Interview Tom Foster (Management Skills Blog) – Part 6 of 6

Q6 Dr Lisa: Are there some basic questions our clients can use to assess the “time span of discretion” for an individual?

Tom: In his Time Span Handbook, Elliott Jaques outlines ten questions for a diagnostic interview. While most diagnostics, related to employment, center around psychological or "behavioral" metrics, the Time Span interview measures the Time Span of the individual.

These questions ask the subject to describe the manner and frequency they are given task assignments, the manner and frequency their work is reviewed, and whether they work on multiple assignments at the same time.

While most psychometric assessments require psychological interpretation, the responses to the Time Span diagnostic can be easily understood by any competent manager.

That completes our interview of Tom Foster. If you have questions or comments, please enter them below by clicking on the Comments hot link.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

My reknown and praised Goldratt Theory of Constraints overview, Maximizing Profitability, is now available through live streaming video. Watch from your desk!

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): January 20, 2009 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.scienceofbusiness.com/events/viable-vision-maximizing-profitability-events.aspx. You can register by fax or on-line.

Interview Tom Foster (Management Skills Blog) – Part 5 of 6

Q5 Dr Lisa: Could you explain about the “felt fair pay” curve for the time span of discretion that is universal across cultures, currencies and continents?

Tom: Felt-Fair-Pay is probably the most controversial, yet scientifically documented finding in the research of Elliott Jaques. Here's the way it works.

Ask someone what they feel is Fair Pay for the work they perform. This question is a little tricky, because, as you might imagine, there are many influences on this response. First, you have to discuss the work. Next, you have to get the person away from their co-workers, away from their spouse and then ask, "What do you feel is Fair Pay for the work you perform?"

When Jaques plotted the points based on Time Span and Fair Pay, they produced a curve that was reproduced in study after study over a period of 12 years in multiple countries under different currencies. Uncanny.

The implication for this finding? If I can determine the Time Span of the role, I can calculate the Felt-Fair-Pay.

..to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): December 1, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Interview Tom Foster (Management Skills Blog) – Part 4 of 6

Q4 Dr Lisa: We find that incentives or bonus programs only useful in a small number of cases. Are management incentives or bonus compensations schemes ever appropriate in your opinion?

Tom: I hear managers, especially in the sales arena decry that their best salespeople are only motivated by money and the best system is straight commission.

Okay. Let's say, I buy that. Let's say there are people who are only motivated, or mostly motivated by money. And what's more, let's say I need that kind of person on my sales force. I want someone who is willing to work three extra hours every day, make that extra sales call, do that last pitch.

Have you ever met a salesperson like that? I have. And what impact do they have on the rest of the organization? My experience is that they are prima donnas and wreak havoc on the rest of my people and my company culture.

BUT I NEED THEM.

Okay, I need them. But they are not an employee. They are not a team player. They are self-employed. Willing to put their compensation at risk, eat what they kill. So pay them like they are self-employed, on a 1099. And keep them the hell away from the rest of my people..

..to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): December 1, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/.
You can register by fax or on-line.

Next Mafia Offer Boot Camp -- is December 2, 3, 4 2008 in Denver.

Interview Tom Foster (Management Skills Blog) – Part 3 of 6

Q3 Dr Lisa: As you know we recommend against most incentive or bonus programs. How does the prevailing belief by Western management that incentives are effective relate to the “best efforts” contract?

Tom: Yes, incentives are effective. They are most effective at creating mistrust in the organization. They violate the implicit contract between the employer and employee. Incentives lay the groundwork for counterproductive relationships and sow the seeds for deceit. Incentives pit manager against employee in a game of underperformance, where the carrot rules.

Even worse, managers use incentives to abdicate their responsibility to hold people accountable for performance. Managers throw up their hands and say, "the only way I can hold my people accountable is to withhold part of their pay until they meet the performance standard." If that is the only strategy a manager has to hold people accountable, then I think I need a different manager.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): December 1, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Next Mafia Offer Boot Camp -- is December 2, 3, 4 2008 in Denver.

Interview Tom Foster (Management Skills Blog) – Part 2 of 6

Dr Lisa: Tom in your speech you mention the “best efforts” contract that exists between an employer and employee. Could you elaborate on what that is?

