A Global Recession Creates Opportunities for

A Global Recession Creates Opportunities for
Lean Thinking Companies

Last week the government estimated that the gross domestic product fell at an annual rate of 6.1% in the first quarter, and many economists believe the first quarter of 2009 will mark the end of the recession. Given the recovery will be slow, many companies are reporting focusing on wringing additional efficiencies out of their businesses through Lean efforts and kaizen team events, rather than quickly expanding and hiring people.

At Leanovations, we believe a global recession creates winners and losers just like a global market boom. Certainly, some companies are using these times to layoff and reduce staff to make their organizations "leaner," which of course is not what Lean is.

With the steep economical challenges of today's global recession Leanovations continues to teach and coach companies to be forward-thinking and see Lean as a key to reducing waste, improving cash flow and improving operational flexibility, thus enabling them to adjust more quickly to the new realities of today's economic climate. As the world exits the recession, Lean companies become well positioned to leverage their productivity gains as volume returns, outpacing their competitors by achieving higher inventory turns, greater operational flexibility, and lower operating costs.

No one is denying that cutting costs is essential for surviving 2009, but companies who are truly embracing Lean, practice a different philosophical approach than just getting most of the costs reductions through layoffs. They look for ways to eliminate waste and improve productivity throughout the entire enterprise, staying focused as they move toward building a better Lean operational excellence and culture to take advantage of future global opportunities. This is continuous improvement with a long-term view.

Before any company makes painfully aggressive reductions, it should keep in mind and fully understand the potentially serious repercussions. For example, companies risk damaging employee morale, losing experienced and talented employees, seeing valuable employees leave on their own as they become worried they may be next to be let go, and hurting the firm's reputation as an employer of choice. During these tough economic times, many companies also lose sight of the importance of training and conducting employee-development programs, which engages the employees in the Lean-execution strategy.

Many of the companies Leanovations is working with understand the power of Lean, and the importance of keeping their people to compete globally. They are trying everything to avoid or limit layoffs by filling their open capacity by bringing back previously outsourced work, implementing flexible work schedules, such as four-day workweeks, 6 hour days, wage freezes, unpaid vacations, and voluntary furloughs. One Leanovations Lean Partner has gone to 6 Hour days, with 2 hours each day dedicated to Lean projects via mini Kaizen Teams. Another is allowing the employees to volunteer time in valuable community projects, creating a win-win environment, with a positive image for the company and providing needed services to the community. These steps help control costs but, more importantly, companies are retaining the value of their human resources.

Many companies today who understand the global impact of Lean are using this slow down period as an opportunity to redesign their skills matrix and align jobs to engage employees while protecting and emphasizing training and development programs. Adding responsibility and autonomy promote employee satisfaction, and providing the company with flexibility and the skills necessary for performing redesigned jobs, which will increase long-term productivity.