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Tripp Babbitt

Quality Insider

Who’s to Blame: Management or Labor?

It’s management, it’s not even close... but not for the reason you're thinking

Published: Wednesday, March 16, 2011 - 04:30

The real battle for quality doesn’t lie in processes; it lies in thinking. The recent rift in the state of Wisconsin and other places caused in part by increasing government costs leads one to ask: “Who is responsible? Is it management or labor?”

Gov. Scott Walker’s actions in Wisconsin highlight the need for new thinking about the design and management of work. However, the management-labor strife doesn’t end in Wisconsin. It’s present in all businesses and has created an environment in the United States where we struggle to compete. When we need management and labor to work together in a global marketplace with emerging economies like China, there is no time for such silliness.

Although labor unions have often been fingered as the problem, we would not have needed labor unions in the first place had management treated workers better. Sure, unions have been corrupt in their history, but you can’t argue against the fact that management has been just as corrupt. Does anyone remember the recent banking crisis? It wasn’t a teller or a back-office worker who started that mess; it was management besieged with targets and incentives to grow the business.

Many say profit is the issue: Managers trying to make profit, and labor trying to take it away. Those in labor are seen as the bad guys, but the problem runs deeper than this. It’s not profit that is a problem but rather the destructive approach to profit that management takes.

W. Edwards Deming warned us about profit and the five deadly diseases of management that destroy it. They embody most of today’s troubles for managing businesses and government. Let’s walk through them and take inventory:
Lack of constancy of purpose. All systems must have an aim (purpose) toward improvement and to stay in business. The lack of purpose leads to short-term thinking. 
Emphasis on short-term profit. Management’s focus on dividends leads to creative accounting rather than improvement, which suboptimizes the system. 
Annual rating or evaluation of performance. Statistical knowledge helped Deming discover that the system, not the individual, drives the performance of the organization and that focusing on the individual was working on the wrong problem.
Mobility of management. Deming understood that management requires knowledge of the system. Getting knowledge requires time to learn and study the problems to understand the system. As he remarked, “People in management today know nothing about the problems of anybody else… they don’t even know their own.”
Management by use of visible figures alone. A happy or unhappy customer is usually unknown and unknowable. Managing by using visible figures alone creates suboptimization in systems that are driven by unit costs and maximizing company stock.

 

Unfortunately, many organizations take aim from the inside out and top down. They put together mission and vision statements that “set direction” for the organization.  However, a mission and vision devoid of understanding customer demand (and more important, customer purpose) sets a course that is fuzzy and unconnected for both employees and customers. Aim development needs a link to transactions between the front line and customers; having an aim connected here can lead to innovation through engaged front-line staff.

Deming talked about short-term thinking and managing by “visible figures” that leads to loss of profit in performance of organizations. Today’s environment has both businesses and government calling for balancing budgets and cutting costs. The management paradox is that this thinking will always increase costs. Management will point to the visible gains in “figures” but miss those things that are important and not counted—like decaying infrastructure and roads with potholes that create costs for drivers. There is always loss of profit or value when the focus is on costs. Losing customers or not getting reelected to office are predictable results.

The most egregious management error is not understanding that 95 percent of the performance of any organization comes down to the system and not the individual (or group of individuals). This is something I call the 95/5 rule. Our systems are made up of elements that include technology, work design, management thinking, and organizational structure. Focusing on the system gives us opportunities for breakthrough method and performance. This is a management issue, not a labor issue. Management can change the system; workers cannot.

For Gov. Walker, whatever he can squeeze out of labor will not help him reach his shortfall. Calling out labor as the problem is trying to solve a management problem by blaming the worker. Walker would have better luck looking at technology spending, because all the technological expense that was supposed to reduce the need for workers has increased the need. Technology has locked in the waste of poor government design.

Government is in desperate need of different thinking about the design and management of work.  Our problems in government and business require labor and management to work together in redesigning systems that are badly broken. But clearly, the change of thinking that is needed must begin with management.

Discuss

About The Author

Tripp Babbitt’s picture

Tripp Babbitt

Tripp Babbitt the managing partner for The 95 Method - Executive Education and Advisors. The 95 Method is about giving organizations a method to use new theories to grow business.  Babbitt can be reached at tripp@the95method.com. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt

Tripp also does two podcasts: The Deming Institute Podcast and The Effective Executive podcast. 

