Creating the Performance Culture
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This document discusses creating a performance culture within an organization. It defines a performance culture as having four key aspects: performance, people, purpose, and predictability. A performance culture is measured based on these four areas. It emphasizes that behaviors determine results and culture, and that in order to change culture and results, behaviors must change. Implementing best practices and measuring KPIs are not enough - an organization must focus on measuring and changing behaviors to develop a sustainable performance culture with improved long-term results.
Creating the Performance Culture
- 2. Creating the Performance Culture Brad Peterson W e at SAMI, and others in our field, routinely write and speak about the methods and success stories that have resulted in substantial improvements. These are inspiring stories, and give us insights on what tactics to use, how to deploy them, and the kinds of gains we can achieve. The truth that most of us prefer to hide is that most of these successes were not sustained over time. So many of the improvements we make create anecdotal stories. One-time events. Sometimes we get bottom line changes men- tioned in our stories (additional production or reduced costs), but mostly we talk about a unit or a line and the changes in availability or an- other KPI. Affecting the bottom line of the company, permanently, is a far more daunting task than improving the availability of a machine, or im- proving a KPI. In benchmarking studies, the rel- ative position of the measured plants seldom changes in the long term, looking at a 10 year time horizon. For instance, most refineries are benchmarked by Soloman Associates. Their relative position and strengths/weaknesses very seldom change. Why is that? Why is real, measureable, bot- tom line change so difficult to get? It comes down to culture. Cultures resist change like crazy. That’s one reason why Toyo- ta and Honda remain so good at what they do. They are so conscious about creating the right culture, they spend years at it before a product ever comes off the line. Each new person who joins the company learns expectations, meth- ods, and teamwork. You can change out the entire workforce over a period of time, but the values and expectations remain embedded. This is also true for the low-performers. They transmit values and expectations as well as the best companies. Culture Determines Results My point in presenting this article is, that Cul- ture Determines Results. You can have all the best practices in the world. You can measure 100 KPI’s. You can have 15 #1 priority initiatives in a company (and most do). These things are all meant to drive changes in the behaviors of people on the plant floor, and the supervision who manage them. Let’s say that again: All the improvement work we do is trying to change the behaviors of the people in the plant. Uptime is named after the single most important topic in process manufacturing. Uptime is a result of doing all the right things. Even safety is a byproduct of doing all the right things to get uptime.
- 3. Financial Results Functional KPI’s Measuring Behaviors Performance Culture This may be the most important sentence in this article. If you don’t understand or agree, I’ll give an example or two. The topic of safety has been prominent in in- dustry for about 25 years. We have seen waves of attempts to improve safety results. At first we measured incidents. Things got a little better. Then we tried training and awareness, and little jingles the people should remem- ber when they are working. Didn’t see much change. We finally saw a breakthrough when “Behavior-based Safety” became the standard. Understanding that what people habitually do gets them predictable results. We began mea- suring not only lost time incidents (things af- ter the fact), but the behaviors that create the incidents (near-misses). By focusing and safe and unsafe behaviors our results in safety have improved dramatically. Behaviors as the core of results is not a new realization: “We are what we repeatedly do. Excel- lence then is not an act, but a habit” Aristotle 384 BC – 322 BC It comes down to this. 1. A Culture is the sum of all the behaviors in a group 2. A Culture determines the outcomes in ev- ery business 3. To Changethecultureyouneedtochange the behaviors of all the people involved We have observed recently that the largest and most sophisticated companies (industrial companies who lead their industries) are ob- serving this: • All the KPI’s are reported as GREEN (every- thing is working great) • Results are flat or declining If we make sure we have no identified gaps, we cannot change. GAPS are our friends for