Breaking the Circle of Gloom

Dec. 5, 2008
Low morale is an invasive weed. Kill it at the root, and make significant company-wide improvements in the process.

A true story of low morale: Recently, a mining operation was experiencing an unacceptable level of equipment failures. The failures were causing significant production losses and increasing repair costs. As expected, mine management began to focus their attention on the maintenance department and put pressure on the department head to rectify the situation. The department head then pressured his staff to respond to each breakdown as quickly as possible so that production losses were minimized. The maintenance staff went into fire-fighting mode, which eroded morale and personal productivity. As a direct result, preventative maintenance was put off in order to give attention to unplanned repairs, which naturally led to higher instances of equipment failure.

Meanwhile, maintenance employees pointed their collective finger at operations personnel as the source of increased breakdowns. And operations pointed back at maintenance. Morale declined further.

The situation deteriorated to the point where over 95% of maintenance hours were spent reacting to breakdowns, leaving just five percent of available maintenance hours for preventative maintenance. Planned maintenance schedules were written up and posted, but were rarely adhered to as personnel chased the latest fire...sometimes literally. Repair costs were well over budget, made worse by the fact that repair parts were being delivered to this remote site on an emergency, and thus premium-priced, basis.

In reaction to the problem of low morale among workers, someone suggested a picnic.

This situation is not unique to the mining industry or to maintenance operations. It can occur in any manufacturing facility. No doubt you have seen it in your professional career. At ForteCEO, a consulting/interim executive firm that helps to restore profitability and build enterprise value, we call it the Circle of Gloom.

How the Circle Thrives

The mistake many leaders and managers make is to assume the Circle starts and ends with low employee morale. They try to "fix" the problem with a morale-building program. However, until the underlying issues are fixed, gathering people together to talk about or fix the "morale problem" will most likely just turn into a complaining session. Focusing attention on morale without resolving the root cause can accelerate the downward spiral, as now the issue of low morale has been brought to everyone's attention and the problems are not getting any better. Some employees hear the message as the famous quote, "The beatings will continue until morale improves."

Identifying the Root Cause

Figuring out the root causes of low morale takes a lot of thought and some detective work. Employees may feel uncomfortable revealing issues to their manager or leaders directly and may have trouble putting the issues into words that tell the whole story.

This example is a true story from the third generation, family-owned company that was having challenges with low morale and not achieving productivity goals. The board decided that they wanted to hear from employees in order to understand the root causes of the problem. A neutral party from outside the company was brought in to conduct focus groups to ask all employees their confidential opinions on what hindered them in their daily work and what they would like to see done differently. Neither management nor the board knew exactly who said what.

The issues brought to light by the employee interviews varied in size and scope. Many of the comments were about issues that leaders and the board already knew about, like a problem within the supply chain or poor communication caused by working in silos. But some of the problems uncovered were easy and economical to fix, on the spot. One group of employees complained of only having one packaging tape dispenser for 10 workers packing boxes. A $10 dispenser was purchased for each packer and productivity and morale increased. Simple.

Other issues were harder to fix and took more time and resources. Management and the board sorted through the commentary to understand the issues they needed to fix, in what order and how. The information gathered from the employees was the cornerstone of developing a strategy and timeline to implement change that would make the company a great place to work. Within the next year, the company moved its operations from two buildings to one -- a move not planned for the short-term -- in response to the overwhelming feedback from staff. The employees were happier, and leadership and the board were too.

Planning Change and Watching It in Motion

Getting back to our original story, mine management decided that breaking the Circle of Gloom surrounding the equipment situation was going to take significant and immediate action. They knew it was not going to be easy. The way the company had functioned for many years was going to be upended and it might get worse before it got better.

The failing equipment had to be given a fighting chance to operate properly if the balance between planned and unplanned maintenance was to be reversed. Step one was to quantify the size of the prize. The prize in this case was the value of having the production-related equipment on line versus standing idle, and was simply calculated as production capacity per hour multiplied by production hours potentially available. Added to this were the additional costs associated with shipping in repair parts on an emergency basis. Improving the former and decreasing the latter constituted a significant potential contribution to the bottom line.

Next was the task of establishing baseline performance for each critical production machine, or how many hours per week each production machine was currently unavailable due to unplanned maintenance. The inverse of this percentage was uptime, or the amount of time the machine was available for production. Maintenance records for the previous year were used to determine the weekly averages per machine. A target level of uptime for each machine was established using industry averages.

Then came the fun part. Each machine was taken off line for 24 to 48 hours, during which a complete maintenance overhaul was conducted. Before the machine was returned to service a "delivery check-list" was reviewed and signed by both a maintenance and operations foreman, attesting to the fact that the machine was in good operating order. FLAC (Fuel, Lubricant, Air and Coolant) standards were established, as were pre-shift inspection procedures for each shift foreman, both maintenance and operations. This last point proved significant, as it was the first time the maintenance and operations foremen felt a joint assignment of responsibility for the health and well-being of the machine.

Finally, weekly monitoring of machine uptime was established with summary reports delivered to and regularly reviewed by management. Through regular and consistent communication, everyone involved was able to monitor progress from baseline uptime levels to target levels, calculate the real value of performance improvement along the way, and feel pride in the progress they were making.

This effort followed the classic order of operational performance improvement and the results were classic as well. Average machine uptime improved from 50% to over 90%. The reduction in unplanned maintenance allowed for a significant increase in preventative maintenance, accelerating the performance improvements. Production increased, costs decreased and management began to focus on other issues.

And what about the morale problem? At the end of the project, Maintenance held their own picnic, and even invited some of Operations folks to join them

John Kopeck is a consultant at ForteCEO, an interim executive/consulting firm that provides executives -- all with at least 20 years of progressive experience as a business owner or leader -- to work alongside client businesses to implement permanent change.

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