For the American economy to rally and re-establish strong growth trends, we must examine at its foundation: manufacturing. The foundation is eroding at an alarming rate, and rather than reinforcing it we must focus on renovation through innovation.

In his book Saving American Manufacturing: Growth Planning for Small and Midsize Manufactures, manufacturing expert Michael Collins offers ideas to shifting the downward trend, and again we provide an overview so that you have a sense of the kind and degree of change needed and to give you some direction in how your company can be among those that remain strong and competitive in the changing marketplace. The concepts Collins discusses are ones that Insight helps clients explore, and we can help you set your organization on a new innovation track, too.

The Crisis in American Manufacturing

The crisis isn’t the surface symptom of lost jobs, it’s the residual effects on the trade deficit, job creation, and strategic industries (xi). Historically, a large portion of the middle class income came from the manufacturing sector; as that sector shrinks, so does the middle class and its ability to help sustain the economy.

A 1987 report issued by the Office of Technology Assessment as an early prediction that is nearing fulfillment:

During the next two decades, new technologies, rapid increases in foreign trade, and the tastes and values of a new generation of Americans are likely to reshape virtually every product, every service, and every job in the U.S. These forces will shake the foundations of the most secure American businesses. (qtd. in Collins xii)

Why should we care?

Manufacturing touches nearly every aspect of American life in one way or another. Collins notes that, among other things, manufacturing:

• Creates secondary jobs (xx)
• Generates exports (xxi)
• Supports state economies (xxii)
• Affects our infrastructure (xxiii)

More specifically, the report makes four predictions:

1. “Change can lead to wrenching dislocation and pain for workers with obsolete skills, for management unable to recognize opportunity, and for communities where traditional businesses have failed” (qtd. in Collins xiv).The data bears this out. From 2000-2006 the United States lost more than 2.3 million jobs in the manufacturing sector alone.
2. “Change can create an America in graceless decline – its living standards falling below those of other world powers” (qtd. in Collins xv).While the upper class and those with top-tier jobs continue to experience high standards of living, that of most Americans is on the decline.
3. “Change can result in a gap between those fortunate enough to have the talents, education, and connections needed to seize the emerging opportunities and those forced into narrowly defined, heavily monitored, temporary positions” (qtd. in Collins xvi).In short, the gap between those who have and those who don’t is widening.
4. “Will people be able to find a variety of attractive opportunities for work, or will only the credentialed elite enjoy such opportunities?” (qtd. in Collins xvi) More jobs are being lost than college degrees are being issued, which indicates that a college degree does not guarantee a well paying job. Collins notes that reasons for this include the advent of the Internet, which has eliminated many tasks that service industry professionals once performed (xix).

What can we do?

Collins is upfront: it is impossible to save all manufacturers (xi).

Success Through Transformation

1. We Must Grow: stopping the decline isn’t enough.
2. Process Solutions: solutions like lean manufacturing help, but they alone are not enough.
3. All Customers Are Not Good Customers: demands prices so low that profit margin is non-existent are demands by customers you can afford to lose.
4. Finding New Customers and Markets: you must find new, good customers to replace bad ones.
5. A New Organization: focus on exploring new markets and developing new products
6. Mindset Change: be market-driven rather than operations-driven.

(Collins 1-2)

Collins, Mike. Saving American Manufacturing: Growth Planning for Small and Midsize Manufacturers. Chicago: First Flight Books, 2006.

What really causes a recession?

When people fear recession, they reduce spending. They decrease growth-related budgets in their business, and they sell their homes for fear of not having enough. Where does the fear originate? While the driving sources may be politics, world events, and so on the origin is largely behavioral.

You must decide how thoughts about “recession” will impact your choices and behavior as a business owner. If you removed the word “recession” from your vocabulary and some other outside influence started encouraging you to cut spending and reduce growth, would you do it? If the act of cutting spending causes a recession, why do it? If others doing business with you pressure you with their cuts in spending, how do you react and determine which reductions will actually have a positive sustaining impact on your business?

