ASQ - Team and Workplace Excellence Forum

June 1999

100 Percent Waterproof

Taking Teams To A Higher Level

Making The Soft Stuff Hard

The King Of Leadership Programs

Merger And Acquisition: The Six Deadly Sins

Enough Is Enough

by Peter Block

Tick Tock, Your Life Is Like A Clock
by Greg Smith

Sorry We're Closed: Diary Of A Shutdown

Brief Cases
Business News Briefs

Views for a Change


Site Unseen

Views For A Change

James Harrington Responds

Staff group activities can be classified into three categories. They are:
· Real-Value-Added (RVA): RVA activities are activities that, when viewed by the end customers, are required to provide the output that the customer is expecting.
· Business-Value-Added (BVA): BVA activities are activities that are required to run the business but have no value from the customer's vantagepoint.
· No-Value-Added (NVA): NVA activities are activities that add no value to the output and are not required to keep the business operating. For example: storage, checks and balances, inventory, etc.

Most organization's staff functions' NVA and BVA activities represent the huge "hidden office" that accounts for over 70 percent of all the staffs' resources. It should be the objective of every organization to eliminate NVA activities and minimize BVA activities. The question is, how do you go about doing this?

The objective of all organizations should be to produce an output that the customer will value to the point that they are willing to purchase the items/services at a price that allows the organization to pay its employees a fair salary and its investors dividends that are better than they can obtain from investing their money in a different organization. The objective of nonprofit organizations is the same as for-profit organizations except they don't need to pay dividends. It is easy to see that only activities defined as RVA support the basic objective.

If you're going to try to bring about cultural shifts in your staff organizations, there are six things that you should do.

1. The first thing you need to do is stop calling them staff groups. Call them what they are- service groups. Their purpose for existence is to provide services that would be considered value-added by the external customer if the external customer had the choice of paying for them or not. Try changing their names to reflect their mission of providing services, not control. For example:

· Change Quality Assurance to Quality Services
· Change Information Systems to Information Services
· Change the Controller to Financial Services

2. Then each service group or natural work team (NWT) should develop a mission statement that reflects a service orientation. This should be reviewed and approved by the next level manager. This process starts with the executive team (the president and the individuals reporting to him or her). Most executive teams fail to realize that they don't produce sellable output and that they need to service those that do.

3. Once a NWT has agreed to a mission statement that defines what type of services it is responsible for providing, the NWT should define the activities that it performs and compare them to the mission statement to ensure that they are directly related. Those that are not directly related should be reassigned or dropped, or the mission statement needs to change.

4. Then for each activity that consumes 10 percent or more of the NWT resources, the NWT should flowchart the activity, classifying each task as RVA, BVA, or NVA. The NWT should now define the processing cost and cycle time related to each task. This will enable the NWT to calculate the total cost and cycle time related to the activity as it moves through its environment. This allows the NWT to define the poor-quality cost related to each activity. (BVA and NVA activities are all classified as poor-quality cost.) The NWT should now calculate the cost of resources consumed per unit/item processed. This provides the NWT with effectiveness measurements for the activity.

5. The NWT then defines the customer that receives the output from each activity. The NWT then works with each customer to define if this is a service they need and would consider a good value based upon what it would cost to provide the input to them. In many organizations, we request that the area receiving the service define the value proposition for their inputs. Those services that don't provide at least a 3 to 1 return on investment are candidates for elimination. If the output is Value-Added (Real or Business), the NWT and the customer define how the quality of the output should be measured and what the required performance standards are for that output. This establishes service-level efficiency measurements for the NWT. When you have changed the name of the NWT, developed a new mission statement and established service-related measurements, the behavior patterns of the people who make up the NWT will begin the change.

6. Then the organization needs to alter its reward systems to reflect the desired behaviors. This reinforcement is necessary to sustain the desired behaviors. If the behavioral patterns remain constant for a minimum of five years the organization's culture will change.

This six-step approach is called area activity analysis (AAA) and has worked effectively in many organizations, both big and small. In fact, I recommend that the first activity in establishing a team focus is not to teach the team the seven basic problem-solving tools but to conduct an area activity analysis to determine whether real improvement opportunities exist.

Making a change in a staff group's culture is as easy as 1, 2, 3…4, 5, 6.

1. Change the name
2. Develop service-oriented mission
3. Define the activity that the NWT is responsible for
4. Develop effectiveness measurements
5. Develop service-related measurements and performance standards
6. Alter the reward systems

John Runyan Responds

June '99 News for a Change | Email Editor
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