Coming out of the COVID-19 pandemic, there has been a challenge for organizations to do more with less. One area of discipline that can help organizations with this challenge is LEAN Management, which has been around for years. Even if you are not a LEAN Six Sigma black belt, you can apply simple LEAN concepts to your compliance program (and even wider to any operational department) to realize efficiencies where you and your teams can work smarter, not harder.
LEAN Basics
It is important to start at the beginning to understand the concepts that LEAN thinking is grounded in – Respect for People and Continuous Improvement.
Respect for People
Respect for people and teamwork are critical to building a basic structure where LEAN can thrive. Working with others begins with mutual respect. This mutual respect is achieved through relationship building and building your internal brand as reliable, trustworthy, and a team player. You build those relationships by getting to know other people, having coffee, going to lunch, asking supervisors who you should get to know, and figuring your way around your workplace both with internal and external individuals.
To solve any problem effectively, you will need to bring others to the table with you. Think through who would be best on the team. To solve problems effectively, the team should be diverse in terms of people, backgrounds, who are involved in the process, and what variety of experience is needed. This diverse group of people will bring about the best outcomes. Always remember to broaden your reach.
Respect for people is a critical element for any compliance leader to master. Compliance leadership should strive to achieve resolution for its “customers,” whether internal or external, instead of just providing the answer of “no.” You want to connect to your customers, ask valuable questions, and get them to a “yes” answer. They may not be able to do what they want the way they want to, but you put them first and strive to get the best answer for them and your organization. You then are seen as the trusted compliance advisor.
Continuous Improvement
Once you have created a safe space internally and have a starting point of understanding, you can jump into continuous improvement. Every organization and person can always improve. When thinking about continuous improvement it is best to first consider “immediate” or “urgent” hurdles.
To begin the process, you need to create a space where you can challenge the current state of things. In LEAN culture, it is common to begin and continue to ask “why” in a respectful manner to get to the bottom of why a particular issue is occurring. Critical to this process is making sure that the group who is problem solving comes to the table understanding that it is not the time to place blame, but is a safe place to share what happened (just the facts) and ideas for how to solve problems. Depending on the urgency, some organizations implement this step as an immediate meeting where the issue needing improvement is discussed as close to the incident as possible.
One of the things that I should interject here is that when an individual does do something that is in violation of the law or policy, then enforcing your standards fairly is an important piece of the seven elements of an effective compliance program. I learned early on in my career from a very knowledgeable HR executive to always remember that you are dealing with people and to speak from the heart. You need to treat people fairly, and individuals make mistakes. That does not mean that you need to come at this step from a place of emotion, but you do need to treat people as you would like to be treated. Also, remember that part of this element is incentivizing doing the right thing. Remember to celebrate the teams that come together to solve problems and take the time to applaud your wins!
Competition can be a tool that can be utilized to make problem-solving “fun” in a way. You can give more than one group the challenge to come up with solutions and use a “carrot” at the end to award the group with the best ideas. Groups who are most effective and efficient shoot for long-term goals that set an anything is possible attitude. When anything is possible, the sky is the limit.
With continuous improvement, the job is never done. There is always an opportunity to improve, even if you have what would be the best practices in place. The ultimate goal is to be at a place with the specific issue where others are looking to you for ideas on how to improve. Steps to continuously improve include benchmarking other entities, breaking through, implementing a just-in-time attitude, and unearthing problems so that they do not fester or grow bigger.
Benchmarking allows you to look to other entities or departments, both internal and external, inside or outside of your industry, to benchmark best practices to see how the best of the best are performing. You can then use these ideas and look at what else could be done to go even further than the best.
Once you know the benchmarks, go a step further to break through. Understand that there are no restrictions. Your goals should be to dream big with no boundaries to what you can do.
A just-in-time approach eliminates waste and creates efficiency and effectiveness in processes. For example, a just-in-time attitude comes in handy when thinking about ordering supplies. If you are like most places, you have a supply cabinet and, in some cases, a supply room. Have you ever thought about the fact that the supplies that just sit in those areas and never get used are wasteful? What about an entire room of wasted space? These things are small, but they represent time and money. Another way to approach supplies is to order them as needed so that you know they are going to get used, there is no wasted space to store them, and that you are not just wasting money on items that you do not need and now need to store.
