someone has went to college doesn't mean they are the smartest or most capable or sometimes even the most educated employees.

I have found college educated folks can rest on their degrees and pedigrees a little too much. The other problem I have found with the college educated folks is a tendency to hang onto the professor's theories. It's strange but somehow they seem to be the most inflexible at times. That's particularly true when it comes to traditional accounting and GAAP.

Isn't it telling that it was Toyota and Taiichi Ono who was able to fully develop the Lean system. It's somewhat astonishing that with all of the higher education that has occurred in this country that it took Japan to fully develop and refine the system.

Unfortunately, our country has developed this HAVE's and HAVE NOT mentality regarding College Education. I personally believe we have our friends in the North East to thank, but it's travesty. While I agree that striving for a higher education is a good thing. It should not be used to denigrate others. I also don't believe everything that is taught in esteemed institutions is correct.

Warren Buffett is a good example of someone who has proven the MBA's and Street Folks to be wrong. He's commented that it has been helpful to him having Business Schools turning out MBA's by the tens of thousands that were taught it did no good to think for themselves.

I have found that in Japanese Companies this elitist attitude is much less prevalent. They seem not to care so much about your PAPERS as much as they do about your abilities and your willingness to continue to learn.

The College Degrees vs. the others is another thing that causes US companies not work together as well as we could. It tends to drive us apart and it can hurt our performance. It's about as far away as you can get from the Respect for Humanity and humility of a company like Toyota.

We need to get over it and understand that all people should be lifelong learners and are of increasing value to a company.

And Jack "aka THE TURKEY VULTURE" Welch could be the Poster Boy for this Elitism.

[Jasmine]

I don't work at GETI but have been interested in this story since reading it in the Eagle because it forcasted some backlash. I am sorry that these people were out of a job at Christmas but realistically folks, any day is a bad day to lose your job would you be complaining any less if it was in june. Then the complaint would be "just before summer" or some other nonsense. These reply comments that have so far been posted perpetuate a "poor me" attitude. We don't know why most of these jobs were termintated or if they were actually a means to terminate the people. On another note, unless a whole department was closing, then it is ridiculous to think that a manager position would be one of the jobs terminated because if they terminated the mangement position that would be a sure fire way to show that more jobs would soon be following. Another thing if you put in the years productively and gain the knowledge and expirence then it doesn't matter what your college education is. That is one good thing about working in a company that is not that large -- you can still be promoted on your experience AND credientials not just a diploma. Again I am sorry that these families were let go aroud the Christmas season but anyday is not a good day and in our up and down economy we should be prepared for the unexpected.

[me at geti]

I work for geti and ley me tell you something. The people that was laid off during the christmas time was laid off 3 days before christmas, and just because they could. They were needed and now we have to make up for them not being there. They wanted a better christmas so some people got the ax. As of now finley was forced to sell the place by the bank to avoid criminal charges and as for gene he is running the place into the ground. He is trying to get all the ass kissers in place and getting rid of the people who actually gives a damn about the company and its employees. Its all about looking good. The only reason anybody works there is for training for an other job or because of certain reasons they miss alot of work. Some of us including me miss alot because I don't really need the money and I just don't give a damn anymore. They will fire people for illegal reasons and then docter the pesonal files to make it valid. Someone there knows someone at a competing company and when you apply there they know about it even if you don't want them to. The former owner was buying peronal cars with the company loans he got and that is why it had to be sold. They don't buy materials to make the goods but if the employees don't make the schedualed time they get it knocked on there very rare evaluations. I got a lot more but screw it it the company won't make it anyway. Most of us are quitting and we won't train nobody else.