Tom:
There is a widely held notion that to get the best efforts from a person, management must engage in a game of trickery, using manipulation, incentives and bonuses to extract the last ounce of willingness from their employees. The notion concludes that employees are basically lazy and to get their best efforts, management must withhold some benefit or some money until that best effort is observed.

Under that notion, the contract reads like this: For your salary or standard compensation, I expect you to show up and trust that you will deliver less than your best effort. At the end, after you have delivered less than your best effort, if I can get you to deliver a little more than less your best effort, I am willing to pay you more.

How silly is that?

It does nothing more than breed mistrust and sets up an incentive system that employees will manipulate. It is a destructive game that tears at the fabric of most intentional cultures.

Now, try this contract: For your salary, or standard compensation, I expect you to show up and trust that you will do your best.

That's it, no games, no manipulation.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): December 1, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Next Mafia Offer Boot Camp -- November 10, 11, 12 2008 in Denver.

Interview Tom Foster (Management Skills Blog) – Part 1 of 6

We'll take a break from our POOGI series for this interesting 6 part interview of Tom Foster.
----------------------------------------------------------

I had a chance to interview Tom Foster. Tom is a consultant and TEC Chair in Florida. Brad heard Tom speak, checked out his blog and then I ended up speaking to his group. During our trip to Florida we had dinner with Tom and discussed a number of interesting topics. Here are some questions we asked Tom and his answers.

Dr Lisa: Tom, as you know, we do results based consulting. We only get paid if our clients increase their profits. So it is very important for our clients and for us to have the right people on the bus. Many times we come into a company to find that the right people are no where near the bus.

You have found that “time span of discretion” is a better indicator than the various personality tests of how successful a person will be in a job. Please explain more about that.

Tom: Each of us has an innate ability to deal with various levels of complexity in our world. This is a finding by Elliott Jaques in his research on how organizations get work done. This innate ability to deal with complexity is measured in terms of "Time Span." While many companies employ various instruments (psychometric testing) to determine what Elliott describes as "temperament," the correlation of any given temperament to success in the position is hardly more than random.

The real key to determine whether a person has the capability to be successful, in a given role, lies in matching the Time Span of the role with the Time Span of the person.

To do this requires some understanding of Time Span and how to measure it. For now, I will leave you with the definition:

Time Span is the length of time that a person can work into the future, without direction, using their own discretionary judgment.

Leverage - Theory of Constraints

Tom Foster of ManagementBlog.org interviewed me about Goldratt's Theory of Constraints. Here is the fifth installment:

--- Start interview
TF: If we do a good job of placing our constraint in our highest cost, most scarce resource, what is the next most difficult thing to do?

Dr. Lisa: Leverage it. Leverage is a great word but we are not taught how to do this or what we are taught is simply wrong.

The book The Goal by Eliyahu M Goldratt describes leverage as exploiting the constraint and subordinating everything else based on the point where you have placed the constraint.

Exploit means not wasting any of what you have. Subordinating is often the harder one because it requires the non-constraint silos to fall in line by supporting the exploitation of the constraint. This is difficult because each silo is usually measured and rewarded on its individual results.
---End interview

That completes Tom's interview of me.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Hard to Get - Theory of Constraints

Tom Foster of ManagementBlog.org interviewed me about Goldratt's Theory of Constraints. Here is the fourth installment:

--- Start interview
TF: If the idea is to strategically select your bottleneck (constraint), what are the characteristics you look for in a strategic constraint?

Dr. Lisa: A strategic constraint should be relatively hard to get more of, compared to a non-constraint. Hard to get more of, means that it’s expensive, hard to find, hard to train or something like that.

Non-constraints, on the other hand, are generally less expensive and easier to get. And a starting rule of thumb is to have 25% excess capacity at your non-constraints.

So we are leveraging our very expensive hard to get resource (constraint) and we have excess capacity at our easier to acquire (non-constraint) resources.
---End interview

...to be continued.
Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Don't Chase It - Theory of Constraints

Tom Foster of ManagementBlog.org interviewed me about Goldratt's Theory of Constraints. Here is the third installment:

--- Start interview
TF: You talk about bottlenecks in systems. Conventional wisdom says bottlenecks are bad and that it is management’s job to get rid of them.

