Why Most Corporate Labor Initiatives Fail

Rahkeem Morris
April 22, 2019

We frequently hear from frontline managers frustrated about some new corporate initiative. The general tone acknowledges that the initiative is relevant and important; the complaint is usually one of three things:

  1. The goal is unrealistic: “Corporate just doesn’t understand our operations
  2. The initiative is unsupported: “Oh, great, another thing to add to my already-burnt-out managers’ responsibilities.”
  3. The initiative is ambiguous: “Yes, I’d love to reduce our overtime numbers. But when I ask for guidance or best practices from corporate, I hear crickets.”

The annoyance creeps in from both sides. Executives are unhappy when goals aren’t met, when initiatives die slow and silent deaths, when there is no discernible performance improvement year after year. And managers are unhappy when executives fly in to toss yet another new project on the site team.

We’ve witnessed quite a few labor-focused initiatives for large corporate employers: How do we reduce unnecessary overtime costs? How do we increase compliance with meal break laws? How do we increase schedule stability for our employees?

Labor initiatives are among the hardest: Not only are the problems deep and human, solutions often have unanticipated second-order consequences. Reduce absenteeism, and you might increase turnover. Reduce overtime, and you might decrease employee engagement. It’s enough for executives to throw their hands up and wonder how anyone can actually make progress.

In witnessing and assisting with these labor-focused initiatives, we’ve found three main reasons why many corporate initiatives die with a whimper. In our next post on this subject, we highlight three solutions for how companies can overcome these main problems.

Problem #1: Failure to diagnose root causes

When you diagnose overtime as the root cause, you’re faced with further complexity defining why overtime is currently happening. After all, it may be the result of many factors:

  • Understaffing
  • Excessive absenteeism, with last-minute shifts covered at overtime
  • Ineffective time clock policing
  • Poor scheduling practices
  • Management use of overtime as an incentive or reward

The list goes on. Yet, if you whisper that you’re facing an overtime problem, you’ll be instantaneously hoarded by a bevvy of vendors selling magical overtime elixirs. Or your team will use a few site visits to confirm existing hypotheses (“of course it’s an availability problem!” or “of course it’s a manager problem!”)... and off you go.

Any labor problem is almost certainly complex, with a broad set of root causes. Jumping directly to an assumed cause will backfire, leading to our second problem:

Problem #2: Blanket targets, blanket (or no) action plans

Saying, “We’re going to reduce overtime to 2% of hours,” is a great goal, but provides no action plan to get there. Saying the same thing but with a blanket action plan (“by increasing manager accountability”) is modestly better. And with a clear action plan (“by focusing on last-minute call-outs”) is modestly better.

However, given Problem #1, even the clearest action plan will almost certainly fail to deliver the intended results. Why? Two reasons:

  • The breadth of root causes means even a well-designed action plan won’t solve the full problem your business faces
  • Each site faces different root causes in different proportions; the best action plan for one site will not help other sites

One way executives we've spoken with avoids the messy details is the "Goal + Incentive": Corporate sets the goal (<2% OT) and then gives managers some sort of bonus incentive tied to achieving the goal. This way, managers have the financial incentive to figure it out themselves.

There are many problems with the "Goal + Incentive" model, however. Without a clear roadmap or behavior guide, managers and supervisors may compromise other important things to achieve the corporate goal. The worst case here is that safety and legal compliance fall to the wayside while corporate initiatives get pursued. The most likely case is that other site-level priorities are sacrificed, with unintended (even unpredictable) consequences.

Yet we forge ahead anyway, because some action is better than none, right?

Problem #3: Adding to already overburdened managers

Let’s assume you’ve identified all relevant root causes and drawn up a concrete action plan. Why might your initiative still fail?

Quite simply, your managers don’t have the time to follow your action plans! Even if you’re following a well-honed implementation process like 4DX, it’s often hard for your managers to continue to pile on initiative after initiative. They play along for a while, but, as the weeks go by, other priorities arise (or worse, poorly scoped initiatives from other corporate departments) and your brilliantly scoped initiative is no longer on their radar.

If this diagnosis rings true for your company, you’ll want to check out our next blog post on a new way to design corporate labor initiatives to overcome these challenges, radically increasing your chances for success.

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