4 Ways to Effectively Implement Change Management

By David Hair

Last month we published a series of articles related to the contemporary issues fueling operational and labor change for many U.S. companies.  In doing so, we also introduced third party human logistics (3PHL) as the emerging business model that provides “fix-it-fast” solutions to many of these issues. What are these solutions? Reduced unit labor cost, increased productivity and efficiency, improved or maintained quality, and reduced labor and co-employment liability.

In our 20 years of experience working with world-class companies, we have found that the biggest obstacle of adopting these “fix it fast” solutions isn’t implementation. It’s commitment.

 To read the case study in its entirety, click here.  To determine if nGROUP’s 3PHL “fix-it-fast” solution is right for your company, click here to complete a quick diagnostic.

Here are four ways we have found to effectively implement change management:

1.  Pressure For Change: The Top Down Approach
The need to change must first be a driving force within your company.

Whether the need to change comes from senior management or from customers or clients in a supply chain, the rest of the organization will need to be convinced of the case for change.  This can only happen to good effect when senior management stands united behind the benefits of the new strategy and communicates that to the entire team.

A change in strategy can be a signal to staff that they have a role to play in making change happen.  They begin to own the change the moment they see how change effects business at a corporate level and is also beneficial at a personal level.

2.  A Clear, Shared Vision That Motivates

Colleagues are inspired when they are motivated and management needs to understand what motivates them. What are the key motivators with every employee? Pride, happiness, responsibility, recognition, security, success, and money.  Motivating staff to support upcoming change is crucial for success. Leaders, never forget that change is a major cause of stress amongst the workforce so plan ahead to motivate your staff and create a positive environment for the shift.

(nGROUP has integrated these motivators into every aspect of the 3PHL business model – from training, to data collection, to incentive programs.  nGROUP’s 3PHL model communicates goals, tracks performance and rewards workers with tangible and non-tangible feedback.)

3. Capacity for Change
There is no magic technology or tool to create change. In fact, the greatest agent of improvement programs is a resource all companies already have — employees.

Workers have the information, intuition, ideas and instincts necessary for implementing a new strategy effectively.  When given the capability and the opportunity to participate in improvement programs, it is employees who often find the greatest cost savings and efficiency improvements.

nGROUP’s 3PHL recognizes the value of an employee’s experience and insight and openly seeks input and suggestions.

4. Action
Once the three factors listed above are in place, it is time to implement change.  This is where momentum matters.

nGROUP’s 3PHL model implements the “Plan-Do-Check-Act” management methodology to ensure the effectiveness and appropriateness of change.  Good monitoring and analysis of the resulting data is essential.

Case Study Results
In this particular case study, nGROUP’s 3PHL solution was first implemented in a single facility for the largest fresh food processing company in North America as a pilot program.  Based on the results, they rolled out the 3PHL model to two additional processing facilities.

“Over the first five years, they realized over $20 million dollars in operating income improvement.  The efficiency gains have ranged from over 25% to over 300% – depending on the baseline performance of each facility.  An overall average of 38% performance improvement was achieved,” says Jim Rossini, nGROUP Executive VP of Corporate Process.

Factors Driving Change in Operational Strategies

By David Hair & Jim Rossini

You have entertained your fair share of sales pitches promising that their programs will bring astonishing improvement to your bottom line. But how can you know for sure? Who can you really trust to bring you the results your company needs? Pick a plan with a guaranteed, proven outcome with feasible implementation.

As explored in “Contemporary Issues Fueling Operational and Labor Change,” there are many factors driving the need to change operational strategies.

“Do It Yourself” Change

As cited in “Why Companies Fail,” ‘Once the human mind has set out to do something, or has gotten in the habit of doing something, change is very hard.  When you add group dynamics, it’s even harder. You don’t need to be a brain scientist, of course, to know that people resist change … and yet, even knowing that, you’d be surprised at how many firms keep driving toward inevitable disaster at top speed.’

Knowing that change is resisted, it’s logical to transfer the responsibility to a third party with no incentive to hold fast to past policies or to feel overwhelmed by the stress from any push back. It’s a win-win situation, the corporation gets change without having to be the catalyst for it.

Consultative Approach to Change
There’s a consultant on every corner offering a one size fits all solution.  This is especially true for the operational and labor challenges facing U.S. corporations.

With consultants, you may be offered operational solutions on paper.  Many of which are misinterpreted or abandoned by line workers within months or weeks of so-called implementation.  In the world of production and labor, it is through consistent, on-site oversight that real change is realized and sustained.

