There are a small number of cardinal rules for an effective lean transformation. One of them is "lean initiatives will not result in laying off people." There’s a reason for this: real lean requires the knowledge, creativity, ideas, and commitment of the entire workforce. People are no longer just a set of hands bought for a few bucks an hour. They hold value in their brains. Yes, lean dramatically improves efficiency which results in a requirement for fewer people… but if it is done right it also creates a competitive advantage that increases sales which then employs those people… and hopefully more.
It was from this frame of reference that I was just about to jump all over Sauder Woodworking, which just announced that 80 jobs would be going away.
About 80 jobs are planned to be cut from ready-to-assemble manufacturer
Sauder Woodworking later this year in an accort to streamline company
production. The company plans to focus on its core customers; eliminate slow
selling and niche items; and transform the operation into a "lean
enterprise", which will mean some restructuring in its management and
staff areas, resulting in 70-80 positions being eliminated plus a
number of internal transfers and reassignments.
I despise seeing "lean" and "positions being eliminated" in the same article. It simply doesn’t have to happen. Yes the furniture business is fighting incredible competitive pressure from abroad. But as we mentioned last year, there are several furniture companies that are looking inward to improve instead of just whining and complaining.
So I also need to give Sauder credit. Instead of capitulating and closing or offshoring, they are trying to make things work. They are willing to transform their business and know that the top line may suffer in the interim.
Sauder’s new sustainable business plan involves three components:
customer portfolio, product portfolio, and business simplification. Production levels have remained steady in the first quarter of 2008 and
sales are up slightly over 2007. With this new strategy and the
sluggish economy, Sauder anticipates some reduction in overall
production levels in the last half of 2008.
If sales are up and production levels are steady, presumably that means that the bottom line is already growing. So why didn’t I jump on Sauder concerning the elimination of 80 jobs? Because they are managing it instead of whacking heads.
While the overall employee count will decrease to align with production
requirements, Sauder anticipates that most of the downsizing will be
covered through the normal rate of employee turnover and Sauder’s use
of temporary employees.
Hopefully this was communicated to the workforce. But I also wish they’d have the guts to take the next step: drive home the competitive advantage that real lean will give them so they can grow the company enough to keep those 80 positions, even if attrition means they’re different people.
Who knows… if the company is growing and respecting people as part of its lean transformation, perhaps those people, and their knowledge and experience, won’t want to leave after all.