To continuously improve, you need to be able to unearth where the problems are. When you have a culture of unearthing problems without assigning blame, you can deal with issues as they happen with lasting effects. If problems are hidden or solved on the surface, they are bound to come up again and be passed along to the next step in the process. As a Compliance Officer, I have seen time and again where something is “fixed” and the same thing comes up two years later. When you dig in, you find that the original countermeasure did not fix the problem, and you may also find that there are workarounds that individuals have put into place to attempt to solve the problem. Workarounds only last so long. A permanent fix where everyone is aware of the solution is the best-case scenario.
Have you ever been faced with a problem where you thought, “I know exactly what is going on at every step and how to fix it”? I think we all have done this a time or two, and we get to the end and find out that we really did not understand the process that was happening in order to offer appropriate solutions. One of the best tools that I learned at Toyota was the concept of Genchi Genbutsu. Genchi Genbutsu means “real location, real thing.” When you go to the source where the issue occurs, you can see, hear, and experience what is happening to form better suggestions of countermeasures.
Tools to Use for Continuous Improvement
To know the amount of improvement you have made, you need to be able to measure your progress using Key Performance Indicators (KPIs). When you know your goal and know where you are going, you can measure your progress to get there and make changes as needed to reach the ultimate goal. Your executive leadership and board may not always know what you are talking about when you talk about your compliance program, but they will be able to understand where you are at and the progress that you are making when you show KPIs and the impact that you have made.
Make sure your KPIs are SMART like your targets. They need to be Specific, Measurable, Achievable, Relevant, and Timely (SMART). Measurement seems to be the one that people may struggle with. Any process can be measured, whether that is by data, time, process steps, or total amount of something to do. For example, when developing a KPI for policy and procedures, you can count how many you have on your list to create or update for the year and can measure your progress by the number completed and the numbers left to do when you report out.
To effectively and efficiently fix problems where they occur, your culture should empower people and teams to “stop the line” and speak up when something is wrong or when there is an error in the process. Think of this as similar to when you ride a bus and you “pull the line” to alert the bus driver that you are approaching your stop and need to get off the bus. This ability to stop the line allows the error to be identified and fixed immediately, and not passed on to others in the process, increasing the problems. Communication is key to an effective and efficient compliance program, and it is key to ensure that people know your goals and how to speak up. Reporting issues without the fear of retaliation should be a clear part of your culture and a pillar of your compliance program.
Once you have put a process in place, write it down step by step. This allows you to walk through the process, identify opportunities for improvement, and eliminate waste in the future. Standard Operating Procedures (SOP) can be utilized as a tool to train new employees clearly on processes so that everyone is processing work the same way. Encourage the new employee to add steps, change steps, and identify possible ways to improve processes. When a new update is identified, everyone should update their process for effectiveness and efficiency.
A concept in LEAN that allows for continuous improvement is the “5 S’s” – Sort, Set in Order, Shine, Standardize, and Sustain. All four of these concepts in action ensure clarity, which eliminates waste and increases efficiency. Examples of the ways that 5 S is implemented are organization of your desk space ensuring that everything has a place and appropriate items are labeled, in open office spaces where desks are shared, sharing work tools (i.e. stapler, scissors, etc.) as well, and ensuring that you have a supply space that is organized and labeled so that you know what you have and what you need to order. The idea of 5 S allows us to keep things organized to eliminate waste.
When you have an issue that needs to be looked at for improvement, another tool is to use the Toyota Business Practice (TBP) eight-step Problem-Solving. This is a step-by-step process to review and break down the problem to identify root causes and develop lasting countermeasures (shown in detail later in this article). Some organizations utilize the Plan, Do, Check, Act, or PDCA process as another way to implement continuous improvement. This is a more concise process. The point with either Toyota eight-step Problem-Solving or PDCA is to show that the process is never complete and that it is in a consistent state of learning and growing.
Eight-Step Problem-Solving
Eight-step problem-solving is a method to solve problems that are at the heart of LEAN thinking. This problem-solving method is complex; however, it helps to really dig into where problems are and to encourage broad, creative thinking to implement long-lasting results that do not need later workarounds or additional review.