Comments

mgt or labor

historically i agree with you - mgt necessitated unions by mistreating labor.  in Walker's case, i also agree with you that he wouldn't be able to address budget problems by laying people off, decreasing benefits and wages, etc.  This is not addressing the cause of the costs.

however, that said, there is also a political narrative - Walker is in my opinion not really worried about efficiency; he is most concerned with decreasing the power of unions in the political process for the benefit of the corporations - koch bros. - who bank rolled his candidacy.   see http://motherjones.com/mojo/2011/02/wisconsin-scott-walker-koch-brothers This means breaking the power of unions to spend large sums of campaign money on TV and get out the vote.  This is just the latest chapter in a book that has been written since there were mgrs and workers, but also as described in a recent book, 'Winner-take-all politics, http://www.amazon.com/Winner-Take-All-Politics-Washington-Richer-Turned/... in the last 30 years, coporations have been extremely successful in dismanteling union power and now unopposed, using their own significant abilitly to raise money to essentially take over politics to their advantage.  That is why Walker is able to do what he is doing and why he is doing it.

This is not a management/worker issue, but a very basic, almost religious belief issue for many conservatives like the koch bros.

if you want to go deeper in the situation on the liberal side you may want to check out 'Truthout'    

http://www.truth-out.org/ a very progressive news and opinion source.  or check out 'the authoritarians' by Bob Altmeyer   

http://home.cc.umanitoba.ca/~altemey/

It's both Management and Labor

Very good article.  The way organizations are run needs to change, in both the private and public sectors.  Systems thinking and development must take the place of Command and Control.  Schools do not teach systems thinking or methods of implmentation and organizations do not know the concepts outside very few people and departments.  Keep hammering the message home.


Charles "Chuz" Shillingburg

On to something . . . I hope so! Markzak

Rather than beating each other (labor-management) up let's show workers some respect and work together with new and better thinking about the design and management of work.  We have to many managers put there for payback in helping people get elected these are the poorest managers of all . . . they are steeped in political ideology and emotion rather than understanding the work (knowledge) and sound principles for redesign of government.

Who's to blame- Management or labor

Excellent article how politicians want to push their agenda without giving importance to work out serious problems with all parties for long term common goal. USA is steadily falling behind in education compared to other nations. All parties must work together to find longterm sustained improvement with responsibility & accountability.

E044820

E044820 Trying to steal the show from R2D2. 

 

One huge problem is we have built complexity into government that you have noted.  Liberals, conservatives and others are full of idealogies which adds to this complexity.  Why not do what actually works rather than what we conjecture?  There will still be the debates, but rather than improving systems from idealogies which has brought deficits, we improve the delivery so there is value.  This means we make decisions based upon knowledge and what works vs. what we can agree on (which isn't too much right now).

I'd be curious to hear your profound answer and name . . .

95/5 Rule

Greg21:

 

This is a concept from W. Edwards Deming, I have identified it as a rule.  Because management continues to focus on the individual.  Understanding Shewharts and Deming's control charts will give you insight into the 95/5 rule.  Common cause variation is attributable to the system, while special causes are typically felt by the worker.

Many readers of this website will understand variation, but if you don't you can always read a simple explanation here:

http://blog.newsystemsthinking.com/sharethisservice-metrics-what-you-nee...

I hope this helps, Tripp

95/5

Good article but curious what evidence you have to support your 95/5 rule. Thanks.

Who’s to Blame: Management or Labor? or? or? or?

Very one-sided arguement uses Deming re-hash; incorrectly applied, out of context, to answer a false dilemma.


Using Organized Labor as a substitute for Deming's 'worker' (and completely ignoring their hand in the Wisconsin case) and using State Government as a substitute for management (and applying prima facie the motives of management in the private sector) gives one the impression that this was an article, already written, in need of a larger context (Wisconsin).


This is way more complicated than the traditional Management or Labor conundrum (false either/or dilemma): Need to include taxpayer's, social/educational needs, and the usual political grinding from both parties into the mix...


 

Who's to Blame: Management or Labor

Here's the other dilemma: the anti--big government pundits think that privatization is the model for reforming government. But when one tries to explain government ills with a businees model, some people decry it is more complicated than that. Scott Walker considers himself a manager of the state's finances ahead of being a political leader. I think the author of this article is on to something. Poor managers will always blame workers for their ills, especially if those workers are organized. Wisconsin's "product" is the group of services it provides to its citizens. Just as a business mistakenly serves the short term needs of its shareholders, Walker is serving the needs of the tiny majority of the people who voted for him.