im- provement. Why do we game the KPI’s? Trying to make them look great? They are tied to our compensation! We are smart guys—we know how to make the KPI’s look really good. Articles written in Journals like Uptime focus on measuring KPI’s. We are measuring KPI’s be- cause we want to improve our results, and to comply with company policy and standards. Executives are measured on results. Results are the consequence of what we do. What’s missing is measuring behaviors. Change the behaviors sustainably, you get a different culture and different results. The Per- formance Culture measures all three. Behaviors and Practices determine Uptime, and overall production reliability, the holy grail of manufacturing. With these things in mind, just what is a Per- formance Culture? How do we know we have one? We measure four broad areas; we call these the“4 P’s of the Performance Culture”: (Figure 3) 1. Performance 2. People 3. Purpose 4. Predictability 1. Performance. • First and foremost a Performance Culture makes its numbers. They set realistic targets, and make the production, safety, expense, revenue, ROI, inventory and pricing targets they set. • Next, they satisfy their customers. In many cases they delight their customers, going be- yond the agreements. • Third, measured over time, you can see that their results trend in the right direction, get- ting better and better. Continuous improve- ment is part of the fabric of companies like Toyota and Honda. 2. People. • In a Performance Culture, managers realize that their most important resource is their people. Their selection process assures a fit in values, as well as capability. They develop their staff, whether it’s by formal training, in- creased responsibilities, coaching to improve, or formal evaluations. And sometimes having the luxury to learn by failing. • One of the things we notice immediately on entering a plant where there’s a Performance Culture™, is the type of energy expended by the staff there. Everyone is busy, but it’s not a frantic, out of control busy. There’s intensity, a quiet purpose. When people talk, it’s mostly business related, problem-solving and coordi- nation. I have heard that Google is like this; everyone is intent on keeping Google at the top. • A great aspect of working in a performance culture is that people trust each other. Trust has two major pieces: first, am I willing to Figure 1: The Heart of the Performance Culture Figure 2: Performance Culture Drivers Performance Causes Performance ResultsBehaviors Practices Equipment Availability Production Reliability • Leadership • Training & development • Communication • Performance management • Business processes • Work management processes • Production processes • Work methods • Preventive & predictive maintenance • Tools (RCM, RCA, Statistical Analysis) • Equipment condition • Focused reliability improvement • Process control • Loss mapping • Predictable supply chain
- 4. 0 1 2 3 4 5 6 Meet Numbers Satisfies Customers Continuously Improves Develops Employees Focuses Energy Creates Trust Lives its Values Embeds Vision/Goals Wins with Teamwork Assures Safety & Integrity Decides by Data Eliminates Variability 4 P's of the PerformanceCulture™ PERFORMANCE PEOPLE PURPOSE PREDICTABILITY PURPOSE PREDICTABILITY PEOPLE PERFORMANCE make everyone successful, do I tell the truth, do I have integrity? Second, am I capable and competent at the tasks to which I have com- mitted? There is so little wasted effort when people meet these conditions of trust. 3. Purpose In his book, Built to Last1 , Jim Collins says ev- ery successful company has a higher spiri- tual purpose. A purpose that creates value for Society, not just makes money for the shareholders. The purpose fulfilled cre- ates value for their markets, and good fi- nancial results are an outcome of doing good. • A great company focuses on its val- ues. In such an organization there is no doubt what those values are, and they form the basis for everything decision made. For instance, our highest and clearest value is integrity. In dealing with our clients, ourselves, our contractors, our markets and regulators. Integrity in all we do helps us create the trust we need to be effective. Sometimes it means we don’t get business, because another firm may promise things they can’t deliver. In our case it means we get a lot of repeat business. • A major portion of Purpose is knowing the target. What do we want to achieve? What’s the “End in Mind”? People who know the outcomes they are collectively working to achieve need little supervision. Everything they do is aligned to the company direction, to the extent that the Vision and Goals have been embedded. • Jim Collin’s Good to Great2 is a touchstone for me. I keep going back to try to under- stand what’s