Six recession-proof strategies that will support positive outcomes in your business

History has proven that these sustaining strategies are what recover troubled times, and they should never be compromised:

1. Focus on your basic purpose. Most businesses have more irons in the fire than they can possibly support with the time, people, and money they have. Focus inward and focus on your greatest growth opportunities.
   • Understand the core strengths and competencies of your business.
   • Examine “best in class” practices, and set action plans to implement them over the next 12 months.
2. Diversify to new markets. Most businesses are challenged by competitors in downtrends. Consider your strengths and identify what new markets might better appreciate the full spectrum of advantages you offer.
   • Identify your specific product and service strengths compared to your more newly gained customer markets.
   • Define high-end or upscale markets that have unmet needs, and assess how you can provide products and services at higher margins.
   • Consider growing channels of distribution.
   • Go directly to customers and consumers via Web-based tools and distributors.
3. Bond deeper customer relationships with assertive marketing & sales programs
. The moment you lose touch with customers is the moment your competitors will swoop in and take over. If you’re improving systems, products, and services then you have a lot to talk about. Use technology and tracking systems to for more targeted sales and marketing.
   • Define your primary long-term customer targets, and define what they need to hear from you. Make sure you emphasize how you make a difference now and will into the future.
4. Solve lingering problems. The lingering problems that decrease productivity may not get the necessary attention in busy times, yet when volume decreases so does the need to bypass these problems.
   • Conduct employee and customer surveys to gather input on what needs improvement
   • Set action plans for mapping better processes.
   • Reward staff when process problems are solved and the customers notice.
5. Hire and train the right people. If you’ve been following our blog, you’ve heard a lot about this already. Slower times are the perfect times to develop career paths for key employees, realign performers to more optimal jobs, implement training programs to support growth goals, and take time to hire the right people for growth-focused initiatives.
   • Utilize assessment tools to better know the skills, talents, and preferences of your employees.
   • Develop career development plans for each role title to align with future growth requirements and to increase loyalty.
   • Develop and execute training programs to develop skills and understanding of the organization’s future growth direction.
   • Conduct performance reviews as a communication vehicle for all of the above.
6. Set simple and tight measurements. As you simplify your business practices around what matters most you become more aware of what to measure for success. Now is the perfect time to distill how you will measure your future success and what technologies will track those measurements.
   • Define the metrics and values that directly relate to your growth objectives (e.g. new customer markets, profit for investments, or sales volume).
   • Program technologies that will track these measurements as easily and as timely as possible. Define reporting intervals so that you and those who need it regularly see data.
   • Communicate these measures to your employees, including how the numbers are calculated and why they are important.

Recession is only opposed by growth. If times are a little slower for you now, we just solved that problem. Focus a larger percentage of time on the most promising scenarios for growth in your organization. Allocate resources to support those areas and you will not only be a part of the larger economic solution, you will individually ride smoothly through what others may need to deem as turbulent, uncertain times.

Studies have shown that employees who are protected from change are especially stressed when change does occur, which creates a less open work environment.

Companies that have a history of good communication with their employees have higher retention, positive morale, and greater productivity than those who remain tight-lipped. Further, companies that expose employees to measured change over time foster the ability for employees to better handle more significant changes down the road.

Are you thinking about what your employees are going through?

Now is the time to consider your communication with employees. How can you be more supportive, honest, and upfront with your team members? Engage your employees so that they are motivated and secure and therefore increase the company’s profitability, morale, and reputation.

Communicate with your people. Recognize stress. Teach adaptation.

* There are four stages that represent employees’ reactions to change, and there are tips that leaders can use along the way:

