Management Insight Quarterly
Vol 1, Issue 3 October 2003
In This Issue
"Just the Facts, Maam" - Change Management with Teeth
Deciding what to improve, is often a smaller issue than the effort it will take to get the company to accept and implement the change. Change management techniques usually focus on the 'soft' issues of communications and incentives. However, new business intelligence tools allow business managers to focus debate away from feelings and onto facts.
Workplace Harassment: Myths and Facts
Operating on myths about harassment law can expose a manager to legal action. Learn the facts behind the most common harassment myths.
Assumptions to Avoid when Setting Safety Stock Levels
Underlying inventory management theory and software are some key assumptions that can produce less than optimal results when calculating inventory levels. Understand the practical implications of these assumptions so you know when to take the 'optimal' calculations with a grain of salt.
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"Just the Facts, Maam" - Change Management with Teeth
Build support for change with facts not feelings
Brian Springman, Springman Consulting LLC
The most frustrating thing about being a consultant is the multi-million dollar improvement suggestion that sits on the shelf. The same frustration exists for business managers. Improvement opportunities abound but with bare bones staff and an uncertain economy, companies only have the willpower to undertake the most obvious projects. Even these high ROI projects can take months of debate and analysis to get off the drawing board.
Traditional change management techniques don't offer the typical manager trying to champion an improvement much in concrete ammunition. The typical suggestions are: form a cross-functional steering committee, communicate the change early and often, work the halls to build support, etc. While these are necessary steps, the effectiveness of the effort usually boils down to the project manager's personal charisma and leadership skills. The typical suggestions are simply a framework which depend on a lot of personality traits rather than an obective tool.
Business Intelligence Tools (BI) can provide this concrete ammunition. Business Intelligence is the use of data warehouses and reporting tools to allow managers to do independent ad hoc analysis on their company's data. A manager searching for improvement opportunities or trying to support a project, can analyze company data many ways and down to minute detail. For example, in the course of a few minutes a manager could investigate the total profitability for a specific product to a specific customer. Or, rank profitability across customers or products. Or, break down costs associated with the least profitable sales.
BI tools are going to transform change management because they are fast and they are inexpensive. BI tools are so fast, companies no long have to make gut decisions because the time to do additional analysis would be prohibitive. Detailed ad hoc analysis can be done in a matter of minutes. BI tools are inexpensive, most companies already own the needed software but have not fully implemented it. In the case of Microsoft, SQL Server licenses come with all the software needed to build a BI solution with no additional licensing fee. BI tools are also inexpensive because they don't require highly paid technical resources to build reports.
Business Intelligence Tools drive change management in the following ways:
No more instinct battles - When the instincts of two manager's conflict the most senior will always win. The problem is, the most senior executive is probably furthest removed from the issue at hand. Often, the concerns of the lower level manager directly involved in the issue are not clearly heard because the manager does not have strong enough facts to counter the senior executive's instincts. BI tools allow the presentation of detailed analysis to satisfy the senior executive and allow quick response to follow-up questions. A concern raised in a meeting can be answered almost immediately.
Democratization of data - In a BI tool the data is made available to all managers to review and analyze. Therefore, it is available to anyone to make their case. Interestingly, it makes it possible for the manager to effectively critique consultant's analysis. It used to be that so much time and energy was spent in aggregating the data that there was no way for managers to critique a consultant's findings. Now a manager can utilize the same BI tool used by the consultants to point out overlooked exceptions or poor assumptions in their recommendations.
Defrock the data high priests - Every organization has a few individuals who are the only ones capable of getting certain data from their systems. Thus, managers needing this data become dependent on these individuals, these 'data high priests'. It's not uncommon for the data high priests to stall or place a low priority on requests which they don't deem important or they see as threats to their position. A BI tool cuts the data high priests out of the loop. Managers can access the data directly for themselves.
Doubting Thomases can do their own analysis - With the existence of a BI tool, the Doubting Thomases can be turned into allies. The most effective way to deal with a Doubting Thomas is to let them see for themselves. Letting them use the BI tool to do their own analysis, will either bring them to the same conclusion or raise valid concerns. In either case, the Doubting Thomases are converted into serving a constructive rather than destructive role.