Dr. Lisa: Bottlenecks are what determine how much money you can make. I don’t think of them as bad. They just are. And by definition you will always have one. The question is, where is it? But, unless you have unlimited profits, you have a bottleneck, somewhere.

If you think bottlenecks or constraints are bad (like we were taught), then you will strive to get rid of them. But, as soon as you get rid of one bottleneck, another pops up, somewhere else. Essentially, we are taught to chase them around. Find them and get rid of them. It’s like being trapped in that arcade game – Whack-A-Mole.

If, by definition, you always have a weakest link or bottleneck, instead of chasing it around, my recommendation is to strategically place it. You decide where you want this control point to be. By doing that, you can get very good leveraging it and knowing how to control and grow your business with this control point.

So bottlenecks are not bad. Management’s job is to control them so that we can meet our commitments and grow. And more importantly to LEVERAGE them so that profits can be maximized.
---End interview

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Maximize the System - Theory of Constraints

Tom Foster of ManagementBlog.org interviewed me. Here is the second installment:

--- Start interview
TF: Intuitively, we try to maximize efficiency (profitability) of the entire company by working in each functional area to maximize its efficiency. We are thinking if every area is absolutely efficient, then by default, the entire company will be profitable. You disagree.

Dr. Lisa: Take an extreme case where a company may break itself into separate P&Ls. The logic is that if we maximize each P&L then we will maximize the P&L of the company as a whole. (And of course it’s much easier to hold each manager accountable only for their own P&L.)

I have a client, a not for profit, who collects donations that they sell in 14 retail stores. Each store has its own P&L and each store manager is measured and rewarded accordingly. The average selling price of an item is $2.25.

Imagine you are one of the underperforming stores in this company. To improve your profit, you need to sell a lot of volume at $2.25.

There are, however, some donated items that fetch $100 or more and sell very quickly. All the store managers love these items. Yet, there is one item that sells for $100 in 13 of the 14 stores, yet, sells for $200 in one of the stores, because of its location. It’s a cowboy item and this store is located near cowboys.

If I hold this item up in front of the group of 14 store managers, which store manager wants it for THEIR store? Of course, they all want the item, but, who should get the item to sell? The cowboy store can sell it for double.

So, if one of the other stores (not the cowboy store) gets a walk-in donation of one of these cowboy items, what should that store manager do?

Most store managers would keep quiet and sell the item quickly for $100 to improve their own P&L. This maximizes their own silo, but steals valuable profit from the company as a whole. This story illustrates how maximizing each silo does not necessarily benefit the system as a whole.
When management teams attack a problem, most often they try to fix a small segment of the company without even seeing the larger system problem.
---End interview

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Theory of Constraints - Systems Problems

Tom Foster of ManagementBlog.org interviewed me. Here is the first installment:

--- Start interview
A couple of weeks ago, I got to spend some time with Dr. Lisa Lang about one of my favorite subjects, Theory of Constraints. Like many of my favorite subjects, Theory of Constraints is a mindset that leads you to take action (make the right move) that is counterintuitive. In other words, left to your own devices, you would intuitively do exactly the wrong thing.

Theory of Constraints helps us to do the opposite. Theory of Constraints has been around for quite a while, but was most coherently explained by Eli Goldratt in a series of books starting with The Goal. Lisa Lang (Dr. Lisa) spent three years as the Marketing Director for Goldratt Consulting. During the past two decades she has used Theory of Constraints (TOC) to help companies solve their most serious problems. This week, I will share with you some of our conversations.

TF: When a management team realizes it has a system problem, what mistakes does it make trying to attack the situation?

Dr. Lisa: Most often, the team doesn't realize it’s a system problem. Because we are taught to manage in silos, or departments, or teams, most often, we attack the problem inside the silo, and don’t impact the system much, if at all.

By silos, I mean, we tackle sales problems separate from operations problems separate from admin problems. This happens, in part, because we have been trained to work inside our own area, indeed, not to meddle in other areas.

If you look at your organizational chart, you know the silos that exist in your company. Silos, in and of themselves are not bad. It’s that we measure each silo thinking that if we maximize each silo then we will maximize the system or the company as a whole and that’s just not what happens.
---End interview

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.