1. Shock. Good managers prepare employees long before shock hits (therefore reducing its impact on the organization):
   • Change work processes whenever you see real opportunities for improvement
   • Give people periodic reassignments that force them to learn new things and to deal with new situations
   • Use stretch goals to encourage flexibility and greater effort
2. Defensive retreat. Even with preparation there will be denial and potential shut-down when change occurs. Here are some pointers for addressing this:
   • If people have had the anchors of their work lives yanked away, find new ones for them to latch onto in new roles or in new work groups.
   • Provide opportunities for people to vent their feelings. Respond non-defensively, keep your cool, and do your best to smoothly handle the pressure.
   • Be a good listener, but avoid trying to sell them on the idea that things are actually better for them since they are not ready to hear this.
   • Find creative ways to solve problems and help your employees manage stress:
     • Help people connect to others under new circumstances: group activities, lunch meetings, or outings.
     • Be willing to take risks and try out new ideas.
     • Be willing to adjust priorities to changing conditions.
     • Demonstrate enthusiasm for and commitment to long-term goals.
     • Actively participate in the change process.
     • Make clear-cut decisions to keep people moving forward.
3. Acknowledgement. Once employees accept that change is inevitable, they may gain a difference perspective and approach the situation with objectivity and more clarity – and that’s your chance to take more risks as those employees are more open to exploring the pros and cons. You can help in several ways:
   • Continue to be a sounding board for complaints and questions. Ask “how do you feel about this?” to get a read on an employee’s emotional state. Now you can begin to talk about the benefits of the new state.
   • Build further on the “anchors” and group cohesion that you established in State Two. Talk about what will remain the same.
   • Encourage people to try new things and to take some risks. Ask “what could we do about this?” Each risk that succeeds will build confidence and lead people toward Stage Four.
4. Acceptance & Adaptation. Most employees will eventually accept the new situation and adapt to it. Others may transition to different jobs. Still others will not adapt, and their performance will suffer. As a leader, you can:
   • Keep working on group dynamics. Keep in mind that people are generally more concerned with how they fit in with the group than with the tasks they’re given.
   • Try to understand what each person needs to feel a sense of accomplishment. For each person, find that special talent and give him or her an opportunity to use it and to earn recognition.
   • Shift the focus from feelings to action.
   • Be prepared to “outplace” people who cannot or will not fit into the new situation. These individuals will slow performance and breed negativity throughout their team.

* We summarized and modified the four stages and their corresponding pointers from a Harvard Business School work called Managing Change and Transition, with content drawn from Chapter 6, “Helping People Adapt: Strategies to Help Reduce Stress and Anxiety.”

What we’re suggesting may seem overly simple and obvious, yet these are the actions that leaders often overlook.

Take some time to evaluate how well you’ve communicated and created a culture that helps employees embrace, adapt, and deal positively with chance and uncertainty.

Dealing with conflict takes self-awareness, respect, careful listening, honesty, and structured dialog in order to be positively resolved.

Disrespect breeds an unhealthy approach conflict.

Respect is the foundation of understanding differences. If you do not respect the person you’re engaging, then you likely have little true desire to discover and negotiate your differences.

Disrespect typically comes from one of three sources:

• Some form of emotional, physical, or resource-affiliated abuse
• Denial of rights for a person to act or feel a certain way
• Misalignment of ethics and core values between two people

Be honest with yourself and identify whether any of these issues exist. If they do, you may need to accept that some level of conflict may always exist and that conflict management may be more realistic than conflict resolution. If maintaining a relationship requires conflict management then you need to understand some facts:

• Choosing to be in situations that include an obstacle to successfully handling the demands and responsibilities of a relationship undermines your ability to construct and maintain a positive self image.
• One of the most consistent and strongest findings in research about conflict is the significant relationship between conflict and stress-related health outcomes, which include: psychological strain, anxiety and depression, somatic complaints, elevated blood pressure, and substance abuse.

Approaches to conflict

Self-awareness goes a long way in dealing with conflict. Knowing how you operate initiates the process of understanding the skills you need to handle stressful situations. Your personality, values, beliefs, instincts, and intellect all affect how you handle stress. The Thomas-Kilmann Conflict Mode Instrument identifies five conflict-handling modes.

According the Thomas-Kilmann, in a conflict situation a person’s behavior can be described in two basic dimensions:

1. Assertiveness: the extent to which the person attempts to satisfy his/her own concerns
2. Cooperativeness: the extent to which the person attempts to satisfy the other person’s conflict

These two dimensions further flesh out to define five methods of dealing with conflict:

1. Competing: assertive and uncooperative, this is a power-oriented method.
2. Collaborating: both assertive and cooperative, collaboration may take longer but provides a win-win outcome.
3. Compromising: intermediate in assertiveness and cooperativeness, compromise offers a middle ground that is often lose-lose.
4. Avoiding: unassertive and uncooperative, avoidance does not address conflict. This along with the following method often lead to passive agressive behaviors.
5. Accommodating: unassertive and cooperative, accommodation is the the direct opposite of competition and leads to habitual self-sacrifice.

Once you understand how you approach conflict you will begin to develop conflict-resolution strategies that are relevant to how you behave under stress.

Convert conflict into constructive energy. Working through conflict is better than putting up with it. One of the best processes we’ve found is the Kolbe Conflict Counter Actives™ that leads to mutual understanding, defined goals, and resolved conflict around a specific issue.

