Operational Excellence in Human Resources

Published on July 30, 2013

Filed under: Business Processes

Operational Excellence in Human Resources

By Kevin J. Duggan

Published by Business Excellence

Operational Excellence is not a continuous improvement initiative, nor a lean program where we seek out waste and eliminate it. It is very tangible and real, and has practical definition that applies to everyone in the organization: Operational Excellence is when, “Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.” But Operational Excellence is not easy to achieve. It requires a designed, robust flow and a good deal of education on how that flow works, what normal flow is, and what abnormal flow is.

In manufacturing, the application of Operational Excellence is easy to understand. We design how a product flows through the factory and then create strong visual indicators to tell each employee how the flow between processes works, where to get their work from, where to send their work, and most importantly, what to work on next. These visuals also communicate whether the flow is normal or abnormal. When the flow begins to become abnormal, the employees working in the flow take corrective steps to fix the problem before the flow breaks down. This makes the entire flow “self-healing”, meaning the flow can be fixed by the employees themselves, without the need for management intervention.

But a typical office environment is different. Office employees are normally “shared resources”, meaning they must fulfill many different roles and responsibilities throughout the day. Unlike manufacturing, it is also unusual for office employees to repeat the same task over and over again. In Human Resources (HR), for example, HR professionals spend time on benefit packages, resolving employee disputes, hiring new employees, and much more. But Operational Excellence can still be achieved.

Guaranteed Response Time: The Key for Hiring New Employees
For organizations that need to hire new employees to continue to grow and capture new opportunities in the marketplace, the charge largely rests with HR departments. And HR teams know that turnaround time to applicants is critical. However, due to the number of people and steps involved in the hiring process, response times to candidates can suffer, and the company can risk losing quality candidates.

That’s because the need for hiring first has to be approved by other managers in the business and then reviewed by HR, which places an advertisement. Résumés come in, which HR filters then presents to the relevant managers for review. Eventually, candidates are contacted and arrive for their first round of interviews. But in most organizations, there is no defined lead time, or “response time”, from the time the hiring need is approved until candidates walk in the door. Instead, it all depends on the individuals involved and how they decide what to work on. In fact, workflow in the office often varies so greatly, a meeting is required to get things prioritized and on track.

Operational Excellence enables a better way. By achieving Operational Excellence in the office, HR professionals can create short, robust guaranteed turnaround times (GTTs) by flowing work through part-time processing cells along direct, physical pathways. The result is that HR employees will always know if they are on time, enhancing their ability to recruit top job candidates from the field of applicants.

How to Achieve Operational Excellence in HR
The first step in creating Operational Excellence in HR is to create a process family matrix, in which we identify all the different activities for which HR is responsible for completing and attempt to leverage similarities among them to create flow. We typically aim for an 80 percent similarity in process content to form what’s known as a process family, and we create one flow in the office per process family.

Suppose that after examining all the activities in HR, we determine that we can create a process family for hiring new employees that consists of the following activities (while there are many more activities involved in hiring a new employee than just the ones listed here, all of these steps must be completed along the way as new talent is sought):

1. Request for new hire.
2. HR review.
3. Place advertisement.
4. Seek out internal company resources for compensation review.
5. Receive and filter résumés.
6. Contact interested candidates.
7. Schedule interviews.
8. Conduct interviews.
9. Schedule and conduct additional rounds of interviews as need.
10. Offer a candidate a position.

Once we have identified all the activities that must be completed to hire a new employee, the typical continuous improvement inclination at this point would be to identify the biggest problem we face, brainstorm ways to fix it, implement a decision, and then measure and monitor the results. When something else goes wrong or needs improvement, we repeat this process again, eliminating the biggest source of pain to our business at the moment. However, this approach only leads to the optimization of certain areas of the flow at the expense of the flow overall, virtually guaranteeing that the customer (who, in this case, is the job candidate) does not experience any benefit.

However, Operational Excellence is not achieved through brainstorming. It is achieved by applying a specific set of guidelines geared toward designing flow in the office:

1. Takt or takt capability
2. Continuous flow
3. First In, First Out (FIFO)
4. Workflow cycles
5. Integration events
6. Standard work
7. Single-point sequence initialization
8. Pitch
9. Changes in demand

We need to apply these design guidelines to our flow in the order seen above. For example, we would determine the takt or takt capability of the flow first, then see where we can do continuous flow (or more likely part-time continuous flow, since office employees are shared resources), then see where we can implement FIFO lanes and create workflow cycles, and so on.