As BI tools are more fully implemented, managers will have a very powerful tool in order to drive change. With the facts in-hand to make better management decisions, companies should be able to focus their limited capital budgets on the most deserving projects, not the projects simply championed by the most charismatic or senior executive. So next time you find youself making an important decision based on instinct, ask yourself why you're not using a BI tool.
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Workplace Harassment: Myths and Facts
A guide to avoiding some common myths about harassment law.
Jan Whitford, The Whitford Group
Harassment is a complicated subject full of gray areas. Oftentimes, managers and supervisors make assumptions based on what makes sense to them or based on information they receive from colleagues as to what constitutes harassment and what an employer’s obligations are regarding harassment. Such assumptions and well-meaning advice can be erroneous.
Here we take a look at a baker’s dozen of the more common myths regarding workplace harassment—and set the record straight by stating the applicable facts.
Myth #1: Sexual harassment is the only form of unlawful harassment.
Fact: As a type of discrimination, workplace harassment may be based on any of the protections of federal and state law, including gender, race, religion, ethnicity, age, disability, marital status, or sexual orientation.
Myth #2: Sexual harassment laws protect only women in the workplace.
Fact: Sexual harassment is not confined to females. Men have brought charges of sexual harassment in increasing numbers when they are faced with hostile or offensive sexual behavior. The number of sexual harassment complaints filed by men with the Equal Employment Opportunity Commission (EEOC) quadrupled in the last decade, and in 2000, men accounted for 13.6% of all sexual harassment complaints filed with the EEOC. The U.S. Supreme Court also ruled in a 1998 case that men are protected from harassing behavior.
Myth #3: Sexual harassment only occurs when a power holder threatens job consequences for refusing a sexual advance.
Fact: Any unwelcome conduct--verbal, physical, or visual--that has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment is harassment.
Myth #4: A single, isolated act can never violate workplace harassment laws.
Fact: While persistent, pervasive behavior is usually required before a work environment becomes legally hostile, a single severe physical act, threatening behavior, or use of extremely offensive words may suffice.
Myth #5: An employee whose conduct creates an offensive environment for a coworker must intend to offend for it to be considered harassment.
Fact: A claim for hostile environment sexual harassment does not require proof of intent to harass. Many people accused of harassment genuinely believe their behavior is "funny," "cute," or "attractive." Some even believe it is welcome by everyone. What the harasser thinks, believes, or intends is wholly irrelevant in determining whether sexual harassment has occurred. What matters is the victim’s reasonable perception of what is offensive, intimidating, hostile, or abusive. Not surprisingly, many cases focus on the perceptions and reactions of the parties. Individuals have different thresholds of tolerance for behavior sexual in nature. The same standard applies to racial, religious, ethnic, age, and disability-based harassment.
Myth #6: An employee who is offended or intimidated by a coworker's conduct must first tell the offender that the behavior is unwelcome before asking for assistance from an administrator or the HR department.
Fact: The U.S. Supreme Court made it clear in two cases in 1998 that employers must have internal complaint procedures that provide a harassed employee "multiple avenues" to complain. Many state courts have followed these precedents. The law requires employer policies provide several ways for employees to request unwelcome harassing behavior be stopped, including complaints to managers, supervisors, and/or the HR department. While employees may choose to discuss their discomfort with a coworker's behavior with him or her in a professional manner, they are not required to do so.
An effective, accessible method for employees to complain about harassment in the workplace, coupled with immediate and appropriate corrective action when harassment occurs can support a successful defense to claims of supervisory harassment.
Myth #7: A manager has no obligation to take action unless there is a formal complaint by an affected employee.
Fact: A manager or supervisor who becomes aware of harassing conduct must act, even though no formal complaint has been made or if the victim withdraws the complaint or leaves the work environment. The harasser may engage in similar conduct affecting other individuals in the workplace.
Myth #8: Policies that prohibit retaliation should protect only the person making a complaint for workplace harassment.
