Synygy Inc. has for many years monitored the number of calls that its sales employees like W. Paul Jordan make on a daily basis, but last year the software firm upped the productivity ante. The company, which is located in Conshohocken, Pennsylvania, launched a method called "PainPowerFit" that takes some of the guesswork out of the sales process. Basically, Jordan, whose official title is new business representative, fills out a short questionnaire that rates a sale’s potential from 1 to 5 right after he hangs up the phone with a customer. Jordan’s managers review the data and track his productivity on a daily, weekly and monthly basis, which enables them to quickly gauge the likelihood that his toil will lead to an actual product sale and keep him from wasting time on dead-ends. "Now I can focus my time on opportunities," he says. "I think I’m working smarter."
Eighteen months ago, the employee incentive software firm shifted its focus to revenue building, and boosting worker productivity was a key part of the strategy, says John Buie, the executive vice president of sales who was brought on board to help Synygy make the conversion. To date, the new system, along with related employee-development programs, has cost the company about $250,000 and has paid off big-time, Buie says. Since it was implemented in the first quarter of 2002, the value of net new contracts has skyrocketed 258 percent, translating into 10 percent sales growth last year. Total revenues for the firm, which employs 500 people globally, 90 of whom now use the new system, are about $50 million.
While Jordan, who has worked for Synygy for seven months, sings PainPowerFit’s praises, Buie admits that some seasoned account managers don’t appreciate having every deal scrutinized on a daily and weekly basis and want to be judged on the overall revenues they bring in. But, Buie says, "we no longer hire people and say, ‘You have two years; let’s see what happens.’ The old way of doing things is no longer tolerable. It’s too high a risk and too expensive."
This is a page from corporate America’s never-ending productivity story, which has become particularly compelling since 2001. U.S. companies of all shapes and sizes are doing everything they can to get the most out of their employees today. The productivity dance is going on at firms in hiring mode such as Synygy, as well as those in the majority that have kept their staffing levels stagnant for several years. Among the latter is specialty chemical maker W.R. Grace & Co., in Columbia, Maryland, which has 3,400 workers nationwide.
"So, in order to stay ahead of inflation, a company has to increase its productivity--making its people more efficient or finding ways to do the same things for less money, or both."
"In the current environment, it has been very difficult for companies to raise prices," says Greg Euston, a spokesman for Grace. "So, in order to stay ahead of inflation, a company has to increase its productivity--making its people more efficient or finding ways to do the same things for less money, or both." Grace has focused on productivity initiatives and has been a proponent of Six Sigma methods since Paul Norris took the helm in 1999. Two examples of productivity successes:
The Rapid Close Project: This took the reconciliation process in the firm’s 50-person accounting department from eight days each month in 2001 to three days today, saving a total of 3,500 people days. After reviewing the process, Grace was able to eliminate unnecessary reporting and cut down on manual input functions through technology.
The Invoice Accuracy Project: A project that ran from August 2002 to January 2003, this reduced the error rate in invoices, which ranged from 5 to 19 percent in various divisions, to 3 percent, saving $500,000 annually. Here, Grace looked at the amount of time (and money) spent correcting errors and pinpointed the source and inefficiencies in the process.
"It’s important to point out that Six Sigma and other productivity methods are about giving employees tools and skills to be more effective," Euston says. "Grace wants to continue to use all of the people it has, but redirect their energy into areas that make a greater impact on the company’s business."
Whether it’s fancy management methods, technology, financial incentives or bosses just pushing employees to up the 40-hour workweek, the corporate mantra today for boosting revenues is "worker do more."
The trend is not always touchy-feely. Just ask Mark Ellwood, president of Pace Productivity in Toronto, whose site is called Getmoredone.com. He charges companies from $10,000 to $100,000 for his productivity consulting services, which include a device he invented called the TimeCorder that tracks what a worker does throughout his workday. Employers often think that employees are slacking off, he says. "The world of work is not a whole lot of fun for people today. The No. 1 question I get asked about my time studies is, ‘How do you know if people will be honest?’ "
New books with titles such as Leadership Sopranos Style: How to Become a More Effective Boss, by Deborrah Himsel, vice president of organizational effectiveness at Avon Products Inc., would have been unheard of in the boom-boom 1990s, when the worker was king. While the author says she’s not condoning the fictional Mafia character’s murderous streak, she does recommend that managers take note of Tony Soprano’s charisma, including his comfort with power and perception of invincibility.
