I interviewed Phil Uglow who discussed Employee Engagement and Reducing Costs.
What is employee engagement?
To me employee engagement is when employees care enough about the company that they put forward new ideas. They really care about the company's success and wanting it to improve. How you realize that they're caring is they're coming up with new ideas. "Hey boss, I've got an idea to do this." "I think we can lower cost by doing this." "I think we can sell more by doing this." That type of thing. Then the next thing about it though, is that--and often the hardest part is actually implementing those ideas. So employees that are really engaged look forward to implementing, getting the job done as well. Finally, employee engagement is employees being interested enough to track how their ideas are affecting the business. So if I came up with a new idea and it reduced cost, then if I'm an engaged employee it interests the heck out of me, how much cost it saves, how it's helping the company and my peers around me and that just feels good. And when it feels good, we want to do that again and again so that is on my definition of engagement.
How can it reduce costs?
When employees are engaged, they drive cost down in unimaginable ways. It always just amazes me that the ideas and creativity that comes out of the people that I and our other firm members, see when we work with clients. For example, just using a shorter or longer screw driver can save hundreds of hours on assembling a piece of equipment. Similarly, they can be much larger. We've had clients that, just by altering the way they make something--so they're altering their process for making something. They end up saving millions of dollars per year. There's one firm that saved 20 million dollars per year just by changing saw blades at a steel pipe--cutting steel pipe manufacturing mill. Saw blades that actually cut the pipe into different lengths. Just by replacing those in a different way and a different frequency, reduce down time and save 20 million dollars and these are costs that don't have any capital cost or expenses attached to them.
This is just people behaving in a different manner to reduce cost and that 20 million dollar cost saving is forever and it just gets better after that. People add on cost reduction ideas to that so your 20 million dollars just doesn’t come and then goes away. It's a permanent sustainable cost reduction. That's one way that employees can reduce cost. The other thing is, when that happens, when a team comes up with a 20 million dollar a year cost saving, that's huge. They actually feel proud. They have a slight cockiness to themselves at that point and in a good way.In other words, "hey, we're the man, we're the woman, we were able to sit down and think about this and we saved the company a lot of money." The more I give that an outcome like that the more infectious it becomes, because greater savings create greater engagement and excitement which creates more ideas and it becomes a circular pattern. It just feels so darn good that you want to command the next and do it again. That's employee engagement and involvement.
In our work, that's an important thing. Engagement is also about people wanting to come to work, enjoying their job and their doing it not just because they're getting more salary. For example in the case of the team that came up with the 20 million dollar cost savings, they didn’t get any more money, they were actually a unionized organization, so their salaries and wages were already calculated. You know, that's nice. It's nice to get a wage and everything like that but it can become less than boring over time. So when you're actively involved in helping the company get ahead, and you can put your hat on some of these ideas again, that just feels good. So that's how its reduces cost in the company and it can happen in many many different ways but the primary thing is that the ideas create the cost savings which makes people feel good, which makes you go and get more ideas.
How is it done effectively?
We talked about how to reduce it and you know it actually sounds like an easy problem. It's simple to do but it's not easy to accomplish. It's not easy to carry out. I think the reason for that is a number of leaders, when they rise up the ranks, they often think that they are the ones that need to come up with the ideas, they are the ones that need to tell all folks below them how to do their job. When actually, what happens is they get further away from the process. Their scope of work changes. A broadness perhaps to other things and they get away from the production line. They get away from the front line where the actual work is being done.
When leaders start doing that, their employees will shut down. They will become disengaged. Their employees will become disengaged and the way around that, how you make sure that doesn’t happen, is you do just the opposite.
Actually, all leaders need to do is frame the goals or the tasks or the criteria that the employees need to work within. So "Mr and Mrs. Employee, the company needs this to happen, you have these resources and you have this much time. Tell me some ideas on how you can accomplish that and I'll provide you the resources and the backup to get it done." Once leaders start doing that, then they're really allowing front line people to take ownership of that process.
Now, when front line people start to come up with ideas, the next most important thing that leaders need to learn and to do is to make sure their employees are safe. What I mean by that is that they always have to recognize an idea. No idea is a bad idea. No idea is a stupid idea. Employees must feel that they aren’t going to be put down or made to look stupid by their leader because they come up with some type of idea. As they get more and more used to putting forward these ideas and articulating them in a way that talks about how it benefits a company then there can be a more healthy push back between ideas between leaders and the managers because there's a trust level that's built up about these things. By articulating it, I mean employees just can't say, "I feel like--I think that this is good so we should do it." They should say something very specific. "I believe that if we spend 10 dollars on a shorter screw driver. That it will allow me to do this task 5% quicker which will result in a 20 dollar saving which will pay back the screw driver in one day." So that makes total sense. Who wouldn’t want to do it?