Fact: Federal and many state laws absolutely prohibit reprisals or retaliation against any person who acts in good faith during, or in connection with, the investigation and resolution of a workplace harassment complaint. Every person who participates in an employer’s internal investigation is protected from all forms of retaliation. This includes the person reporting the incident, the person whose conduct is the subject of the report, and any co-worker or administrator who may have knowledge of the events or issues being investigated.
Myth #9: Only managers and supervisors with power over employees can violate laws prohibiting retaliation.
Fact: While retaliation occurs with direct reprisals by management, co-workers' behavior may also violate the law and company policy, including such behavior as ostracism, threats, taunts, or abusive gossip.
Myth #10: A company is not responsible for the conduct of vendors, customers, or other non-employees if they create an offensive or abusive environment for employees.
Fact: Both federal and state laws define workplace harassment as conduct that unreasonably interferes with an employee’s ability to perform the job. In maintaining a harassment-free work environment, employers are, therefore, responsible for the inappropriate verbal, physical, or visual (graphic) conduct of employees, supervisors, managers, or others with whom their employees come into contact in their work environment. This includes visitors, vendors and suppliers, and even customers or clients.
Myth #11: Temporary employees and independent contractors are not protected by workplace harassment standards.
Fact: All individuals are protected by legal standards and company policies while performing work for, or on behalf of, a company.
Myth #12: A business can never be liable for workplace harassment in the absence of proof of tangible job consequences for the affected employee.
Fact: According to the twin 1998 rulings by the Supreme Court, in some situations simply working in an environment that is offensive, intimidating, or hostile is sufficient to require a report and appropriate corrective action. It is not necessary for the employee to demonstrate that the conduct has actually resulted in tangible loss of pay, benefits, or status.
Myth #13: The purpose of workplace harassment policies and disciplinary actions is to punish employees who behave inappropriately at work.
Fact: While the effect of discipline may be punishing, the purpose of policies is to create a work atmosphere where every employee is comfortable raising his or her concern with an administrator or the HR department so that it can be promptly addressed. According to the Supreme Court, when a supervisor's harassment results in a tangible job action that constitutes a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits, the employer may be automatically liable. This is so even if the employee has not complained to higher management. However, when no tangible job action is undertaken by a harassing supervisor, the employer may still be legally responsible unless it had an enforceable policy and internal complaint procedure, trained supervisors on harassment prevention, and the victim unreasonably failed to use the internal complaint procedure.
The 1998 Supreme Court ruled[i] that a Company must be able to demonstrate “good faith efforts” to avoid discrimination, violation of employee rights and the proper handling of complaints of discrimination, in particular sexual harassment. The Supreme Court was very specific about what it considers “good faith efforts” in sexual harassment cases (as well as other types of harassment). An employer must have all of the following in place or the Supreme Court (as well as the EEOC) regards the employer as having “no defense” even though the “Company” had no knowledge of the harassment.
A clear, detailed policy that specifically outlines the organization’s position against harassment of any type, especially sexual harassment;
A complaint procedure that encourages employees to come forward with harassment complaints and guarantees no retaliation;
An investigative procedure that protects the privacy interests of both the alleged victim and the accused offender to the extent possible; and
Perform periodic management and supervisory training and have employee awareness programs communicating anti-discrimination policies and grievance procedures.
[i] 1998 Supreme Court rulings referenced are Burlington Industries & the city of Boca Raton.
The above information was summarized from an article written by Patricia S. Eyres an experienced attorney with more than 18 years' experience defending businesses in the courtroom.
Date posted: 8/11/03
Jan Whitford is the founder of The Whitford Group a management consulting firm based in Charlotte NC specializing in employment law compliance. The Whitford Group can help your company be in a position to have an affirmative defense in the face of sexual harassment or other harassment and discrimination charges and law suits by bringing you into compliance with employment law, including Supreme and other Court rulings.
Jan Whitford, MSL, SPHR
Management Consultant
The Whitford Group
(704) 905-7749 Phone
TheWhitfordGroup@aol.com
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Assumptions to Avoid when Setting Safety Stock Levels
The practical side of inventory management theory
Brian Springman, Springman Consulting LLC
While we'd all like to believe there is a simple formula to improve our business, we continually find that the clean theories are only a guide and that the devils in the details are always mucking things up. The same is true for setting inventory safety stocks. It would be nice to believe some software developed by PhD's could churn out unquestionable inventory targets, but luckily for us humans, the machines are not ready yet to handle all the possible exceptions. Here are some exceptions to keep in mind as you set inventory levels for your business.
