Date: 2024-11-21 Page is: DBtxt003.php L0913-TVM-MMW-000017
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TrueValueMetrics ... Peter Burgess Manuscript
Making Management Work for Relief and Development |
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Chapter 17
Feedback ... and Make Improvements |
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Feedback
Feedback and adjustment There is no point in measuring if there is not going to be any feedback. There is no point in feedback unless it is used for some form of decision making that is going to improve performance. Without feedback, any activity is out of control. Results needs to be part of a feedback loop so that there is more and better action. Merely measuring results and talking about them is not sufficient. The feedback process is perhaps the most important part of management of anything. It is the mechanism by which a learning organization uses its accumulating knowledge and turns it into something of value. The process is very powerful. But feedback must also be used with understanding. A reaction to information should result in improvement, but knowledge can also be used in a way that makes performance worse. This is apparent in much of the ill-informed and heavy handed policy guidance meted out by the relief and development organizations as a component of “conditionality” for their help Nothing really works very well unless the feedback system is working in the right way. I learned something about control theory when I was an engineering student. It is everywhere in engineering, and needs to be everywhere in the management of resources. Feedback and Control Theory It does not happen as often as it used to. But loudspeaker systems used to let you know what was going on in the feedback loop. If there were screeches and whistles there was positive feedback and the system was out of control, and when the feedback was working right, in this case some negative feedback, there would be a nice stable output and everything under control. To have control, there absolutely has to be feedback, and the feedback has to be geared to the changes that are needed. None of this is going on in the relief and development sector, and the system is totally out of control. Money is going in and noting much is coming out, and nobody seems to have a clue about what is going on. One issue of importance is the timeliness of the feedback. Control theory is not usually as much as it should be in management, though it can be very effective. The following is an example of what can be accomplished by effective and timely use of feedback. At one time in my career I became VP Manufacturing for a companye with several production departments and about 3,000 employees. The factory produced a wide range of products, almost all with custom engineering. When I got the job, a daily production report was prepared daily and circulated around 10.00 am on the following day. It was a routine ... more social than anything else, and not much happened. I changed this reporting process and meeting schedule and agenda. The new daily report did not simply list what had happened the day before, but described what was going to happen today ... just 30 minutes into the day's work. This report told management what problems were emerging today and would impact the production of the day. By 8.30 am the whole of the management team was helping to address all the problems and getting them fixed. Production more than doubled ... it might have increased even more, but other constraints started coming into play. It does not matter how good the measurements and the information, if the organization has no way of making use of it to improve performance or, perhaps, no ability or no intention of using it. Early in my career I was a division controller at Aerosol Techniques Inc. The division president had an accounting background and had been the division controller before me. I prepared much analysis after analysis of our manufacturing operations that needed major reorganization ... but very little ever actually got done to change anything. No decisions and division performance simply drifted worse and worse. Some years later I was the CFO of Continental Seafoods Inc. The president had a long track record of operating trawlers and marketing seafood. I did a lot of detailed analysis of operations, marketing, risk, etc. which were used by the president ... who would tick off what my analysis said should be done with what he had already done ... and anywhere I came up with something additional, he checked out the analysis, and if it was right and worth doing, it was done. In a period of a few months, the company's performance went from pathetic to pretty profitable ... a lot was changed and most of the changes were right. The cost of good management have huge value when put to good use. Two weeks of analytical work helped me to save some $100 million in cost overruns on a big factory construction project. Early in my career I worked for H.A.Simons, the Canadian pulp and paper mill consultants. I was the field accountant at a greenfield pulp and paper mill construction site in Texas. As part of my work I was monitoring the project costs, and evaluating progress. I was also carrying out an ongoing cost audit to verify the cost information. As a result of this work, I concluded that the contractors, Brown & Root, now part of the Halliburton Group, had spent 2% of the budget money but only done 1% of the budget work. I thought this was serious, since the cost overrun projected out to the end of the work would be well over $100 million. I showed my work to the head of our consulting team, an experienced engineer. He checked my work thoroughly, staying in the office until late in the evening. It was Thursday. Around 10 pm, he called the contractor's project manager and arranged an early morning meeting for the next day. Next day we went over my work again, this time with the contractor's project manager and some of the key supervisors. The decision was made to reduce the contractor's staff on the job from over 1,400 to around 700 people. On Monday, only 700 people were on the payroll. Two years later the work was completed ... on time ... and within 2% of the projected budget. |
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