Every organization is different, and that is why nGROUP guides each through their own unique experience.

Sustainable, “Fix-It-Fast” Results

Want the ‘fix-it-fast” solution that yields real results? It’s what we call  third party human logistics (3PHL).  After 20 years of experience improving labor-intensive operations for world-class companies, nGROUP performance partners pioneered the 3PHL business model.  Here is a visual representation of what we’re talking about:

Top 3 Issues Fueling Causing Operational and Labor Change

By David Hair and Jim Rossini

According to Inc. Magazine there are 5 main reasons why organizations do not change.

  1. Strength of Culture
  2. Rigidity of Structure
  3. Sunk Costs
  4. Contractual Agreement
  5. Entrenched Interests

It’s sobering to read that a few industry giants absolutely refused notions of change – for example Kodak and the advent of digital cameras and Blockbuster and the popularity of streaming videos.  Oops! So if your company is pushing back on new ideas, know you’re not alone. It happens everywhere, even to the best of us.

And yet, mainstream media is constantly reporting about evolving global competition and the expansion of domestic regulations affecting labor-intensive operations here in the U.S.   So while companies are resistant to change, we live in a world where change is inevitable.

These contemporary issues driving change as it pertains to succeeding in today’s U.S. labor market are:

1. The cost and administrative burden associated with labor compliance is dramatically increasing.

According to “Examining Trends in Regulatory Specialist Employment,” there has been a 122 percent increase in the number of private sector compliance staff.  “To further expand the regulatory state, the Affordable Care Act and the Dodd-Frank will produce more than 500 regulations in the near future, forcing the private sector to continue expanding its heightened compliance structure.”

2. Employment litigation has increased significantly over the last decade.

The Equal Employment Opportunity Commission reports a 140% increase in the number of lawsuits filed by the agency alleging employment discrimination in the last ten years.  They also report that the number of harassment claims has more than doubled during the past three years. 

To add to an overall increase in employment litigation cases, there has also been an increase in the number of cases involving co-employment or “permatemps.”  The most publicized case resulted in a 
Microsoft settlement of $97 million.

3. US manufacturing is positioned for a comeback as many of the advantages that once fueled China’s dominance are now becoming unsustainable.

“[T]he era of cheap China may be drawing to a close,” the Economist explains. “Costs are soaring, starting in the coastal provinces where factories have historically clustered. Increases in land prices, environmental and safety regulations and taxes all play a part. The biggest factor, though, is labor.”

Chinese labor costs have surged 20 percent per year for the past four years, and its most productive industrial centers are increasingly losing the ability to draw cheaper labor from inland China, while corruption and piracy are also degrading profitability. Labor costs for blue-collar workers in Guangdong, a key manufacturing region, rose by 12 percent a year from 2002 to 2009, while in Shanghai costs rose by 14 percent.  Source: ThomasNet

In short, we live in an era of increased labor regulations and global competition.  The pressure to adapt to a new economic climate may mean changing your labor strategy. In part two of our change management series, we will explore internal and external options for identifying the best next generation labor strategies.

The 2014 Economy

By David Hair

As executives and operations managers head into 4th quarter, they traditionally rely on economic indicators to predict sales, costs and decide whether or not to hire or layoff workers.  Things are a bit more complicated as we look ahead to 2014.

As reported by Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp, “the only thing that can be said with certainty is that we are in a period of extreme uncertainty. Consumer confidence hit a 30-year low as consumer spending hit a record high for the year.   Wall Street is announcing record corporate profits while Main Street is suffering.”

With such uncertainty, how do you plan to respond to unpredictable shifts in consumer demand and the effect these shifts have on your workforce?

The 2014 Solution
An emerging labor solution pioneered by nGROUP performance partners, known as Third Party Human Logistics (3PHL) is a proven model that works seamlessly WITHIN production, distribution and warehouse facilities.

Like staffing agencies, nGROUP provides a flexible workforce.  The 3PHL model also provides engineering process and labor performance management, guarantees a reduction in labor costs, mitigates co-employment issues, and solves ObamaCare and other workforce compliance issues.

To determine if the 3PHL model is the flexible solution you need in today’s uncertain economy, complete this online diagnostic.  There is no charge, no obligation – just insight.

What to Consider When Renegotiating Your Staffing Agency Contract

By David Hair

For many companies, third quarter is a time to review contract renewals for the upcoming year.  In the case of labor-intensive operations, this often means renegotiating staffing agency contracts.  If you are heading to the negotiating table, here are some things to consider BEFORE you sign.

