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The Last Time He Micromanaged

By: Dan Eastman

Dan Eastman has worked in the primary metals and stamping industries since 1964, and is principal of Eastman Consulting, LLC, Sinking Spring, PA, specialists in change and turnaround management;dgeastman@gmail.com.

Saturday, September 01, 2012
 

Years ago, in a company far, far away, I had a boss that micromanaged everything. His assistant never typed a letter that didn’t have to be retyped three times. He attended every meeting, saved every report and changed every decision. He was obsessed with every detail. And he collected everything. It was rumored that he had an envelope in his desk marked, “For String Too Short to Save.” And, the company operated below average—in the industry, in sales and in profits.

My job: Pricing the firm’s new quotations. And when the boss reviewed each final quote, he changed every price by at least 5 cents. This occurred if the quote was $20/thousand pieces or $300/thousand pieces.

One morning when the boss arrived, there were donuts on a work desk. When he asked why, I told him that the donuts were to celebrate my birthday. And when he asked how old I was, without thinking I said, “I’m 27 and a nickel.”

You should have seen the look as my meaning sunk in. From that moment on and for the next several years, employees were free to be creative. Sales increased by 400 percent and our unit became the company’s most profitable in the corporation.

Micromanaging More Destructive than Ever

That was then and this is now. While your boss may not look at every detail of what you do, I believe that micromanaging not only is alive and well, but that it has taken on a new form and is more destructive than ever.

In the mid-1980s, with the beginning of serious foreign competition, profitability in our industry became more difficult. On the surface, the solution became pushing more out the door faster. After 2000, everyone had to ship more with less people. The last week of every month became life and death as companies strived to meet their numbers. Companies were being micromanaged by the calendar.

The result was to act without thinking. The goal became shipping volume without regard to profits, as managers assumed that profits would follow volume. The opposite, in fact, is true. Here’s why.

• During the last week of each month, all effort focused on finishing product. In-process operations slowed, so that we pulled a vacuum in the flow. Then shipments slowed during the first part of the following month.

• Some orders, not even scheduled for the month, were rushed through because they could be finished. We then asked customers to accept product early.

• Production of orders scheduled for the month, which would not ship the last day, would stop in favor of those that could ship. The result was an on-time delivery miss, with a longer recovery.

• Maximum overtime was scheduled to ship as much as possible. This situation became embedded in the company culture. Management thought it was the norm, and employees counted on the overtime.

• Many times, we were paying for premium freight. And often, costly shipping mistakes occurred.

• The cost of quality increased, as everyone was in a hurry and could easily lose attention to detail. Same goes for safety. Take a close look at when quality and safety problems occur at your company, and see if they correlate to rushed production.

The Calendar Can Be Your Worst Enemy

If you are experiencing any of the above, you are being micromanaged by the calendar. In my experience working with metalforming companies, this practice can reduce profits by 10 to 20 percent.

Rather than manage based on a monthly production schedule, I recommend managing on a three-month moving average. While on the surface it appears this may not change anything, actually everything changes. This means there is never an end of the month to worry about. The trends become apparent, making the company easier to manage.

While this seems to be an easy, quick fix, the change is difficult but worthwhile. The challenges:

• Owners and operators will not give up the 30-day culture without a good deal of pain. Believe it or not, it is the same as an alcohol or smoking addiction. Just wait for the last week of the month to occur and see who gets the jitters.

• After the last-week-of-the-month drill, everyone breaths a sign of relief and takes a casual stroll into the first week of the month—a reward for saving the company. This becomes a part of the culture difficult to remove.

• Overtime will be expected, and many will seek to retain it. But experience has shown that if the three-month moving average is properly executed, the business will expand such that overtime still will be needed.

Just as the light went on for the head of the unit I worked for years ago, profits can increase at a rate never thought possible. Maybe this will be the last time you micromanage. MF

 


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