There is more lean nonsense floating around, this under the heading "Aviation Company Soars With ‘Lean’ HR". The gist of the article is how a ‘lean’ company called Pemco Aviation Group has become lean in their HR management through the deployment of Oracle software. As tempting as it is to go on a rant about Pemco claiming to be lean – they can barely survive let alone be lean – or to go on another ERP tear, I promise to restrain myself. It is not easy, however. The Oracle – Pemco story is so pathetic they cite as an example of their lean HR success the fact that Oracle enables them to fire people with efficiencies they never before imagined.
No, the bigger point the article raises is the notion that process re-engineering – using value stream mapping and the like – in management functions somehow makes a company lean. This is the same trap that GE led the world into with their Six Sigma crusade. The problem is that the management functions are supporting the wrong objectives. Taking the waste out of them only drives the company in the wrong direction more effectively.
The problem with HR functions in non-lean companies is not the waste in how they operate. It is that they hire and compensate people based on the wrong criteria, and they do not support continuous knowledge and skills development necessary for continuous improvement. Figuring out more efficient ways to calculate production volume based incentive schemes only helps to build more inventory faster; and figuring out how to lay people off based on seniority does not make HR lean – it only reinforces the notion that age counts for more than skill and contribution. HR departments need to drive companies toward development and deployment of multi-skilled operators and compensation schemes based on contributions to improvements in value stream quality, delivery and cash flow. Even a wasteful process that supports lean objectives is valuable. On the other hand, a waste free process in support of non-lean objectives is a disaster. What Pemco and Oracle call ‘Lean HR’ is simply streamlining activities that should not be done in the first place.
The same nonsense is more often seen in accounting. Most companies that profess to be pursuing lean accounting are actually doing nothing more than re-engineering the processes that they have always used to generate data that undermines manufacturing excellence. What they call lean accounting makes a real lean transformation impossible.
Failure to recognize that lean requires pursuit of different management objectives, rather than a simple streamlining of the old practices in pursuit of the old objectives, is the fuel behind the thriving BPO field – ‘Business Process Outsourcing’.
There is no trick to managing HR like it has aways been managed. Old school HR management is a commodity – you can hire just about any HR person from any background and get the same old results. That being the case, the six sigma and kaizen event crowd often come to the conclusion that the best way to improve it is to automate it, or contract it out to the lowest bidder. Lean companies, however, gain a competitive advantage over others by deploying HR management in a manner that enables them to truly optimize their human resources. No one can outsource or Oraclize a function and have it become such a competitive weapon.
The same is true with accounting. A company out-manages its competition by providing its managers with better information for planning and control of the business. That is the heart of lean accounting. The alternative is to use the same foggy data as the rest of the industry, and try to find software or a third party to do those foggy calculations cheaper.
The point is that management processes aimed at non-lean, non-competitive objectives cannot be re-engineered because they are all waste – 100% waste. You cannot improve something that is harmful to be doing in the first place. The only improvement is to eliminate it. Lean management means, first and foremost, refocusing management functions on lean objectives. Only when that is complete can it make sense to vale stream map and attempt to improve the management processes.