We believe that “tangibles” (things we can see, touch and pay for) create earnings - mobile equipment, production facilities, operating supplies, equipment components, employees, contractors, and computer systems. When we build a budget for forecast, changes in tangibles drive increases or decreases in earnings and cash flow.
BUT…what about the impact of “intangibles” on earnings and cash flow? Their impact is significant and greater than most of us can imagine. What are intangibles? They are beliefs, behaviors, choices and other invisible factors that interfere with performance:
- People that are afraid to talk about problems.
- Departments that don’t work together to solve problems.
- Unachievable expectations for performance that set people up to fail.
- Superintendents that have a personality conflict and won’t communicate with each other.
- Anyone in a management level that doesn’t follow through on what they said they would do.
- A lack of trust between the workforce and management or within the management team itself.
Intangibles act as BARRIERS in everything we do - project management, getting good data and the right information for decision-making, budgeting/forecasting and problem solving, etc. They even stop efforts to improve performance and sustain change. We may invest in Six Sigma, Lean or TQM and wonder why improvements did not materialize and change did not last. We blame the methodology, consultants and employees for this failure without considering the impact of intangible barriers on improvement shortfalls. Managers held accountable for production and cost, but not for subjective choices that stagnate change.
Here are some of the costs of intangible barriers:
- Intangibles impact the general ledger as excess costs buried in cost centers or as missing margins associated with product that could have been produced but wasn’t.
- I call some intangibles “Million Dollar Choices With NO ACCOUNTABILITY” because millions of dollars are spent correcting problems that could have been prevented with clearer communications, consistent follow-through and better cooperation between departments.
- Intangibles ALWAYS reduce management credibility, a hidden cost that is difficult to recover.
Often intangibles (“beliefs, behaviors and choices”) are accepted as “part of the culture”. When we do this, three things happen:
- We reinforce the belief that intangible barriers can’t be removed from our company.
- We turn our backs on the financial and cultural benefits of removing them.
- We NEVER ASK “how good could we be?” because we BELIEVE that our best is not possible to achieve.
Ask yourself these questions:
- What would your bottom line look like if your intangible barriers were removed?
- Can you imagine what it would be like to work there?
- What if it was possible for people to make better choices for communication, follow-through and problem-solving BECAUSE THEY UNDERSTOOD the impact of their choices on the bottom line and culture?
The answers to these questions are short and to the point. It is possible to intentionally optimize your bottom and equipment performance. It is possible to create the culture you always wished you could be a part of. It is also possible to set a daily goal for your “best day ever” and know that employees come to work with that attitude and intent.
If this scenario sounds impossible, it is because companies historically work hard to be experts in the “Mechanics of Change” but are out of touch with the “Intangibles of Change”. We expect our people to be great at managing the processes they are responsible for without giving them the skills to recognize and remove the barriers that are holding them back. If management masters the skills required for removing its intangible barriers, all bets are off on what they can achieve.
Thought for the month:
How much better could you be if management removed the intangible barriers that are holding them back?
Author: Kay Sever CMC, CQIA, Sustainable Improvement Consultant and Coach. Kay Sever is a leader in sustainable improvement for mines and plants. She combines 29 years of mining experience with a common sense approach to improvement that raises awareness about lost opportunity and hidden barriers that prevent improvement success. http://www.miningopportunity.com/
Read the article online at: https://www.worldcoal.com/coal/19012012/coal_cost_and_culture_have_you_dared_to_ask_how_good_could_we_be55555/