As reported in “Business Management Daily” the number of lawsuits involving flexible workers is rising.  Such lawsuits are resulting more and more against both the staffing agency and the hosting employer.  From issues such as background checks to liability coverage, there are crucial elements that need to be included in your staffing contract.  Leaving the details up to the agency can often result in your company lacking necessary legal protection. Here are some things to consider:

  1. Spell out what background checks should cover
  2. Include an indemnification clause
  3. Attach your organization to the agency’s liability coverage
  4. Guarantee that you can review the results of background checks
  5. Make sure you can terminate the contract with 30 days notice
  6. Comply with federal and state laws.

Beyond negotiating staffing contracts that include these six elements, you should also think about an emerging labor solution pioneered by nGROUP performance partners, known as Third Party Human Logistics (3PHL).   Like staffing agencies, nGROUP provides a flexible workforce.  That’s where the similarities stop.  This 3PHL model also provides engineering process and labor performance management, guarantees a reduction in labor costs, mitigates co-employment issues, and solves ObamaCare and other workforce compliance issues.

nGROUP also provides outcome-based production and pricing guarantees AND adds a double layer of legal protection since nGROUP contracts with the staffing company, and manages the line production.

Major companies throughout the US have recently been moving away from a direct contract with staffing firms after evaluating the impressive cost improvement and legal advantages of a 3PHL firm, like nGROUP performance partners.

For more information and case studies, please visit www.ngroup.biz or call 877-202-9677.

Playing The Clock

By Jim Rossini

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If you are a golf fan chances are you tuned into the TPC Sawgrass Tournament a couple of weeks ago.  Moreover, you witnessed one of the most epic meltdowns in golf history.  Heading to the iconic 17th hole, Sergio was tied with Tiger Woods.

The 17th hole is a par three with a picturesque island green, meaning the tee shot must land on the green – avoiding the ultimate, non-negotiable hazard – water.   Considering the pin was front-right, Sergio made the decision to play the 17th aggressively and “go for it.”  Simply put, he came up short –two times.  On the 18th hole, once again Sergio found himself in water.  Ouch!

One can surmise that Sergio let his eagerness to beat Tiger override his decision-making abilities.  After all, TPC Sawgrass is a legendary course with legendary hazards.  Taking unnecessary chances on such a course is professional suicide.

 In my business, I see companies take similar risks way too often.  The solution, much like Sergio, is to be aware of and respect the hazards that prevent success.   In my world, one of the most prolific hazards is the mismanagement of time and attendance systems.

Many of the facilities that we partner with have time and attendance systems already in place.  Such systems may be a corporate method or system put in place by staffing companies.  Regardless of who “owns” the system, it is the lack of management and oversight that can create a hazard. So what are the common hazards of time and attendance systems?

“Playing the Clock”

 Most systems will roundup a worker’s time.  For example, if an individual clocks out at 8:44, their ending time is 8:45.  If they clock in after 8:45, their ending time is 9:00.  Guess what happens at 8:44?   The area around the time clock gets really crowded while workers wait one minute and one second so they can get paid for 15 extra minutes.  Plug-in any amount of numbers you want, but when you do the math the “playing the clock” game can have a significant impact on labor costs.

Manual Edits
One of the biggest areas of fraud when it comes to time and attendance is manual edits.  This takes place when the floor or shift supervisor simply takes the necessary steps to override an automated system and inaccurately enter hours that accurately record a worker’s hours.

“Buddy Punching”
When one worker simply punches in and out for another employee it’s called “buddy punching.”  After all if there is a name for it, it has to be commonplace.  What is not common is consistent oversight as to ensure that “buddy punching” doesn’t take place.

At nGROUP we pioneered the Third Party Human Logistics model.  3PHL goes beyond outsourcing work cells and processes – it involves the training, management, and measurement of the human factor. When it comes to the potential hazards of time and attendance systems, we take fraud and misrepresentation out of play through consistent oversight and accurate data capture.

As a trusted partner we are experts at avoiding labor and process related hazards.  As a result, our clients reap financial, performance, legal, and financial benefits.

From Pit Row to Production Floor: How To Make Seconds Count

By David Hair

It takes perfect timing to win the Indianapolis 500.  The fastest Indy500 was completed in 1990 by Arie Luyendyk  with an average speed of 185.981  mph.  In 1997 Luyendyk won the Indy500 again by .570 seconds.  This year the 97th Indy500 takes place on May 26 and as the most legendary automotive race in the world.  It’s certainly every racer’s dream to chug milk in victory lane and take home the Borg-Warner Trophy.

