The rapid decline in crude oil prices has led many oil and gas organizations to initiate layoffs as a major part of their adaptive strategy.
Layoffs Are Not Always The Answer
The first article in this series highlighted layoff related risks and costs that leaders often ignore or underestimate.
- diverted management time and attention
- loss of expertise
- reduced productivity and loyalty
- increased expense when hiring and training new employees as the business recovers
Finding Alternatives to Layoffs
The second article listed alternatives that reduce layoff related risks and costs, including:
- cutting contractors and bringing back retirees
- initiating a hiring freeze and offering incentives for voluntary separation
- reducing work weeks or hours through job sharing
- expanding telecommuting and virtual teams
- “inplacing” valued talent to other departments or organizational units.
Mobilizing Teams Around Productivity Improvement
Another way to reduce the need for layoffs is to focus the entire organization on the need for operational efficiency. When crude prices are high the normal emphasis is on growth and production. When crude oil prices fall the focus needs to shift to productivity.
In simple terms, production is defined by the organization’s outputs alone while productivity reflects the ratio of outputs to inputs. Productivity can be increased by either increasing output while maintaining inputs, or by maintaining output while decreasing inputs.
There are any number of sophisticated systems designed to increase process efficiency and effectiveness. Some of the better known ones include:
Toyota Production System (TPS)
TPS is an integrated approach to operations improvement that emphasizes the role of work teams in improving the flow of work. Focus is on consistent processes to reduce waste and continuously improve. Ford, GM and Chrysler have implemented their versions of TPS.
Lean Manufacturing or simply “Lean”
Lean builds upon TPS principles but expands the role of management and focuses on eliminating waste through value stream mapping, Five S, Kanban, etc. A wide variety of organizations use Lean.
Examples include manufacturers such as Nike and Caterpillar as well as service organizations such as Wipro (software services) and Jefferson Pilot Financial,
Developed by Motorola and widely used in GE, Six Sigma is a measurement oriented approach to removing defects and variability in business processes.
For Success, Get Employees Involved
These systems do engage the skilled front line workers in the process of identifying and implementing operational improvements. However, they emphasize the disciplined use of rigorous tools and processes or leader-led initiatives.
Many organizations have attempted to implement these systems without having the management commitment, leadership skills or organizational norms needed to make them work effectively. The results are often disappointing.
By way of contrast, it is often more effective to involve a broad base of the organization in improving productivity by using simple but structured methods.
The basic steps to engage the organization in improving productivity are:
1. Provide information on the economics of the overall business and each work group that is involved.
2. Help work teams identify the resources (materials, tools and equipment, capital, labor, etc.) that are consumed when producing their product or service.
3. Quickly teach teams the problem solving methods needed to improve work processes, reduce resource requirements and increase productivity.
4. Focus early on “Quick wins” to show improvement and gain momentum.
5. Track results and recognize and reward improvements.
Advantages of Employee Involvement
Increasing productivity through employee involvement has many advantages, including:
- Front line employees are closest to the work processes and can see where resources are lost, delays introduced and opportunities missed.
- Taking concrete, focused action reduces the cynicism and victim mentality that is often present during downturns.
- Employees are less resistant to changes in the workplace when they help identify and implement the changes.
- Supervisors and managers grow their skill set and become more effective as coaches and facilitators.
EKT Interactive offers workshops and training for leaders and work groups that support front line approaches to productivity improvement.
For Work Groups and Project Teams
- Mapping and Improving Work Processes
- Problem Solving Tools and Techniques
- Planning and Implementing Projects
- Initiating and Implementing Change
- Coaching for Improvement
- Facilitating Team Meetings
- Growing Commitment and Accountability
About the Author
Alec Schrader is a Senior Associate with EKT Interactive in Houston, TX.
He conducts leadership training and facilitates workshops that help improve team and organizational performance.
He retired from Shell Oil Company after 35 years in the Oil and Gas business. He holds a PhD in Industrial and Organizational Psychology.