First, let's get on the same page about safety stock. Safety stock makes up a small percentage of a company's inventories. It is usually far surpassed by working inventory. Safety stock is only the amount of inventory needed to cover demand above and beyond the forecast during the replenishemnt lead time. For example, if it takes a week for your warehouse to get product delivered from your plant and your forecast for a week is 100 units, then safety stock is the amount you carry in case demand during the week exceeds 100 units. Safety stock is important because it drives your customer service levels. Safety stock is what prevents 'stock outs' and lost orders. So if you want to fill customer orders 99% of the time, then you'd better have the right level of safety stock.
Detail 1 - Safety stock calculations may not apply to all inventories. Safety stock calculations are based on statistics. Statistical models are good predictors of future events when things are consistent and don't fluctuate wildly. In the case of items with sporadic demand, the use of safety stock may not be the best inventory policy. For example, if you have an item that is ordered only four times a year and the forecast is off by $10K in value, to solve this problem with safety stock will mean carrying an extra $10K in inventory all year long. Explore other ways to solve this problem without safety stock: encourage customers to place smaller and more frequent orders, require more advanced notification from customers, produce to the forecast and then fill any variance with backorders, etc.
Detail 2 - Don't base safety stock calculations on unusual events. In the course of doing business, there will be unusual events which will cause demand to spike and forecasts to be inaccurate. For example, a competitor's plant goes down so you are flooded with orders. If you include the data from these events in your safety stock calculations, you will overestimate the amount of safety stock needed based on rare events that may never occur again. This means you will be carrying extra inventory for years in case your competitor's plant goes down again. Before finalizing your inventory, you should review your variance data for outliers. The easiest way to do this, is to investigate any data points that are more than three standard deviations from the mean.
Detail 3 - Match the forecast period to the replenishment lead time. Unfortunately, in the real world the forecast frequency rarely matches the replenishment lead time. Safety stock calculations are comparing the variance of demand to forecast so you need to make sure you're dealing with a common time period. There are two cases: the replenishment lead time (RLT) is longer than the forecast period or the RLT is shorter than the forecast period. If the replenishment lead time is longer, you can align the time period by multiplying the variance (actual demand to forecast for the common periods) by the square root of the multiples of the time periods. For example, if the RLT equals four weeks and the forecasts are weekly, then multiply the difference between one week's demand and forecast by two (sq root of 4) to get the expected variance over four weeks.
If the RLT is shorter than the forecast period (monthly forecast and one week RLT) then break the forecast down to match the RLT time period. If you have an ERP or production planning system, it is probably already breaking the forecast down to smaller time periods. It is best to use the same algorithm. For example, it could be evenly distributing the one month forecast across four weeks.
Detail 4 - Review whether your demand to forecast variances are normally distributed. The most common calculation of safety stock assumes a normal distribution of your demand variance to forecast. This may not be the case, and operating under this assumption will result in either excess inventory or low service levels. You can utilize a different distribution function, but the distribution function may vary from item to item making it very difficult to manage. The best course is to calculate safety stocks using discrete probabilities. Using discrete probabilities does not assume any distribution function and simply groups historical variances into ranges to calculate the probability of each range. For example, variances of 5-10 units had a probability of 20%. Discrete probabilities are more difficult to calculate, so you may want to calculate a few inventory levels both ways (normal distribution and discrete probability) to determine if the error caused is worth the additional calculation effort.
Hopefully, these details will help you to set your safety stocks as optimally as possible.
Feedback is Appreciated
Management Insight Quarterly is edited by Brian Springman of Springman Consulting LLC. It is distributed quarterly by post and e-mail. Subscriptions are free. Submission of articles is appreciated and encouraged.
Please forward comments and inquiries to the editor at:
Brian Springman
5301 Kuykendall Rd
Charlotte, NC 28270
bspringman@carolina.rr.com
(704) 847 - 7595