While the trophy and milk are traditions unique to the Indy500, the sport of racing has evolved technologically. Their success is dependent upon tactful preparation but their ability to outperform the competition can now be measured by a fraction of a second.

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Much like the sport of racing, performance in today’s global marketplace means that manufacturing and distribution companies throughout the U.S. must adopt strategic plans that account for every detail of their operations.   If every step, every second, and every work cell of an operation affects the outcome of a company’s performance, what contemporary strategy and technological advantage provides the competitive edge?

The solution for winning in business is the same as winning the Indy500 – make every second count.  Companies must develop an experienced team, build strategic partnerships. Technology and processes need to be predictable, precise, and measurable.  Above all, the strategy MUST provide the desired outcome.  In the case of companies involving labor-intensive operations, one such strategy is Third Party Human Logistics (3PHL).

While 3PL providers are more common in the marketplace, nGROUP performance partners created the 3PHL business model.  The training, management, and measurement of the HUMAN factor makes a significant difference in outcome.  As efficiency experts, nGROUP helps companies achieve high levels of performance – meeting or exceeding production and quality standards.   To learn more about nGROUP’s 3PHL model and how this model makes every second count, visit www.ngroup.biz.

Top 3 Innovative Labor Strategies for Top Line Business Growth

By David Hair

Last month I cited a number of revised tax laws that make it increasingly difficult for labor intensive businesses to maintain or increase their profits.  The Affordable Care Act alone places additional costs and compliance burdens on businesses with 50 or more employees.  Adding to these burdens is the increased litigation and costs associated with labor unions and “permatemp” employment.  So the question becomes, how can your company stay in compliance, reduce or maintain labor costs, AND increase your top line? Here’s a look at three strategic labor solutions and why they may be a viable solution for your company.

1. Reduce Your Workforce
Reducing your workforce is the “solution” that many political and business leaders quickly cited in response to the ACA’s “50 or more” mandate.

A reduced workforce lacks the ability to keep up with demand, which saves cost on the ACA, but hinders top line growth.  Peak demands often require a workforce that well exceeds 50 workers.  Simply put, if your business grows or if you have peak production season, you need a larger workforce.  So beyond reducing hours or limiting your workforce to 49 employees, you may want to consider splitting your company into smaller entities.

recent article in Entrepreneur Magazine noted that during a recent webinar on Obamacare, Bob Graboyes of the NFIB Research Foundation “advised participants that entrepreneurs may not be able to avoid the large-employer fines by splitting their companies into smaller, separate businesses. Even an entrepreneur with completely separate companies may find his or her workforces combined for the purposes of the health law.”

With the law being unclear as to how the government will treat multiple companies with the same owner, reducing your workforce or splitting your company into smaller, separate businesses is a very limited, short-sided approach to begin finding real solutions.

2. Hire Independent Contractors
In a recent article, “Data Spotlight: Independent Contractors on the Rise,” Jeffrey Eisenach, an economist at George Mason University cited that, “the number of so-called independent contractors is up by more than 1 million since 2005.”  Independent Contractors work on a contract basis, file a 1099-MISC with the IRS and don’t draw the benefits of a full-time employee. When a service provider is classified as an independent contractor, the company is no longer liable for:

  • State workers compensation
  • Federal unemployment tax
  • Federal employment tax
  • State income tax withholding
  • Employer Civil Liability (wrongful discharge or entitling the employee to benefits plans)
  • Minimum Wage Laws

While avoiding these liabilities sounds like a winning solution, any HR Director can quickly point out that the legal requirements of hiring independent contractors is limited in scope. As noted on the popular website, LegalZoom, “Should employers incorrectly define a worker as an independent contractor, they may find themselves liable for past taxes including FICA and federal unemployment tax.”

In relation to labor-intensive operations, retaining Independent Contractors is particularly limited in its ability to provide solutions.  Typical distribution and plant workers do not fit the legal definition of an Independent Contractor.

3.  Partner with a 3PHL
Third Party Human Logistics provides labor and process management to its customers. 3PHL is an innovative on-site, outsourced business model whereas the 3PHL provides services for a fixed cost, lower than a firm is currently spending.  3PHL firms specialize in labor solutions for manufacturing and distribution facilities. As a third party, they employ or contract for the workforce – removing the burdens and risks of labor issues from the client. 3PHL providers work on-site.

Unlike traditional temporary labor providers, 3PHLs are experts in engineering labor standards and production efficiencies and incorporate best-in-class practices. It is the responsibility of 3PHL firms to provide expert analysis and oversight of the production systems that provide a safe, efficient, and compliant-based operation that meets quality standards.