important. His descriptions of the Level 5 and Level 4 leaders set the tone for excellence: Level 5’s are humble and know they are part of a vast system of people do- ing their best for the company. Level 4’s are charismatic leaders—when they leave the company has no north star to guide them. Everyplace we go we see silos, usually by functional area. The very lack of teamwork and common business processes creates seri- ous issues with results. The issues with results create the need for finding a scapegoat. And everyone is right! Maintenance can’t perform because of production not giving them the equipment to maintain. Production can’t per- form because maintenance doesn’t keep the equipment running. Only teamwork can get us out of the catch-22. 4. Predictability The PerformanceCulture is all about Predictabili- ty. The point is to be consistent in our results, in our approach to our people, in our values and purpose. Making a record one day at the cost of performance the next is not what greatness is about. Greatness is about doing the rights things consistently, and improving on what we do all the time. Understanding what our customers want and need, and exceeding expectations. Consistently, Predictably. • Safety and integrity are core to running any operation. In the past 10 years behavioral- based safety has made great strides to be- come part of most cultures. At the same time we see reactive cultures trying to emphasize safety. Our observation is that it’s an oxymo- ron to have a safe work environment that’s re- active. Reactive environments by definition aren’t in control of the equipment, nor are they able to provide proper equipment care, planning and scheduling of work. Inevitably this puts pressure on the individual operator or technician to keep an operation running without the proper study, parts, equipment, ignoring alarms, etc. Predictability for safety goes hand in hand with predictability of pro- duction. • Having the right data, knowing what to do with it, and operating from data-based deci- sions will deliver predictability faster than any method. This is a disciplined operation by definition, as it requires analysis of what’s important to start with, then having the dis- cipline to enter data that may not seem im- mediately material to the provider. Making the time to analyze data, mixing in the proper experience, and coming to a consensus on action plans will eliminate a lot of false starts. Doing things once, doing them right and eliminating root cause will help assure every other part of the Performance Culture. • Variability in manufacturing operations is a fact of life. It takes many forms, including customer demand, operating speeds, pro- cess and equipment parameters, materials and finished product. Variability in any form produces waste and as variability increases, performance is adversely affected. It affects the operation in one or more of the following ways: o Lost throughput o Wasted capacity o Inflated cycle time o Larger inventory levels o Long lead times and/or poor customer service CASE STUDY We worked with the oil and gas production Figure 3: Performance Culture Spider Chart: Sample Data
- 5. 0 1 2 3 4 5 6 Meet Numbers Satisfies Customers Continuously Improves Develops Employees Focuses Energy Creates Trust Lives its Values Embeds Vision/Goals Wins with Teamwork Assures Safety & Integrity Decides by Data Eliminates Variability 4 P's of the PerformanceCulture™ PERFORMANCE PEOPLE PURPOSE PREDICTABILITY PREDICTABILITY PURPOSE PERFORMANCE PEOPLE operations of a European-based oil major to achieve three goals: 1. Improve production output 2. Reduce costs 3. Improve asset integrity within the exist ing operating budget, as opposed to special studies and interventions The vehicle was through improved main- tenance and controls within their managing system. When we began our work, their Perfor- mance Culture analysis summary showed the measurements shown in Figure 4. They were regarded as a first quartile opera- tor in their industry—demonstrating how low the bar is for this industry when you see the huge opportunity for improvement demon- strated by this“spider-diagram”. The issues demonstrated in the 12 elements of the Performance Culture were: 1. Meets It’s Numbers - Despite being a top quartile performer in the categories of pro- duction loss and operating expense, both of these highly important metrics were trend- ing in the wrong direction. 2. Satisfies Customers- Increasing unplanned production losses were causing occasion- ally missed customer nominations at export points. 