A conflict-resolution dialog. There are many layers of discovery required when people explore core issues and root causes of conflict. Here are some modified steps for dialog that demonstrate the types of considerations needed:

1. Listen, listen, listen. Listen actively for words and feelings. This means to listen with empathy and without evaluation. Be present. Be encouraging. Reflect back to the speaker what you heard before you respond.
2. Write down and define specific examples of the conflict. Discuss your examples. Are they based on similar situations? Do you agree on what isn’t working?
3. Reaffirm your mutual trust.
4. Identify the areas where you leverage each other’s talents.
5. Develop a list of shared goals. Discuss differences and commonalities.
6. Discuss the amount of time you spend together, what materials and resources are shared, and whether one person has more control than the other. Do you agree on how it should be and why?
7. What disagreement do you have about each other’s feelings, thoughts, and actions? Where do your perspectives differ the most and why? How are your perspectives the same?
8. Are your natural approaches to problem-solving different? If so, name the differences.
9. What are the consequences of your conflict? How do they affect the other person’s expectations?
10. What are more realistic expectations? How will you achieve your common goals?
11. What action steps are you each willing to commit to? How often will you meet? How will you define success?

We recommend using a facilitator help you to learn the comprehensiveness of the process, especially in complex situations.

Why should you conduct layoffs with a sense of positivity and possibility?

There are two main reasons that positivity is important: preserving your organization’s “employment brand” and maintaining high morale among remaining employees.

News travels faster than ever these days, and with the proliferation of instant publishing tools like Twitter, Facebook, and blogs your company’s environment and actions are always a potential topic of conversation. A disgruntled former employee can vent their feelings for the world to read and seriously damage your organization’s ability to recruit high-quality talent down the road. The economy will rebound, and you will again have to compete for talent because, after all, aligning the right people with the right strategy maximizes your success. Maintaining a positive employment reputation and expressing empathy even in difficult times bears fruit beyond what you’ll see in the short-term.

Your remaining workforce will likely feel the strain of any layoff. Minimize the tension to keep morale and productivity up. Transparency is the key; current employees should see and understand the layoff process because employees who feel their jobs are threatened will begin to look elsewhere.

These 5 tips provide guidance on what positivity looks like.

Obviously there’s no ideal way to conduct a layoff session since each employee and each situation is unique. A few general tips, though, will give you some ideas of positive approaches to the potentially painful session.

1. Draw information from assessments. Ideally, the employee would have completed personality and conative profile assessments. These assessments contain information that can help you find and highlight the possibilities. For example, since these assessments profile the person’s natural ways of thinking, working, and relating to others you can use these indicators to help the individual identify potential careers or roles that will suit them well.Practically speaking, you can specifically mention the person’s unique qualities and strengths in letters of recommendation. You can also encourage the person to share their assessment results with potential employers during job interviews; this information may demonstrate to the potential employer just how compatible the person is with the open or future positions.
2. Express appreciation. Spend time expressing and discussing with the individual the ways they’ve improved the organization. Make sure you review their work before going into the session so that you’re thoroughly prepared to be specific. With the employee, review and emphasize their strengths; it is not appropriate to not criticize or critique their work. You can suggest new career areas and positions that may fit the person well and enable them to find deeper career satisfaction.
3. Provide (gentle) advice for their job search. Because you are well-acquainted with their assessment results and work history you are in a unique position to provide practical advice. If you know of open positions in other organizations that might be a good fit, now is the time to direct the person to the potential employer.
4. Help the person envision a positive future. Sincerely express your appreciation for the person’s work and empower them to also consider the possibilities and opportunities that they may now have — even encourage the person to explore their passions and interests and how those might lead to a new career. Remind them that unemployment is temporary and is not a reflection of their competency or ability. You may even want to share a personal story about a time in your own past when an apparent setback transformed into a successful endeavor.  Help demostrate a future that supports their interests and give a list of resources that offer free resources to help their search.
5. Pay attention to remaining employees. Your remaining workforce will be affected by the layoffs. Avoid the temptation to retreat into your office and withdraw all communication; instead you need to reassure and rally your employees with positive messages, updates about the state of the company, emphasize the current goals, and keep information flowing. In the end this will reassure workers, prevent a drop in morale and productivity, and provide a sense of purpose and hope.