The getting-the-most-out-of-employees movement appears to be working. Productivity among American workers is growing at a pace not seen since the Korean War era, says James Smith, professor of finance at the Kenan-Flagler Business School at the University of North Carolina. In 2003, productivity in the business sector increased 4.5 percent from the previous year, according to the Bureau of Labor Statistics. From 2001 to 2002, productivity jumped 4.9 percent. That means the annual average rate of productivity growth was 4.7 percent from 2001 to 2003, the biggest two-year rise since 1949 to 1951, when it grew at a 5.7 percent annual rate.
"It's important to point out that Six Sigma and other productivity methods are about giving employees tools and skills to be more effective."
Smith speculates that corporate initiatives that encourage workers to do more in response to hard economic times since 2001 may be showing up in the recent productivity numbers, but he won’t swear to it. "Anybody that tells you they can explain the ups and downs of productivity is lying," he says flatly. There’s pretty conclusive evidence that since 1993, better use of technology has contributed to about one-third of the climb in productivity. But "where does the other two-thirds come from?" Smith asks. It’s an economic conundrum, he says. If productivity growth is high enough, companies will have to hire more people. But, he warns, companies have to beware of the Mozart problem. If you have a lovely Mozart string quartet that takes about 30 minutes to perform, "having it played by one guy on an accordion in five minutes doesn’t mean it’s productive," he quips.
Speeding up the tempo appears to be backfiring for some companies. Lawsuits seeking overtime pay are on the rise, and suits against a variety of companies, including names like T-Mobile USA Inc. and RadioShack Corp., have netted anywhere from $5 million to nearly $30 million for employees and their lawyers.
One as-yet unresolved claim involves Sears, Roebuck and Co. A class-action suit filed in the U.S. District Court for the District of New Jersey in 2001 seeks unpaid overtime on behalf of the retailer’s product-repair employees who claim that they were directed in some cases to work beyond their 8 a.m. to 4:30 p.m. shifts without pay. The suit contends that after a six-month Six Sigma study conducted in New Jersey and Wisconsin to boost the number of visits by repair workers each morning, Sears decided to require its employees to obtain their daily assignments at home via a handheld computer at 7:15 a.m. when they were off the clock, instead of going to a central location at 8 a.m. Parts that workers had previously loaded onto their trucks at a Sears location during work hours were now being shipped to the employees’ homes after hours and would have to be loaded on the workers’ time, the suit alleges.
"A lot of these productivity programs are designed from the employer’s perspective to compel the workers to do work off the clock without pay," says William Pinilis of Kaplan Fox & Kilsheimer, in Morristown, New Jersey, one of the attorneys representing the Sears workers. "They are getting productivity from workers but getting it in exchange for nothing."
The suit claims that Sears has benefited from the new program and has seen its estimated-time-of-arrival charges drop by 95 percent at sites where the Six Sigma initiative was piloted. It states that "production improvement at the pilot sites reflected an 8 to 16 percent increase, resulting in a five to eight call complete per day increase." Sears officials would not comment on specific circumstances in the suit. But Chris Brathwaite, director of media relations for the retail giant in Hoffman Estates, Illinois, says, "Given that this matter is in litigation, the only comment we would make is that we believe that the plaintiffs’ assertions are without merit, and we plan to vigorously defend the company in this matter."
Sometimes, pushing workers during lean times is a matter of survival and may be worth the pain. That has been the experience of the San Francisco technology company Rs-unix.com, a firm that distributes IBM servers and storage units to various companies. In 2001, after many years of growth, the company’s president, Jeff Medeiros, realized that the industry had overinvested in infrastructure, and that meant customers would stop buying. From a peak of 26 employees in 2002, he was forced to cut his team to 14 last year—nearly in half. He decided to slightly increase bonuses and alter the format to reward workers for performance both as members of a team and individually. Even more important to the bottom line, workers were encouraged to put in overtime.
"I didn’t say, ‘You have to work more hours.’ I just said, ‘We have a unique opportunity to reestablish ourselves as leaders in the marketplace, and we should take full advantage of that.’ " Knowing that they were part of the downsized team and that it would be short term, he says. His workers were motivated to put in the extra hours. Employees put in 60-hour workweeks on average during 2003, and the company ended up reporting a 45 percent growth in both profits and revenues. Sales totaled $26.5 million last year.
