[Image above] Credit: opensource.com; Flickr CC BY-SA 2.0
Change can be hard.
We’ve all been there—you want to break an old habit, start a new one, or even just adjust the way you think about something. But it’s easier to say you’re going to change than to actually alter the course of your ingrained ways.
But, if you can gather the momentum, the outcome is often worth it.
For Tanya Patrella and Butch Peterman, the outcome has been nothing less than success.
Patrella and Peterman have founded a consulting and coaching business directed towards small manufacturers, Manufacturing with Heart, that takes a rather unconventional strategy towards change for the better.
Based on their experience at abrasives manufacturer Abrasive Technology (Lewis Center, Ohio), Patrella and Peterman recognized that the company’s traditional hierarchical organization was limiting, wasting time, and just not working as effectively as they wanted.
So their vision for change toppled the conventional business organization and instead developed a process-centered organization focused on a positive work culture.
Peterman co-founded Abrasive Technology and still leads the company as president. Patrella also was an executive at the company for 25 years. The strategies they are now advocating and implementing through Manufacturing with Heart are based on the changes they successfully implemented at Abrasive Technology.
And those changes are not trivial.
Time sheets and employee reviews? A waste of time. Hierarchical mangers? An ineffective leadership strategy. Overall business culture? Total rehaul.
Their unique work model invests in trust of employees through what they call heart culture. Their organization flattens the ladder of leadership, replacing the often-endless rungs of managers and supervisors with simply process engineers and coaches that focus on the company’s work processes and employees’ career and personal development, respectively.
Their leadership structure ditches time-wasting trivial oversight, instead empowering employees through trust. “Our efforts enabled employees to be more involved in daily decision-making, engaged, collaborative, and accountable,” Patrella says in an email.
You can read more about their unique business model in this article from Smart Business.
Patrella and Peterman were kind enough to answer the following questions about their new vision and experience.
Your organizational structure is rather unusual—what was the inspiration or driving force for turning the traditional structure upside-down?
After several years of efforts in personal and leadership development and cultivating a culture of trust, we found the traditional hierarchical structure was limiting further evolution.
What has been the biggest advantage you’ve seen in your company from this restructuring?
Hierarchical organization is structured around product line silos, which dramatically limit the ability of employees to really be involved and feel connected to the people around them and needs of the company and its customers. Process-centered organizations (PCOs) are aligned around processes, which foster collective creativity and encourage teams to make their own decisions.
Managers are traditionally tasked with process improvements and people development. Managers are often better with people issues or process issues—not both. In a PCO, the roles of the stereotypical VP or manager are divided. Process engineers define and monitor processes and are responsible for throughput, productivity, cost, and quality. Coaches counsel, support, build relationships, inspire, educate, mentor, discipline when needed, and provide training for employees. This structure creates a dual-servant leadership model.
The priority of leaders in a winning PCO is to lead change by effectively communicating with all employees and all teams. It’s important that leaders focus on both individual and team development—teaching, listening, and making supported decisions and doing it again. All this is done from their hearts with a baseline level of trust in everyone and in the direction headed.
Without attendance policies and performance reviews, how do you deal with employees who are not living up to expectations and pulling their weight? In other words, those who aren’t “buying into” the organization’s goals? How do you get them on board?
We scrapped our strict, time-consuming time and attendance policy that people spent hundreds of hours a week to track, correct, and manage. Instead we implemented a simple attendance guideline—if you’re at work, log your time; if you’re not at work, log out and let your team know so the team can cover for you. This eliminated time people spent managing others’ time, while likewise increasing work–life balance and personal accountability. Most importantly, it showed that we trusted team members.
For performance reviews, we again did something unthinkable—we got rid of them!
We replaced performance reviews with individual associate development plans, which are simple lists of tasks, expectations, and behavior requirements for the company as a whole and for each process.
Process engineers, coaches, and associates work together to determine the best goals for each associate’s continuous improvement as well as the training to reach those goals.
Again, clarity of expectations is very important to everyone. This tool provides clarity and it is created and maintained by each associate in collaboration with the needs of the company and its process tasks.
Part of our coaches’ role is to work with any associate who is not meeting expectations or is showing unacceptable behaviors. They meet frequently to review and discuss where they do not meet expectations. Together, the coach and associate define a plan to make improvements. In the end, associates choose whether they want or can change their behaviors to meet expectations. Their actions then determine whether they can continue to be part of the company—therefore, it ends up being their choice.
In your experience so far, what is the key ingredient that makes this organizational model work?
The key ingredient is that people are not “managed”—projects and processes are. This creates a comfortable workplace where people are free to be collaborative and creative. Associates now have a process engineer to help them with process improvements and a coach to help them with training and personal development.
If they are given the information and tools that they need to perform, if they are provided with an understanding of customer requirements and of the big picture of the work, if they are guided by clear measurement systems, and if they are treated with respect, then they will do what needs to be done without being ‘managed.’ It is the processes, the inert designs of work, that need management and oversight, not people.
–Mike Hammer, author of best-seller Reengineering the Corporation
Does employee compensation also reflect non-hierarchical structuring?
Compensation is based on skill sets. As skill sets change, compensation changes. We use a national compensation database, annually, to review all wages and make sure we stay competitive. In addition, benefits for all associates are the same, including items such as health insurance, PTO, a quarterly incentive compensation plan based on team productivity, and an annual profit-sharing plan based on profits of the company as a whole.
Can this structure work for any manufacturing company (or beyond?), or can only certain types of environments or leaders pull this off?
Any company could do it. The lead person of the company (owner, CEO, president) must have a core belief that people can be trusted and have the time, patience, and perseverance to stay the course and lead this kind of effort.
What has the response from employees been like?
Those that like a collaborative, team approach and want to continue to learn like the organization. For associates who prefer a more structured environment, it does not work, so they usually leave after a short time. With a company that is 45 years old, we have associates who have been with us for 35–40 years. The structure reduced our voluntary turnover by over 75%. In addition, this structure is ideal for millennials.
You indicate that key metrics improved—can you quantify?
Key business metrics:
Annual productivity up 5%–10%
Annual incentive compensation bonuses up 20%
Annual customer complaints down 5%–10%
Voluntary turnover down 75%
Associates more involved in daily decision making
Greater engagement, collaboration, and accountability
More flexible, agile, and innovative environment
More smiles and a strong sense of community
Cultivated a positive and productive workplace