The successful application of these guidelines ends up creating a robust guaranteed turnaround time for each process in the flow and even the entirety of the flow. That enables us to tell job candidates, with certainty, that we will contact them within a certain number of days, ensuring timely responses to them. Not only does the guaranteed turnaround time give us a greater chance of recruiting top talent, it eliminates the need to only go through the hiring process more than once to find someone qualified for the job.

Operational Excellence in HR: A Practical Example
Because of the complexity of real-life HR environments, demonstrating how an entire end-to-end flow would work with workflow cycles, part-time continuous flow cells, and single-point sequence initialization would be a significant undertaking.

To keep things simpler, we’ll instead look at how these concepts might apply to a section of the new-hire process family, specifically, the following activities numbered four through six above that take place during the hiring process:

4. Seek out internal company resources for compensation review.
5. Receive and filter résumés.
6. Contact interested candidates.

If we were to draw this section of the flow in something called a value stream map, it would look similar to what we find in Figure 1.1.

Figure 1.1

In Figure 1.1, the “I” found within the triangles represents inventory present in the form of files or requests. The “D” represents delays, specifically those that are externally caused. If there were any that were internally caused, we would represent those with a “W.” The cross-hatch symbol indicates that each of these processes are shared resources, meaning they are responsible for completing many different activities on any given day.

It should be noted again that Figure 1.1 represents only one small piece of the overall flow. There would be additional processes before and after this segment that we would also have to handle, but for now, let’s look at what we might do with this part of the flow.

At this point in the flow, we can see that HR needs to seek out internal company resources to begin assembling the details of various compensation packages. For example, finance might need to determine the range of salaries to be offered, while accounting might be needed to examine the cash flow impact these different salaries would have on the business.

As we can see from Figure 1.1, the main problem with the flow is that there is no way to guarantee how long it will take for the work to move from process to process. In short, there is no guaranteed turnaround time for the flow (or guaranteed response time), and this leads to internal disruptions in the organization that increase the likelihood of rework being needed and also the amount of time it takes to hire someone.

By applying our office design guidelines to achieve Operational Excellence, we can eliminate these issues. One of the ways we can synchronize the timing of the flow between all of these processes is by creating part-time continuous flow cells. Based on the takt or takt capability of the flow, employees would come together during workflow cycles in pre-determined locations to flow work in a “complete one, move one” fashion. Each employee would know what to work on next simply by working on whatever came to him or her in the flow. In other words, they would work on whatever the person before them in the flow gave to them. (See Figure 1.2)

Figure 1.2

In Figure 1.2, the first two processes in the flow are part-time continuous flow cell. Employees get together at preset days and times to flow work (the specific timing is seen directly above each process and is governed by the established workflow cycle). At the first workflow cycle, representatives from HR, Finance, and Accounting would come together to review various compensation packages.

Work would then flow in a First In, First Out (or FIFO) lane from the first part-time continuous flow processing cell to the next one, were résumés are received and filtered. The FIFO lane ensures that the sequence of work is preserved from process to process, which helps create the guaranteed turnaround time for our flow since no individual piece of work will ever “jump” another. The segment of the flow shown in figure 1.2 has a guaranteed turnaround time of four days, meaning everyone in the organization can expect the work to have flowed through these three processes within four days, eliminating the need for meetings, status check-ups, and additional interruptions in the flow.

At the “Receive and Filter Résumés” process, a workflow cycle brings together employees from HR, Design, Engineering, and Project Management, all of which are needed to vet candidate résumés. During the workflow cycle at this process, résumés would be evaluated by representatives from the different departments present. Selected résumés would then flow via FIFO lanes to the “Contact Candidates” process, where they would be used to get in touch with interested and qualified job candidates.

Preserving the sequence of work, flowing it between processes in FIFO lanes, and using workflow cycles to flow work at preset times on preset days guarantees that each piece of the flow will have completed its work by a pre-determine time. This guaranteed turnaround time would even exist for each individual process in the flow because the sequence of work does not change and we know how long it takes to complete the work at each process.

In addition to the guidelines highlighted here, we also need to make sure we apply the rest of our guidelines, too, like standard work, pitch, integration events (if applicable), and systems to deal with changes in demand. Going forward, we would want to extrapolate the methodology described here to every other process in the flow, connecting each one with FIFO lanes, creating workflow cycles to regulate the flow of work, and even creating part-time continuous flow cells where applicable.

Reduced Time Yields Results
Applying our design guidelines to the office creates an environment where every employee can tell if the office is on time. It creates an environment where, “Each and every employee can see the flow of value to the customer, and fix that flow before it breaks down.” By striving for and achieving Operational Excellence in the office, HR departments can dramatically reduce the amount of time it takes to hire new employees, ensuring that their ability to recruit top talent in a minimal amount of time – and support the growth of the business well into the future.