From the Ask Tom mailbag:

Question:
You have talked about Managers and systems. And you've described the most important system for a Manager as the People System. What's inside that system?

Response:
There are three primary accountabilities for any Manager.

• First, is that the Manager is responsible for the output of the team. I don't listen to excuses that some team member failed to perform, or some other team member fell short. I hold the Manager accountable for the output of the team.
• The ingredients that support that output are the ability of the Manager to assemble the team together. This has a great deal to do with identifying and selecting talent.
• Once assembled, the Manager must lead the team to work together, competently and with commitment in pursuit of the goal.

Failure in any part of this system falls to the Manager. -TF

"This has nothing to do with bonuses," Dean protested.

"As I look at these goals, each attached to a bonus, every team has an internal goal, based on some efficiency. The highest efficiency for each team can best be achieved by ignoring the goals of the other teams.

"Here is the central question," I continued. "Do you think the company can be most effective by making each of its internal departments most efficient?"

"Well, yeah," Dean replied.

"It seems counterintuitive, but for the company to be most effective, some of the departments may have to be less efficient."

Dean looked puzzled.

"Look, Dean, of your four departments, which is the slowest, the department that everyone has to wait for?"

Dean looked at a chart with his four teams. Red, blue, green and orange. "It's the green team. They're the bottleneck. We would put more resources in there, but they are too expensive. We just do the best we can."

"And when everyone is focused on their own stuff and not paying attention to the green team, what happens?"

"Well, the blue team feeds them work. But the blue team works most efficiently in batches, so they feed zero work for two days, then dump a bunch of work on the green team at the same time. The green team can only work so fast, so everything stacks up there and everything goes late."

"So, why doesn't the blue team work in smaller batches and feed work sooner?" I asked.

"Well, if the blue team works in smaller batches, they can't produce enough to make their goal. And their goal is tied to their bonus."

"So, you have a bonus problem." -TF

"What would be the benefit of drawing a flow chart of this system?" I asked. Valerie had solved the problem, but I wanted her to transform the solution into a system that could be used again.

"For starters, drawing a picture of the system helps me get it straight in my own mind, and makes it easier to explain it to someone else," she replied.

"And what if one of your team members has a suggestion for improvement?"

"They can go right to the spot on the picture and we can talk about it." Valerie was already pulling a piece of paper to the table.

"Valerie, what's different about your supervisor solving this problem yesterday and the work you are about to do now, as a manager?"

"Well, my supervisor solved the problem to get us out of a jam, yesterday. I am working on a system to prevent the jam from happening again. My supervisor was working for one day. I am working on the future."

"So, what does it take to create a system like that?" I asked. "To create a system that would notify for rejected parts along with lead times for replacement parts and alternate suppliers?"

Valerie was shaking her head. "I know our computer software pretty well and to program that functionality would be pretty expensive."

I reached in my bag and pulled out a handful of 3x5 index cards. "Suppose I said that you were not allowed to modify your software and the only tool you could use were these 3x5 cards? Now build a system. Let's start with how frequently it happens."

"You're right," Valerie started. "It doesn't happen that often. Our QC guy who certifies incoming parts, could send a card with the details to our purchasing person. Our purchasing person has access to lead times and alternate vendors. Purchasing gets their order quantities from sales orders, so they could run a reverse report to find out what orders would be impacted, that's easy."

"What else do we need to know to effectively respond?"

"We would need to get our sales people involved to find out what wiggle room we have on those orders. Since we are three weeks ahead of the game, there are all kinds of adjustments that can be made with ample notification."

"If I asked to draw a picture of this on a piece of paper using circles, arrows and labels, could you do that?"

"You mean, like a flow chart?" Valerie asked.

"Like a flow chart." -TF

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"Well, I thought our team did pretty well, given the circumstances," Valerie continued to protest.

"Yes, they did," I replied. "And those circumstances should never have existed. To come down to the wire and find you are missing 500 critical parts on an order should never have happened."

Valerie shifted in her chair. "But stuff happens."

"Yes, stuff happens all the time and that's why your system should detect these conditions. When did you find out that your supplier had shipped 500 defective parts?"

Valerie looked to the left. "Three weeks ago."

"What difference would it have made if your system had delivered a report three weeks ago that showed 500 rejected parts along with replacement lead time, a list of alternate parts vendors and their lead times, along with all orders pending that required that part?"

Valerie's head was nodding. "We would have had three weeks to work on the problem instead of three days."