Part three of our “How to Fail” series for businesses – learn a lesson from your competitor’s mistakes.
Most large organizations struggle with internal communication. In fact, a survey of 400 companies in the U.S. and U.K. found miscommunication causes an average loss of $62.4 million USD per company each year.
The problem is although most businesses and their employees understand the need for effective change management and interdepartmental communication, they simply don’t know how to get there.
Three processes are central to creating a framework through which companies achieving high effectiveness in communication and change management:
- Create a system that streamlines communication between departments
- Standardize the necessary touch points between departments to allow easy project tracking and accountability
- Ensure employees understand how their work fits within and impacts the entire organization
In the first post in our series, we showed you how one company’s efforts to streamline communication backfired because it didn’t address the root cause of inefficiency between departments. In the second part of the series, we showed you how to standardize and optimize the timing of touch points between departments, and shared the story of a big-box retailer whose managers and executives spent between 25% and 50% of their time in unnecessary meeting time.
In this third part, we’ll share two stories that correlate with step three, helping departments and each employee understand where their work fits in the big picture and how it impacts the organization. And, we’ll show you how to implement these three steps to improve cross-departmental communication, change behavior to create value, and improve financial performance in your organization.
Step 3: Understanding where your work fits in the big picture
Case Study: Getting it printed right the first time
A large retail client had a problem with its ads. The retailer’s merchants would often change which items they were promoting in the last couple of weeks, causing costs and delays up and down the supply chain.
“The merchants have no idea how much extra work they create when they change the items in the ad. They think they’re just changing an item, or price, but it has huge implications on us in supply chain. We end up with lots of wasted time, and inventory problems.” – Supply Chain Director
When questioned on the practice, local category managers said they needed to make this adjustment in order to match or beat their competitors’ prices. Since it didn’t create much extra work for them, they didn’t see why it was a problem.
Sounds reasonable enough, except that upon closer examination, it was discovered:
- The additional communication associated with these changes resulted in tens of thousands of hours of extra work up the supply chain
- Fewer than 10% of the additional work was related to change to the price
In other words, category managers weren’t making these changes to help the company stay competitive—they lacked the preparation to make a strategically sound decision, and were using the current practice to buy themselves more time.
They were worried that if they weren’t able to maintain the same positioning in promotions, their year-over-year sales might decline. To protect against this, they were simply putting in temporary product selections and waiting for the final details or plans to make changes.
A common theme we heard from senior department managers was: “My department is as efficient as possible, everyone is putting in extra hours and we still can’t get all the work done. And yet they expect better results and lower costs. We’re frustrated and not sure what to do next.”
What went wrong?
Individual departments prioritized their functions over the big picture, which resulted in delays and rework, last-minute rush orders and waste.
To solve the problem, we recommended making sure that everyone involved understood the entire production process and what their role was, ensuring quality and timeliness.
Before, making last-minute changes to ads didn’t seem like a big deal to merchandising managers because it didn’t cause much extra work for them. But by helping them understand the impact of their choices on other departments and the bigger picture, they were able to align their goals with the organizational goals of getting the ads printed and distributed in an efficient and timely way.
The newly disciplined approach actually saved everybody time and effort.
By cutting the number of requests for change each week in less than half, the retail company was able to save tens of thousands of dollars and hundreds of hours or work.
“Now that we have the new promotion process and I understand how my work affects productivity of other departments, it has actually freed up enough time for me and my team that I can think more strategically about my category and how to optimize product mix and profit.” – Senior Category Manager
Case study: Communication without context
Another great example of putting this principle to work is a grocery retail chain that was struggling with the cost of maintaining their equipment.
Under the existing process, individual stores would create work orders for the maintenance team, who would then dispatch its members to fix the equipment. The maintenance team was overwhelmed responding to hundreds of work orders per day, which made it impossible to act proactively. As a result maintenance on equipment was performed as triage, with no visibility into how it affected the larger picture.
What went wrong? There were three big problems with this system:
- Communication: There were no standard communication systems in place between the stores and the maintenance team, which put this grocery retailer’s head office and stores at odds over what turned out to be significant waste in facilities maintenance costs.