But this year, Medeiros has had to rethink the overtime. "People were absolutely at their wits’ end. I had gone right to the line of their ability to perform, and I didn’t even know I was coming to the edge," he says. His staff told him he needed to start hiring, and this year he’s already added five new workers. "It’s extremely short-sighted not to listen to the employees," he says.
"People were absolutely at their wits’ end. I had gone right to the line of their ability to perform, and I didn’t even know I was coming to the edge. It’s extremely short-sighted not to listen to the employees"
While Medeiros was able to rally the troops, it’s best to tread lightly, warns Alan Larson, a management consultant and author ofDemystifying Six Sigma: A Company-Wide Approach to Continuous Improvement. "[Medeiros] got his message across that it was do or die, but that only works for a time," he says, and it’s easier for a small firm than a big company to pull it off. Companies with fewer than 50 employees don’t need expensive management methods to get them through the tough times and improve productivity. "The small guy should do that naturally."
At larger companies, it’s harder to get the message relayed from the top down that the benefit of being productive and getting the job right the first time will reap benefits for all. Often, he says, senior management thinks workers are lazy, or that the union hamstrings its efforts. The rank and file believe that managers don’t know what’s going on.
The very essence of Six Sigma, he says, is "constant respect for people." That message has gotten lost in today’s corporate environment. "If you go in and try to beat more out of the same system, the only way you’re going to do that is to bloody your workers. If you go in and really do a system/cultural change, you’ll be asking people to do less work." One of his major clients was a $100 million division of a Fortune 500 company. The unit had one product, a precursor chemical for foam-rubber manufacturers, that had a 27 percent reject rate. Larson says he formed labor teams, involving the union as well, and trained and coached workers in problem-solving. As a result, one worker suggested that the process be done in a different order, and the reject rate went to zero.
Larson was paid $60,000 for his consulting work over a six-month period. He says that the team approach led to $1.5 million in savings after about two to three months.
Sharing the wealth and doing it in real time is also a good motivator. FedEx Freight, with 22,000 workers, was banking on the productivity of its staff when the FedEx division launched its money-back guarantee in September 2003. Several months earlier, the unit began disbursing incentive pay on a quarterly basis instead of yearly. "They can see a direct correlation to work they do," says Jeryl Mitchell, vice president of human resources for FedEx Freight in Memphis, Tennessee, which moves 57,000 shipments a night. In recent years, the company also has used technology, including tracking how long shipments stay on the docks, and management training, including motivational coaching and leadership training, to enhance productivity. While FedEx Freight’s overall staffing has stayed at about 22,000, productivity gains have not come at the expense of employees’ personal time. Hourly and salaried workers have maintained a typical 40-hour week through recent productivity gains, Mitchell says. "Asking people to work a significant amount of overtime is not consistent with our philosophy." (Mitchell says that the firm is poised to start hiring in substantial numbers later this year.)
Even with recent signs of life in the economy, including the creation of more than 300,000 jobs in March, many firms will still be focused on doing more with less. Service Net Solutions, a service management company that creates and administers warranties and service contracts for manufacturers and retailers, announced in March that it had created a productivity and efficiency initiative. The company, which is based in Jeffersonville, Indiana, and has about 300 employees, plans to spend $150,000 to $250,000 on the effort, and that could include some technology purchases, says Jennifer Holland, who was named general manager of the P&E team, which has six employees. She projects that the team’s first-year initiatives will yield more than $1 million in savings. "We’ve got a laundry list of things to look at," she says. "We want representatives from all areas to put together massive flowcharts and find ways to streamline processes so we can eliminate waste. There may be ways we can reduce talk time by customer-service reps by streamlining scripting or technological applications to automate certain sections of the call." And in order to handle the cyclical nature of the business, which typically peaks in the summer, she says, the firm is considering mandatory overtime or cross-training to get the most out of existing workers.
"Our goal is to stay lean and mean but not at the expense of customer satisfaction," she says. The firm has been growing steadily since its inception in 1996, and is now a $57 million company, landing Dell and Sony as customers just in the last six months. "We want to grow but not see head count grow as quickly as revenues."
Workforce Management, May 2004, pp. 41-44 -- Subscribe Now!