What recommendations or tips do you have to offer employers who are forced into the difficult position of laying off employees?

It’s tempting to focus attention on technology, materials, and processes to manage costs and gain efficiencies. While those are certainly important, it is your people that actually run technology, acquire materials, and initiate processes. You can have the best resources in your industry, yet without the right people operating and managing your resources, your efficiencies and productivity will be compromised. The time you spend developing your people can be the solution to ultimate cost savings and efficiency. We propose that your next quarter, or even makeover this next year, should focus on developing your people to be more effective than ever. Think longer-term. Think employee performance.

Attention to Employee Performance Yields Great Returns

• Instills a sense of ownership and self-worth
• Promotes mutual accountability between the employee and the manager
• Improves overall company morale
• Builds trust and a positive, innovative environment
• Increases job satisfaction

Improved Workforce Performance Affects Your Bottom Line and Your Reputation

• Improves employee retention
• Fosters adaptability and resiliency
• Increases productivity and efficiency
• Promotes longevity and profitability
• Improves customer satisfaction and retention

How to Approach Performance Management

Insight’s experience shows that focus on employee development rapidly deteriorates after the hiring process; little thought and few resources are allocated to foster and grow the talent of people already on the payroll. Further, many employees are misaligned with their current jobs, which results in inefficiency and dissatisfaction that costs your company time and money while you accommodate, avoid, or are simply unaware of the problems that result. Every job within your organization should have a career path identified for growth and development. This assures that from day one employees are engaged in a growth program and will view their job as fulfilling and valuable.

Think of Your Employees as You Do Your Customers

Customers are getting smarter. So are employees. Both have needs that must be met for your organization to succeed, and if your company doesn’t tend to those needs then you’ll be left behind. Even a stagnant job market won’t dissuade an unfulfilled employee from looking elsewhere. Research shows employees are more willing in these times to start their own venture and take on entrepreneurial risk rather than work for a company that doesn’t clearly value them or encourage their growth. Meet your employees’ needs by understanding their aspirations and tying those interests into the needs of your organization for growth.

Capitalize on Individuals’ Desire for Self-Improvement

Walk through a bookstore or turn on the television and you’ll be bombarded with products and services from the “self-help” industry. It’s no secret that these items sell because people want to improve themselves — and that ambition can carry over into the workplace, too, if you make the effort to better understand and develop your employees. Engage an individual goal setting process that clearly defines training, projects, and education that employees desire and align those goals with specific role description requirements and organizational strategic initiatives.

Continuously Work to Build Teams that Mentor

Teams that have clearly defined roles and goals have members who are sharper, more focused, and more willing to contribute at a moment’s notice. Clearly defined roles enable each member to see his/her position in and value to the big picture and to focus on the task at hand. When team members know and understand each other — including strengths and growth areas — they can better accept one another and consistently work as the proverbial well-oiled machine. Make employees’ individual goals known throughout the organization. Encourage mentorship and support among team members. The more reliant team members are on one another, the more accountable and motivated employees are to grow and succeed.

Now is the time to invest in people development and employee performance

The work of your people, their flexibility, and their ability to quickly adapt to changing dynamics will sustain long-term success. A leader must understand what makes each person tick and consequently provide meaningful work that engages each employee to achieve predictable and desirable results.

Keeping people engaged in your organization through high levels of purpose, passion, and ownership encourages them to continue to want to be associated with your company. If your employees are not engaged, motivated, and secure then your profitability, morale, and customer service can plummet.

There is no better opportunity than slower times to focus on areas that were neglected and not fully nurtured in the past:

• Focus on what you do best with a vengeance
• Reconnect with the specific DNA that makes your business unique
• Envision how to serve your customers and employees better going forward

In terms of people development that means you need to:

• Develop career paths for key employees
• Realign performers to more optimal jobs
• Implement training programs to support growth goals
• Take time to hire the right people for growth-focused initiatives
• Implement assessment tools to better know the skills, talents, and preferences of your employees
• Conduct performance reviews as a communication vehicle
• Engage team members as mentors engaged in mutual growth and success

It’s inevitable that any business initiative without committed purpose and supportive people is easily derailed. We’ve developed a unique process — the Invest People Development Process — that can improve workforce performance 225%. If you’re interested in learning more contact us, and we’ll send you a case study that details our work with a U.S.-based automotive water pump company.