Leaders have to coach their front line folks to speak in that manner to put cost in it. So you get away from "I feel" "you feel" arguments. There is just a factual base to it and there might be some risks as you get into--well, there's always risks as you get into bigger projects but you can talk about how to mitigate those risks. What are the advantages and disadvantages? Having those conversations are great. So once, an employee feels safe and there's building their--building up that relationship. The ultimate goal for the leader to make sure all of this happens effectively, is really to build confidence in their team and their--people that are reporting to them. Because when people are confident and they know that they can articulate their idea in a safe manner, in a safe climate, that they won't get hurt, that brings huge results to organizations.
Again, it becomes infectious. When there's confidence it builds people up. They can push back effectively, present their arguments better and--that just explodes. Ideas explode. There's cost savings. The number of cost savings increase dramatically, reducing total overall cost and ultimately, profitability. That's the main thing but that's still not enough. So what you also need to do is record those ideas and they can be down simply in an action--that I call an 'item action list' which is a three-column spread sheet or three columns on a piece of paper that says who does what by when. So if I fill the "I'm going to buy the shorter screw driver" this--and the when and it's this week, and then we review it at the end of the week and I've done it, then that's great. If I haven't done it then there you see is a reason why and so we would discuss that. Nobody gets beat up if they don't do it. But our experience when we work with clients to help them track ideas, it's rare that somebody doesn’t come up with an action item and--or it doesn’t complete their action during this tracking phase because no one likes to come in front of a meeting and go "Oh, I didn’t do it." It's letting down your peers. T
Though even if you do it at the last minute, you're up till midnight shortening that screw driver, it usually gets done. So just having it on paper and having a regular tracking system, it's definitely a must. And then of course you have to have weekly reviews of that tracking system like I stated and that can be anywhere from daily on a drilling rate where there's 24-hour work going on and stuff needs to be done in the next 12-hour shift to weekly, to monthly and to quarterly, whatever works for the company.
Finally, you need to be able to track how these ideas and the actions around these ideas are affecting the company. Employees need to know that if they come up with an idea, how much cost it really did save because when it saves cost again, it goes back to feeling good and it creates this cycle where people want to do more of it. But also, it helps us learn that maybe what we're doing isn’t getting a result that we want. That's okay too because at least we know that there are ideas we can cross that off our list and if we know that, and our competitors don't, then we have an advantage over them. Doing those three things continuously will increase engagement and lower cost ultimately increasing profits and it's going to be applied anywhere in a business. For example, it can be used in a manufacturing environment, it can be used in an engineering environment where people are coming up with you know, engineering drawings and also, it can be used throughout the whole supply chain as well. So when people are coming up with ideas, big and small, through all those different supply chains, that's-- and they're track
They're tracking or capturing them in action item list, and then tracking their effect on the whole supply chain process and the cost, then that can dramatically drive down cost again and it's a continuous thing. As they implement one thing, they'll drive down--for example, supply chain management cost as well.
So that's about it. Again, it's not rocket science; it's a simple concept but not easy carry out. There's number of factors and leadership techniques that has to be learned to do that. That's why I do this type of thing. I'll tell you a little bit about my background and as I see companies and clients struggling with these concepts to bring down cost and it can get frustrating and to why I started Renshi Consulting Group was because--three things. One, we as a company, believe and as seen through all our clients that people just want to get things done.It's like I said earlier, when people get things done, they come up with an idea and it helps the company, it feels good and they want to do it again. The second thing we believe in is that we work with tools, not models. What I mean by that is, we hate models where people say that "Thou shall do something the Renshi Way" and once you learn the Renshi Way, you will be the best leader, operator, worker in the world. For us, that's simplistic and non-sensical so what we do is take hundreds and hundreds of tools that we have learned over a couple of decades of work and to our careers before that and put them together in a matrix and then these tools can be picked out and used when employees and leaders require them. So it's a much more fluid way of improving performance and is more sustainable because--and here's the third thing we believe in, that we pool relevant push ideas. So again, we don't come in and say "thou shall do this" we say "what's going on?" "what are you seeing?" what's stopping you from doing things?" and then we would suggest something like, "would you like to look at this tool that might give you a support or an answer to the problem that you're dealing with."
That's why we got into the business because when we deal with those three things, then people become more productive, they become safer and there's less stress and they're happy in their jobs which is another great by product. So Renshi just started a little over 8 years ago to do that. That's our philosophy. We've grown to over twenty. We have performance management coaches that go in and work full-time clients. Pretty much about 80% of their time is in the frontlines. Again, working with those people that are holding the tools, holding the drawing, holding CAD programs that type of thing.
Please provide a brief background of yourself?
I come from a construction and a manufacturing background, had a lot of a QA and QC training. Then, I started and sold a bunch of different companies and metal manufacturing, plastic manufacturing and cleaning products that serve the plumbing and working industries.Just over 8 years ago I got into consulting. I started a bunch of consultant groups. I have a MBA in global business and BA around the graduate degree in economics. I spent some time in China and know a little bit about Mandarin. I live in Calgary, Alberta that’s where our company is headquartered. We have another office in United States in Toledo, Ohio. So that’s it.
If you need anything else just ping me on Skype or email and I'll be happy to provide some more commentary. Talk to you soon. Bye.
About Phil Uglow
President at Renshi Consulting Group