3. Continuously improves – The organization did have ongoing improvement initia- tives, but, these projects required a substan- tial“push”effort from the staff to engage the field. There were far too many to attend to, and most showed no progress at all 4. Develops Employees – Individual and po- sition developmental plans existed along with significant training resources. Al- though these were in place, there was a high level of under-utilization of training and personal development resources. 5. Focuses Energy – The organization was data and information rich. However, there was insufficient focus on the critical few param- eters which were driving production and expense. 6. Creates Trust – A low level of trust existed between the field staff and office staff. This was primarily the result of multiple“high” priority initiatives which would start/stop, which were chronically under resourced, and usually had little follow through and no accountability. 7. Lives Its Values – The organizational values were clearly communicated and largely ex- hibited with the occasional exceptions. 8. Embeds Vision and Goals – Goals and objec- tives were communicated in the organiza- tion top down. However, the goals were not uniformly cascaded down into the orga- nization. This created misalignment on the asset and regional levels with the top level goals. 9. Wins with Teamwork – Although subtle, the organization was“siloed”in several ways. Territorial divisions existed between the functional organizations (i.e., Operations, Maintenance, Logistics, Procurement, etc.), as well as the field versus the office staff. Some teamwork was exhibited at the asset level within functional organizations. 10. Assures Safety and Integrity – There was a high focus on safety, health and environ- mental issues. Safety critical work always received the highest priority and safety performance was high. 11. Decides by Data – As mentioned previ- ously, the organization was data rich and monitored many parameters. They were not effectively using the data and report ing system as management tools to guide the decision making process. The result was a lot of cost to measure, and little ap- plication of the information. 12. Eliminates Variability – Due to increasing unplanned outages, production and ex- pense budgets were being missed. With the lack of data driven decisions, waste was being introduced by emotional and “gut feel”actions to address issues. The variability trends were consistently in the wrong direction. What We Did The presenting problem was their failure to implement SAP PM, in spite of several attempts. The un- derlying cause was identified as “optionality”. The culture of oil and gas exploration was entrepreneurial, and lacked discipline. Managers felt they had the“option”of following best practices. Perhaps a better cause of optionality would be lack of clear leadership. There was no understanding of the value of imple- There was no understanding of the value of implementing these practices and disciplines.Was SAP PM implementation an exercie of some administrative mandate, or was this a business imperative, leaving hundreds of millions of dollars on the table? Figure 4: Performance Culture Spider Chart: Pre-Implementation
- 6. 0 1 2 3 4 5 6 Meet Numbers Satisfies Customers Continuously Improves Develops Employees Focuses Energy Creates Trust Lives its Values Embeds Vision/Goals Wins with Teamwork Assures Safety & Integrity Decides by Data Eliminates Variability 4 P's of the PerformanceCulture™ PERFORMANCE PEOPLE PURPOSE PREDICTABILITY PURPOSE PREDICTABILITY PERFORMANCE PEOPLE menting these practices and disciplines. Was SAP PM implementation an exercise of some administrative mandate, or was this a business imperative, leaving $100’s of millions on the table? The magnitude of the opportu- nity was never quantified, the implementa- tion plan one which had little field input, and there was no plan to coach for sustained per- formance of excellent practices. Without these methods in place, the implementation was doomed, as indeed it is throughout the SAP implementation universe. We began with a Strategic Plan for Operations. Everyone has a strategic plan for the business, but improving operations seems to be a series of overlapping initiatives, all well-meaning, but overwhelming in their resource demands, lead- ing to frustration and very little progress. We worked with a team of their people to clearly delineate: 1. Where they were now 2. The future state of where they envisioned they wanted to be 3. The strategies to bridge these gaps, and the projects and sequence to implement the strategies 4. The overall implementation plan for all 28 properties, which varied dramatically in size geography 5. The business case, cost and benefits for the overall plan implementation This plan was the vehicle to implement all 12 Elements of the Performance Culture. It got leadership attention because the value of the planwasaresultofover$1Billionperyearinad- ditional