Two hot topics among the economic and business intelligentsia strike me as pretty good indicators of leanness: The minimum wage and the availability of skilled employees. The more a company cares about those issues the less lean it is.
Look at who pays minimum wage: Walmart and other retailers, McDonalds, and similar bottom dwellers. The reason they feel compelled to pay so little is because they add so little value, and because they have to pay for enormous corporate waste. When you find a manufacturer concerned about the rampant talk around raising the minimum wage it’s a safe bet you will find the same situation – management that has no real concept of value so they add very little of it and compete solely on price – battling China, Vietnam and Bangladesh in a race to the bottom, along with a ton of corporate bloat ranging from too much IT to too many people creating policy manuals.
On the other hand we have Steve Brenneman, head of Aluminum Trailer in Indiana: “Lean, in a lot of ways, could revitalize American manufacturing if we do it right, because our workers are extremely productive and they’re smart,” Brenneman said. “We as managers have to put in a system that realizes that value. If we just see them as a set of hands, we’re not going to realize that value.”
Aluminum Trailer is like the rest of the truly lean companies. Their people are fully engaged in creating more and more value, and those people make a lot of money. The minimum wage, and even the theoretical wage compression is supposed to create are completely non-issues at these companies, while no wage is low enough to satisfy those employers who see workers as Brenneman says it- little more than “a set of hands”.
The same thing is true with the braying from the old school manufacturers about their perceived inability to find skilled workers. All depends on the skills. When they see workers as merely that “set of hands” they are right. Lean companies, however, see it a bit differently:
“Because Brenneman believes a business can always find ways to increase productivity, he thinks a worker’s brain is just as valuable as his hands. An employee who feels valued, both financially and intellectually, is worth the added labor costs from paying higher wages because of the extra value created in the finished product, reduced employee turnover, and cost savings achieved by running a leaner operation.”
Workers, in fact, bring a lot more than they hands to the job. They bring their brains and their hearts. And lean companies know that of the three – head, hands and hearts – hands are the easiest to train up using tools and techniques like TWI and Standard Work. The key is to hire people with their heads and hearts in the right places, and they find no shortage of such folks in the labor pool.
The narrow thinking managers who believe that all the thinking that needs to be done must come from the head office and assume production folks by definition have sloth and selfishness in their hearts. With that view all that workers are good for is their hands and any shortfall in that area is catastrophic to them. The real hoot is that they use this argument to justify keeping manufacturing offshore – they can’t bring it back because they can’t find enough skilled folks …. As if they found the skilled folks they need among the sixth grade graduating classes of compulsory state run schools in Ho Chi Minh City.
Companies that truly understand the value propositions their customer’s desire know that success comes from aligning all of their people with those value propositions and engage them in continually enhancing it. Those folks create so much value that the notion of paying them minimum wage is absurd. It all comes down to people, culture and a focus on value. And a very accurate measure of the degree to which management ‘gets it’ is the amount of time they spend worrying about the minimum wage debate and fretting over shortages in skilled workers.