How Layoffs are an Affront to Process Improvement

Unfortunately, but sometimes warranted — process improvement and people or entities associated with it often come with a negative perception. Thoughts of “downsizing” or “rightsizing” often come quickly to mind when a company starts down the path of process improvement.

Two well-known companies are closely associated with process improvement, Toyota and Motorola. From Toyota, we can particularly learn that process improvement does not (and perhaps should not) mean lay-offs or downsizing. The Toyota Production System (or the Toyota Way) became known as “lean manufacturing” or “Lean.” Motorola coined (and trademarked) the term Six Sigma. Lean is primarily referring to the idea that we want to reduce waste in products and services, while Six Sigma focuses on reducing variation in systems or processes. Putting aside what that means for a law firm, it is important to see that companies have worked the process improvement goal through company culture. Let’s look at Toyota by way of example.

While many think of “efficiency” as a guise for layoffs, Toyota has a no-layoffs policy and has not laid anyone off since the 1950s. (NOTE: Toyota does hire a larger percentage of contract or temporary workers than other auto manufacturers and the no-layoffs policy does not apply to them because they are understood to be either temporary or on a path to possible full-time employee status with their contract status used as a trial period).

Since process improvement is fundamentally about improving things going forward, it doesn’t always have immediate benefits that employees can readily grasp. It’s nearly impossible to ask employees to commit to an ideal that’s future-focused, such as process improvement, if the company cannot commit to the employees as well. As such, Toyota has fervently retained workers under this policy even at a great short-term economic loss to themselves.

A necessary component to maintain a no-layoffs policy is the right cultural focus. We often hear talk of cost cutting instead of emphasizing productivity or value. Anyone can cut costs. Simply get rid of things that cost money and don’t worry about the consequences or value of what you are getting rid of. For example, it costs a significant amount to buy and use technology. However, I doubt clients would be happy to find us still using DOS computers and dial-up modems from the early 90’s, while using the justification we are trying to save them money.

This also applies to people. Toyota takes great pride in training employees to do the right thing, stopping entire production lines if there is a problem and working together to fix it instead of emphasizing blame. As these people work together to solve a problem and improve the process, what would really happen if someone was always let go after the process was improved to be more efficient? People would stop solving problems, and ignore, if not create, problems to maintain job security.

No matter what clever buzzwords are used to disguise the idea of layoffs, employee reductions are always an affront to true process improvement. Process improvement should be focused on bringing more value and profits to clients and the firm.

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