cash flow. The future state described how they would work, what the work would be, how they would make their numbers, what data would drive decision-making. The organization structure, the cross- functional teamwork required, the job development and gaps in per- sonnel and skills were all laid out. A result of the implementation would be to measure and reduce variability, including the opera- tors’ job descriptions, roles and responsibilities, and planning all work to eliminate most opportu- nities for safety lapses. The implementation was laid out to develop more than 100 Subject Matter Experts; this was in no way a “SAMI Project”, but fully owned by our client. We put part of our fees at risk and acted as a partner in the implementation and results, and not simply as a consultant. We could veto changes in the project plan when we knew they would compromise results. We moved resources around to make sure every property met with maximum success. We had a planned implementation period of two years. In fact we finished in 18 months. Everyone knew the change was coming. It wasn’t optional. And everyone was prepared ahead of time to get ahead of the curve. The results were spectacular: unplanned downtime went from 6% to 1%, and planned downtime was reduced by one-third. Platforms that were experiencing a trip a day moved to a trip per month or less. Productivity increased by 50%, and safety critical backlog went to nearly zero. Total operating costs were reduced by $25,000,000 annually, or 20%. The resulting measure of the Performance Cul- ture is shown in Figure 5. We did an audit of the business processes in 2011. We found the 85% of what was imple- mented was still being used many years later. Conclusion “We are what we repeatedly do. Excellence then, is not an act, but a habit”. Culture determines results. Until you under- stand that, embrace that, your professional life will be like Sisyphus, rolling the rock up the hill, only to have it roll down again and start all over (Sisyphus in Greek mythology was a king pun- ished by being compelled to roll an immense boulder up a hill, only to watch it roll back down, and to repeat this throughout eternity). Changing results requires changing behav- iors for the long haul. A project, a computer system, all the initiatives in the world will not change a culture. We understand and agree that technical and tactical competence is important, but the sus- tainability of such approaches is totally depen- dent upon the behaviors supporting the Perfor- mance Culture. Over the course of our professional lives, SAMI has made a study of the Keys to Sustainability. If the keys to sustained performance stem from Culture determines results. Until you understand and embrace that, your professional life will be like Sisyphus, rolling a rock up a hill, only to have it roll down again and again having to start all over. Figure 5: Performance Culture Spider Chart: Post-Implementation
- 7. the culture, then how do we change the cul- ture? Our findings are conclusive, and agree with Jim Collins’ in Built to Last3 , Stephen R. Covey’s in 7 Habits4 and Stephen M.R. Covey’s in The Speed of Trust5 . Performance is an outcome of doing all the right things, which are embedded in the Performance Culture. The right things in- volve having the right elements for: • Performance ( Meets Numbers, Satisfies Cli- ents, Continuously Improves) • People (Develops Employees, Focuses En- ergy, Creates Trust) • Purpose (Lives itsValues, EmbedsVision and Goals, Wins with Teamwork) • Predictability (Assures Safety and Integrity, Decides by Data, Eliminates Variability) We know how to measure these items. We know how to correct them, and we know how to engage our clients to make these perma- nent behaviors. The Performance Culture is not a mystery, but a path towards excellence. REFERENCES 1. Collins, Charles James & Porras, Jerry I. ,“Built to Last: Successful Habits of Visionary Companies”New York: Harper Collins, 2002 2. Collins, Charles James,“Good to Great: Why Some Companies Make the Leap…And Others Don’t”New York: Harper Collins, 2001 3. Covey, Stephen R.,“The 7 Habits of Highly Effective People”Free Press, 2004 5. Covey, Stephen M.R.,“The SPEED of Trust: The One Thing That Changes Everything”Free Press, 2006 The Performance CultureTM is a registered TradeMark Brad Peterson is the Chief Execu- tive Officer of SAMI. As the found- er and principal owner of SAMI, Brad is sought after as a speaker and advisor to to companies around the world. Prior to found- ing SAMI, Brad’s experience has included practice leadership in to major management consulting firms. His education includes and undergraduate (Phi Betta Kappa) and Masters degrees in Physics and a Masters degree in Counseling Psychology. www.samicorp.com