Additionally, 3PHL firms are financially accountable for delivering efficiency by means of process improvements and human (workforce) improvements, making a firm more competitive in speed, quality, cost and capacity.

When it comes to meeting compliance, remaining profitable, and increasing the top line, the 3PHL model is the all-in-one solution.  Your operational costs are reduced and your labor related risks are reduced as well. While this model produces the same flexibility as temporary or staffing companies, it goes a step further by providing your company with efficiency experts that guarantee quality throughput on a fixed Cost Per Unit (CPU) basis.  With a 3PHL, you get reduced cost, reduced liability, increased throughput, and increased quality.

Baseball and Business

By Jim Zimmerman

If you are a baseball fan chances are you’ve seen the 2011 movie Moneyball, starring Brad Pitt.  The movie focuses on the rise of advanced statistical analysis in Major League Baseball and is based on the Oakland’s A’s 2002 season when they won 103 games.

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As a baseball fan and an operations officer, one line from the movie struck me.  “It’s about using stats to reread them [players].  We’ll find the value of players that nobody else can see. People are over looked for a variety of biased reasons and perceived flaws . . .  Mathematics cuts straight through that.”

The movie went on to show how the most minute statistics determine the best probability to win a game, a matchup, and an at bat.  Stats indicate how batters match up versus a specific pitcher, in a specific park, or in a very specific situation.

In business we can learn from baseball.  Too often companies let “meaningless” information slip through their fingertips.  As Carly Fiorina (former President of Hewlett-Packard Co) once said, “The goal is to transform data into information, and information into insight.”

Just like pitchers, fielders, and batters, a company’s workforce is positioned to succeed or not each day.  If aligned differently, could we better react to that influx of orders, or improve productivity, or reduce overtime, or hit a game winning grand slam?

If we don’t capture the data and evaluate the results against previous situations, we will never know or understand the cause and effect of big changes, much less the small tweaks and minor alignment variations. So how do we collect and apply the infinite volume of information we have around us? A system.

The system is a process that takes inputs and generates outputs, takes actions and ends with results.  As you change the actions, you get differing results.  Pinch-hitting a batter during a preferred scenario gives a team a higher probability of the desired outcome.  Changing our workforce configuration, placing various individuals in certain positions, or insinuating different behaviors can create entirely unique conclusions.

Play ball!

The Unique Conditions of 2013 Will Affect Your Company’s 2023 Prosperity

By David Hair

In 2012, an Aberdeen Group study1 surveyed 156 multi-national enterprises with 91 headquartered in the US and 65 headquartered internationally.  The purpose of the study was to identify best practices in labor management, warehouse, and store operations.  Below is a graph that summarizes the top pressures facing such companies.

It’s no surprise that the top pressures are the executive directives to decrease operating expenses and reduce staff, while also increasing service levels.

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Adding to this top pressure, U.S. corporations and individuals are facing 13 tax increases in 2013.  While the 2% increase in the Social Security tax has gained the most attention in recent months, there are additional taxes on business investment and the elimination of corporate tax deductions – most of which are associated with the passage of the Affordable Care Act.  Regardless of whether you personally or politically agree with such increases, the fact remains. When the cost of business increases, measures must be taken to off-set the rising costs.  The question becomes, what are you going to do about it?

To neutralize the tax impact, relook at innovative and proven labor strategies. As reported in the same Aberdeen Study, best-in-class companies have already universally incorporated strategic actions to increase labor efficiency and better manage workforce productivity. Such strategies include:

  1. Streamlining Processes and Systems
  2. Increasing Automation
  3. Bolstering Labor Productivity

No one wants to pay higher taxes or lose valuable investment deductions, but when you are faced with circumstances beyond your control, the logical rebuttal is to incorporate an aggressive approach to cost reduction while improving quality and reducing risk. While the economic landscape in the U.S. has become challenging to say the least, we at nGROUP know that our innovative performance model delivers immediate and long-lasting results.

It solves both the cost improvement and increased service level issues.  It closes the gap between your corporate initiatives and what actually happens on the production floor.  This new performance partnership model keeps production in your facility for local quality control, but without new investment in additional automation.  As a result, this model immediately reduces cost and risk, while increasing throughput.  Average savings on labor costs range from 10-40% within the first year. Perhaps the most significant benefit is it also provides a double-layer of protection from labor risk, as in this business model, the 3-party provides the labor.

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1 “Analyst Insight: Best Practices in Labor Management for Manufacturing, Warehouse and Store Operations: US and International Trends,” The Aberdeen Group,