- Workflow: The teams were dealing with large amounts of work orders. Each manager had hundreds of work orders to approve per day from stores. How to handle some of the requests were obvious, and some needed time for investigation. But when you know you have hundreds more coming tomorrow you have to finish all of today’s requests by the end of the day. Context was missing.
- Inefficiency: And maintenance costs doubled or tripled the original cost of the equipment. For instance, TPG found a lift truck had been fixed 14 times in the past 2.5 years. Although there was clear communication between the stores and the maintenance team regarding what needed to be repaired, these communications lacked context. Nobody was communicating that the same machine had been fixed 14 times, causing unnecessary and inefficient spending, to the tune of, in this case, 2.5x the value of the lift truck.
It was a bold and unusual move for us, but in this case TPG’s analysis stopped all parties in their tracks.
We recommended several refinements in the maintenance process. The company standardized communications between stores and the maintenance team, and instituted a preventative maintenance schedule and repeatable workflow.
The key in this situation was our experience looking at an entire system of processes to identify root causes of the issue. Addressing each root cause in turn, and in concert, makes a difference. In this case it accounted for nearly 20% improvement in efficiency and effectiveness. The maintenance team was able to get out of triage mode, and a preventative maintenance schedule meant that the team was more easily able to identify when it was more cost effective to replace equipment rather than repairing it.
It seems simple to understand, but not as easy to implement.
How can you apply these three steps to create effective change management and communication at your organization?
All of these case studies are great, but they don’t really matter unless you can replicate them in your organization, right? Here are some quick tips that can get you started creating effective and efficient change management and communication in your business.
Step 1: Pick a single go-to channel for interdepartmental communication
Employees many of whom may work in different buildings or even on different continents, need an easy way to ask questions, define specific needs, and track the response progress. But in many circumstances, employees receive countless emails ranging in importance from mundane to mission critical. And, they have no idea if their request was received or when it will be resolved.
“I’m getting 200 emails a day from different departments,” we frequently hear from Merchandising Business Managers. “I don’t know which are truly critical and I can’t handle the volume of communications.”
By picking a single channel for critical communications and putting protocols in place for how to use it, you can ensure that when you get an email in your inbox, it’s important, not an invite to Dave’s barbecue this weekend, and that your employees will have all of the information they need to take action.
There are also technologies that can help assign importance to the messages in your inbox, and distinguish between urgent messages and messages that don’t need immediate attention.
After putting a system like this in place at his organization, a Merchandising Business Manager told me: “My inbox has significantly fewer unread emails in it each day, and now I trust that anything I receive directly relates to a critical task in the process.”
Step 2: Ensure the work being passed off between departments is standardized
Once teams know the communications they receive are critical in accomplishing objectives, outcomes are more predictable.
Next, identify the processes in projects you repeat and standardize the workflow and touch points. This allows you to:
- Identify and map communications processes and handoffs so you always know where projects are in their lifecycle
- Identify critical missing steps in the process, and identify redundant or unnecessary work that could be eliminated
Step 3: Build accountability into the solution
This will either prevent long gaps in communication and delays in work or identify where delays are unavoidable and allow the team to manage for that.
To create the task deadlines, first start with engineered estimates, and then apply historical data to determine the appropriate amount of time a task should take. Assigning clear accountability to individuals for each task, and ensuring a clear understanding of expectations, is critical to creating productive outcomes.
After implementation, the Business Manager shared “The new process identifies exactly where a task is in reference to a deadline. I am updated when a task is behind schedule, and I know exactly what the highest priority items are and who is responsible.”
Pulling it All Together: Hope & Next Steps
Gain the competitive advantage of being 3.5X more likely to significantly outperform your industry peers, with the bonus of more harmonious department relations.
Get started today. Effective change management and employee communication remains a leading indicator of financial performance worldwide. And although most of the case studies we’ve used in this series are in the retail industry, these same steps have worked in healthcare, manufacturing and virtually any industry.
Your organization doesn’t have to continue to struggle with interdepartmental communication and delays, lost value and missing out on market timing. With a disciplined approach, you can streamline communication that will ultimately allow you to make decisions faster and respond more quickly to customer needs.
Comment below and share your frustrations and wins in these areas.