The GJS Can Take Lessons from TPS

The Good Jobs Strategy, or GJS — an approach to improving productivity and customer satisfaction in retail and other service industries — works. But the system, which involves paying frontline workers more, providing them with predictable schedules, offering them career opportunities, and supporting them with a specific operations model, is not easy to implement. There haven’t been hundreds of GJS transformations to learn from, but there have been hundreds of implementations of the Toyota Production System (TPS), and they can help us learn how to change an operation. The GJS has many parallels with TPS in terms of investment in people and the operational choices that leverage that investment. (See the sidebar “The Four Operational Choices in a Good Jobs System.”) Crucial to both approaches is the need for a stable workforce — for employees who show up, stay with the company, and work hard and well. The Four Operational Choices in a Good Jobs System Operational Choice Example Focus and simplify Identify what problems you help solve for your customers and streamline products, promotions, and services to maximize customer satisfaction and employee productivity. Minimize last-minute changes to deliveries and promotions. Focusing and simplifying enables higher wages, more-predictable schedules, and higher motivation for employees; better service for customers; and higher sales and lower costs for companies. Standardize and empower Standardize routine processes (the unloading of trucks, shelving, and cleaning, for example) with input from frontline employees, and empower those employees to improve their work, provide input into merchandising (how much inventory to hold, which products to stock, how to display them, and so on), and solve customer problems. Standardization drives efficiency, while empowerment increases motivation and helps employees contribute to higher sales. Greater employee contributions make possible higher pay. Cross-train Train employees to perform both customer-facing and non-customer-facing tasks so that they can vary what they do depending on customer traffic — and train them in a way that ensures ownership and specialization. Cross-training means more-predictable schedules, higher motivation, better teamwork, employees who are more responsive to customer needs, and higher productivity (because there’s less employee downtime when traffic is slow). Operate with slack Staff your units with more labor hours than the expected workload so that you can meet demand at peak times. Operating with slack lets employees do their work without making mistakes, deliver great service, and have time to identify and communicate ideas for improvement. It enables companies to cut costs and continuously improve. In TPS, stability means the 4 M’s: machinery, materials, methods, and manpower. The first three M’s are obvious and widely accepted. After all, you can’t run a good operation if your equipment keeps breaking down, your supplies are unreliable in terms of quality or delivery, or your methods depend on exceptions and work-arounds. The fourth M — manpower, or people stability — is often overlooked or misunderstood. But without a capable, reliable, and motivated workforce, TPS can’t succeed, and neither can the GJS. A good example of an organization that knows people stability is a prerequisite for continuous improvement is Deublin, a company based in Waukegan, Illinois, that manufactures a large variety of rotating unions — complex rotating sealed bearings used in machine tools, paper mills, wind turbines, and many other industries. Deublin has partnered with the Toyota Production System Support Center (TSSC) over the past five years to implement a sophisticated just-in-time production system. (TSSC has helped hundreds of Toyota’s partners and suppliers and many other organizations improve their operations through TPS.) The just-in-time system dictates that a manufacturing line can be down for minor delays, equipment downtime, rework, or changeovers no more than 15% of the time — a very high standard for complex assembly. But the line making rotating unions was down 31% of the time. Part of the problem was materials, machinery, and methods instability, and Deublin and TSSC made many improvements in those areas. But another big issue was people instability. The line’s complexity required highly trained employees who knew the product and the process, could consistently follow standardized work, were attentive to detail, and could quickly identify what was going wrong and think of ways to solve it. An investigation revealed that Deublin did not have that kind of people stability. The biggest people-stability challenge was high turnover among temporary workers. Deublin was committed to offering stable jobs for permanent workers, but because of seasonal variability in demand, it also used temporary workers. Owing to a weak applicant pool, many temps failed quickly and had to be replaced. Those who did well and would have liked permanent jobs often left for companies that offered clearer career paths and better pay. Before Deublin could improve its production process, it had to address this issue. First, the firm added a standardized dexterity test, a behavior assessment test, and a process to make sure it hired the right people. Second, it changed its training procedures to provide new hires with mentors and to do a better job helping them master crucial skills. Retailers that subscribe to the GJS, such as QuikTrip (a U.S. convenience-store chain) and Mercadona (Spain’s largest supermarket chain) have similar hiring and training practices. (See “The Case for Good Jobs.”) They’ve found that this higher investment in new employees pays off in people stability and operational excellence. Third, Deublin worked to keep its strongest performers. It raised the starting wage for temps by 25% and gave them a 20% raise and increased benefits after six months on the job. It also roughly halved the time needed for temps to secure full-time assembly-line positions — from 12 months to six months — and explicitly laid out how they could progress to machinist, supervisor, and mid- and upper-level management roles. Turnover among temps dropped by 50%, and Deublin found itself with a much more stable and productive workforce. Now the firm was in a position to work with TSSC to implement its own version of TPS, called the Deublin Performance System, and to transform its business. It has increased on-time delivery performance from 50% to approximately 95% (the goal is 100%). And with all employees engaged in continuous improvement — thanks in part to real workforce stability — Deublin knows it can get there. People stability is also necessary before implementing GJS operational choices, such as empowering people to make decisions and giving people time to identify and solve problems, that can work only with capable and motivated employees. As discussed in “How to Build a Business on Good Jobs,” Quest Diagnostics, a provider of medical diagnostic services, realized it had to stabilize its workforce to improve the performance of its call centers. It raised wages and offered a clear career path before embarking on GJS operational improvements such as cross-training and empowering employees. Like Deublin, Quest has seen significant performance improvements that have delighted customers. As both the Toyota Production System and the Good Jobs Strategy demonstrate, operational excellence cannot be achieved without great people who show up, are competent, and want to improve. Companies often perceive a trade-off between operational inefficiency and people investment, but it’s a false trade-off. You’re going to pay one way or the other. Either you invest in a well-paid, well-trained, well-motivated team that will make your company better every day, or you incur endless high penalties for your mediocre workforce in the form of higher turnover, higher inventory costs, lower quality, worse customer service, and less responsiveness and adaptability. Investing in people stability may seem expensive, but the alternative — a poor-performing operation — is much costlier. The Big Idea

The GJS Can Take Lessons from TPS

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