Observation #39
Management system changes often entail tightening up the planning standards that are used to schedule the operations, and then providing managers with tools to control, monitor and report on attainment to the plan. The efficacy of management systems depends on the integrity of the numbers placed into the system, and the use of the system information to make decisions about the business. Most system problems stem from inaccurate planning parameters, late scheduling changes of one kind or another, and the resulting tendency of management to disregard or somewhat arbitrarily modify the schedules that are produced.
The red flags we look for when reviewing how effectively changes in the management system have stayed in place include:
- Forecasts are considered inaccurate and do not directly feed the resource plan.
- Managers stop using the resource plan to determine resource levels (e.g., they disregard recommended staffing levels).
- The planning parameters within the resource plan (e.g., expected performance) no longer match the business-plan assumptions.
- New activities change the business process, but the planning standards are not updated and become obsolete.
- New managers are hired or promoted, but are not trained to manage with the system.
- Daily performance reviews do not have an agenda, become irregular or do not discuss specific performance by area and causes of variances.
- Visual performance charts are kept not up to date.
- Performance targets are not updated in operating reports and/or do not reflect the resource plan.
The management system is arguably the most important tool that executives have to hold onto improvement gains and to build on those higher levels of performance. Executives play a very important role in making sure that management systems keep their integrity. Unfortunately, they are often part of the problem, intentionally or not, as we discuss in the next Observation. Stay tuned!
