27 May 2009
“Results” become non-negotiable for today’s managers. Using the ValueTree™ as our reference point (http://www.myvaluetree.com/TheValueTree.pdf) we see why managers are pushed to drive up earnings while simultaneously driving down invested capital. This leads people to make decisions that optimize their immediate situation while increasing risk to the total system. The NTSB’s analysis of Air Midwest Flight 5481 dramatically demonstrates this point; http://www.ntsb.gov/events/2003/AM5481/default.htm

The plane crashed as a result of three deviations to the aircraft maintenance manual. The case study reminds us that the work must be central to our thinking and the team of people doing the work must be seen as integral to success. USAirways contracted with Air Midwest for flights who contracted maintenance work to Raytheon Aerospace (majority owned by Veritas Capital) who sub-contracted labor from SMART, Inc. On the actual shop floor where the maintenance work was conducted, Air Midwest, SMART and Raytheon were represented to varying degrees. The financial climate drives objectives that become common for each business. Managers make decisions that optimize their results, but when it comes to the shop floor where three companies are present to do the work, the work can get compromised as seen on Flight 5481.

I see two trends emerging that need our immediate attention. First, personnel in shop management positions are rotating every two years. The technical complexities and the centrality of the work and workers become underappreciated and decisions to reduce costs and capital get made with fewer rigors. Second, the outsourcing of work to reduce headcount and labor costs is being pushed by senior managers. However, the new work of contracts, contract management, service level agreements and auditing is not seen as necessary work to add. Trust becomes the basis for cross-company working relationships. Trust that certifications are current. Trust that workers are trained and performance is managed. Trust that inspections are conducted according to the manuals. Trust that workers have sufficient work instructions and help solving problems. Trust that everyone is available at the right time to do their piece of the work. Trust that someone is accountable for the final results.

Our businesses demand attention to detail, a relentless focus on quality, clarity of command and a unified team of people doing the work. Financial pressures will continue to drive new and creative responses and we must be ready to provide steady guidance and counsel so that quality is never compromised.

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Alden B. 1-860-748-3780