Deloitte Looks at People Management in Manufacturing

September 14, 2010 by Wally Bock

Issue 7 of the Deloitte Review contains an excellent article titled: “Tailored to the Bottom Line.” You can read the article online or download a PDF. Here’s a key paragraph.

“Consistent with a bottom-line approach, it is fair to ask: How do people management practices impact the performance of a company? Have these practices in your company kept pace with the changes in your business? Most importantly, which practices contribute to profitability?”

That’s the reason to read this article. Read it to compare your company’s practices to what other companies are doing. Look for ideas you can adapt to your situation.

The article has two parts. The first part outlines Deloitte’s conclusions based on an online survey that drew 779 responses. They sorted the companies based on self-reported net earnings, then studied the top 142.

Based on that analysis, Deloitte identified three “practice areas” that differentiate the most profitable companies from the least profitable companies.

“Defining a clear and explicit people strategy that is linked to business strategy.” I thought this was a virtually useless finding. This is one of those cases where the details make the difference. The strongest message that I took from this section was that it’s important for HR managers to be familiar with “the broader aspects of the business.” Deloitte cites Coca-Cola as a good example of how to achieve this.

“Performing formal succession planning across the workforce.” Across the workforce means both more kinds of work and more levels.

The succession planning section unintentionally shows you why taking self-reports at face value can be dangerous. The article cites Johnson and Johnson as a company doing a good job of succession planning. But, as we posted in “News Flash: No CEO Lasts Forever,” on August 30, the Wall Street Journal reported that the CEO at Johnson and Johnson would be staying on because no qualified successor had been identified.

“Linking employee pay directly with productivity of the company or to the respective manufacturing plant.” Everyone seems to be for pay-for-performance, but it’s frightfully hard to do.

You will find a good description of how the pay-performance link works at Nucor. What’s here is based on an article on Business KnowHow: “How Nucor Steel Rewards Performance and Productivity.”

The best material in the article begins when the “findings” end. That’s where the article discusses different practices in three categories: people strategy and culture, talent acquisition and development, and performance management. 

You’ll get good ideas and some perspective from what you find in the article. Just don’t take what’s here as “benchmarking.” Instead consider the article a collection of practices. You’ll want to investigate some of them, and maybe even adapt them to your company.

Wally Bock is a coach, a writer and President of Three Star Leadership.

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