Step one of the eight-step problem-solving is to clarify the problem. In clarifying the problem, you should ask yourself or your group, “What is the problem that you are attempting to solve”? For instance, this may be how do we achieve a higher training completion rate? Once you identify the problem, you want to identify what the ultimate goal would be if there were no barriers. Dream big! In our example our ultimate goal might be to launch training across the organization with total completion within a month by all employees. You will then want to understand the current situation and what you want to achieve to identify the gap between the two. If you currently have 80% completion after launch with two months to take training, then you know that you have some work to do to get to your ultimate goal of 100%. Quantify the gap to visualize and measure the achievement of your steps to the ultimate goal. In our example, your gap would be the 20% of non-completion rates and the length of time to complete training.
Step two would be to break down the problem step by step to understand the current process. This allows you to identify where the process may have breakdowns or is not as efficient as it needs to be. Since you cannot solve everything all at once, you want to identify the prioritized problem at the point of occurrence within the overall process so that you can focus on what issue to solve first.
Once you know where you want to focus, step three is to develop a target for improvement. When you set your target, make a commitment to the problem you are solving with concrete, measurable targets. Earlier in the article, I referenced SMART targets and that concept should be implemented here. For the example used, you may want to set a 5% improvement in training within the next year. This will be the KPI that you can report to your leadership to show potential improvement towards this project.
The fourth step in this process is to perform a root cause analysis. – This is where asking the five “whys” comes in. You want to take the prioritized problem at the point of occurrence and ask why the problem is happening. You want to continue asking why until you feel like you have broken down the issue as completely as possible. A tip I learned from a supervisor at Toyota is to first work through the whys, and when you are done with that, start from the bottom (i.e., your ultimate root causes) and go back up the chain by saying “therefore” in between each item. If it is a smooth transition both ways, then you have developed appropriate root cause analysis thinking.
Once you identify the root cause of the issue, develop a list of possible countermeasures that could be deployed to solve the problem. At this step, you may be hesitant to include those items that you think will not be possible for one reason or another, but resist the urge to leave out possibilities. Once you have the list of possible countermeasures, you then assess each one by evaluating the cost, time, and other factors that may impact the execution of each potential item. Based on the evaluation, you can select one or two countermeasures to implement.
Now you are ready to go. Implement the countermeasure(s) quickly and begin to measure the results. Once you implement countermeasures and measure your results, you will want to reflect and evaluate your accomplishments. Review the key performance indicators to determine if you are making strides towards your ultimate goal. If the numbers do not show progress or progress as quickly as needed, then the countermeasure put in place may not be working as you intended.
If the countermeasure is working, you will want to continue in the same direction for maximum effect. You can do this by standardizing the updated process across your department and organization. You standardize by documenting a Standard Operating Procedure (SOP) that shows step by step the new or updated process. Share this standardization and update the process across the board and move on to the next problem to solve. Standardization also allows you to identify gaps and other opportunities for improvement in the overall process either immediately or over time.
Once you have standardized any process, you should consider these items as potential areas for audit or monitoring to check the efficacy of the data and to ensure that the solution is working. You may want to include these items in the annual compliance risk assessment to make the determination as to when these solutions should be audited.
Conclusion
Compliance Officers and other executives today are experiencing increased pressure to do more with less, increase revenue, and be more competitive. The goal is to make LEAN part of your compliance culture so that your employees understand that becoming more effective and efficient drives increased revenue, allowing you to be more competitive and to be able to operate when budgets are decreasing. LEAN allows you to get more work done with fewer people and resources by eliminating waste across your department. Your organization will see your value and your effort to utilize company resources effectively and efficiently.
I would like to thank Toyota Motor Engineering & Manufacturing North America and specifically my direct supervisors, Gennie Bridwell and Rusty Dawson, for working with me to develop my understanding of Toyota and LEAN manufacturing. Toyota took the time to fully develop me as an employee, a supervisor and a professional. All concepts in this article come directly from my internal learning at Toyota and the application of the concepts to my work there and my positions afterward. For a full understanding of LEAN, a good resource is the book The Toyota Way by Jeffrey Liker (2004).
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