Is Laying People off Really Anti-Lean?

I think you’re confusing a few issues here.

The main thing we preach about with Lean is not letting productivity improvements, that come about through Lean, drive layoffs. Or, we don’t let employee suggestions drive layoffs.

Allowing employment levels to drop through attrition (not hiring to backfill) isn’t as bad on morale as doing active layoffs. It’s unlikely that 1600 people left the company through attrition, in the above case, in seven years.

Falling demand is another issue altogether. If demand has fallen, you might have no choice but to layoff people — the alternative might be going out of business and EVERYONE losing their jobs. If you have a plan for gaining that business back (not just hope), then you might keep the “excess labor” in the short term if you can make use of those folks soon. This is easier to do if you’re a private company than public.

To answer the question in your post title, laying people off isn’t necessarily “anti-Lean.” There’s times where we have to make tough choices since we are ultimately running businesses more so than we’re implementing Lean.

That said, it’s ideal to NOT be in the position to have to do layoffs due to volume declines. I’d say that’s management’s responsibility to help chart out steady growth, as Toyota has.

If you lay off people off after lean improvements you may end any hope of future improvement. but keeping people on the payroll for the sake of a happy work place makes no business sense to me at all either. you are running a business after all, right?

hi nice post, i enjoyed it

I worked at a company that institutef ” Lean” for the specific purpose of increasing stockholder capital productivity as much as possible.

This means their ideal company has one employee.

Attrition has been very high after layoffs.

I have never seen morale lower anywhere else.

The key to this is previous management did not make effective business decisions, Board fired him or her. The Lean process identified the mis management with solid data to drive smart business decisions. I have been in this situation and it was a painful experience but the people who eventually lost there jobs understood it was previous poor management decisions that drove the down sizing not the Lean methodology.

It’s simple really; you have to follow and implement the guiding business principles and match the right number of people to get the jobs done. You can explain to the remaining folks that it is the company’s mantra to ‘take better care of fewer people’. Then, go about doing so. Reward the remaining employees for high levels of performance; ie based on a set ROA figure or some other measureable outcome.

I agree with Russell’s statement. It wasn’t the lean improvements that led to the lay offs but the poor management prior to them. I worked for a company that had a similar situation with having a lot of employees due to the increase in demand, but then when demand suddenly dropped, we were left with a lot of people doing nothing. The organization ended up laying a lot of employees off just to need a lot more the following year for a drastic increase in demand. I wonder if the amount spend on lay offs, hiring & training was more or less than it would have been to keep them on…

In a sense, layoffs are anti-lean in that they work against lean because people will see lean improvements lead to improved efficiency and a decrease in the number of people needed thereby putting their job at risk. However, rather than going out and hiring a bunch of people when demand spikes, if lean is implemented, the company wouldn’t face such a dilemma. Lay offs should be a last resort for drops in demand…

I can certainly sympathize with the ideas that layoffs eventually lead to the death of many lean efforts. I have lived to see far to many times in both public as well as private organizations. This stems from the fact that senior management often hears about lean as a tool to cost reduction (better profits) and thereby benefits the company (as well as their own pockets via bonuses) with little regard for those who are reduced or eliminated (bad for their pockets).

Lean as much as it is a tool for improvement also carries a great deal of social obligation (respect for people). Much of senior management would do well to learn and respect this tenant. In organizations where I have seen people redeployed to increase improvement instead of laid off, the rate of return and increase in customer value (speed, quality and value) took off in huge double digit returns. This then put the burden on the sales force (who in the past always complained about late orders, poor quality and other reasons why they couldn’t sell more) to go out and do their jobs and actually create an find customers. Nothing could be so satisfying for a “manufacturing guy” then to shift the burden back to the sales side of the equation and take the heat off “operations”.

More organizations need to adopt the culture, but like our own ethnic backgrounds, there are reasons, beliefs, rituals and celebrations that are centuries old that are passed from generation to generation. So it needs to be with Lean, we need to understand this culture and use it to better ourselves instead as a weapon that is inflicted upon others.

Under such condition it can be a duty of human resource manager to develop the skills of employees and refer their names for other organisations or consultancy services.