Is Your Company Managing You?

There just aren’t enough hours in the day!

Yes, I’ve said this many times myself. Sometimes it feels that you simply have no control over your schedule.

There is no doubt that Industrial Leadership is a serious challenge even in the best of times. There are so many diverse responsibilities to be attended to, challenges to deal with, crises to overcome, and opportunities to pursue.

Just look at the table of contents of this book. Clearly, Industrial Leadership isn’t a narrowly focused expertise or discipline. To survive, let alone achieving any measure of success, the Industrial Leader must diligently oversee all aspects of the company organization, from technical aspects of the manufacturing process, the safety of employees and contractors, product and/or service quality, environmental compliance, financial performance as well as strategic aspects of financial leadership, a broad range of HR tasks including protecting the organization from corruption and protecting employees from exploitation by loan sharks, supply chain strategy including cost strategy, sales and product development, and personal development. There is even a chapter about networking … how can one ever expect to devote time to networking and personal development while attending to all of the other leadership responsibilities?

Major facilities owned and operated by multinational conglomerates typically benefit from a global team of specialists, experienced professionals recruited from peer companies and competitors, and bright young specialists selected from the best domestic universities. However, the majority of industrial facilities are small to medium sized ventures managed by a very small team of professionals who each oversee multiple functions. For example, the Accounting Manager may also take care of Administration and HR. The Operations Manager is also the Maintenance Manager. The Safety Manager oversees the Quality function. The Supply Chain Manager also takes care of Finished Goods. The Managing Director also serves as the Plant Manager and Sales Manager.

In many ways, leading a small industrial facility can be significantly more challenging than running a major facility. However, regardless of the size and scope of the business, the modern competitive environment demands that each employee and each manager be fully utilized, with headcount strictly limited.

Delegate: To Who

My whole team is busy, everyone is working hard. I know I am doing tasks that should be delegated to others. I know that my key management responsibilities are not getting done because I’m working on non-core tasks. However, if I delegate these tasks, either they won’t get done properly, or they will get done at the expense of other important tasks.

You say I don’t delegate effectively. I say I am very willing to delegate, if only I had someone to whom I could responsibly delegate these tasks.

Delegation is a Process, not an Act

Delegation is not simply assigning a task to someone else, like kids passing the hot potato. If it was this easy, everyone could do it.

Your responsibility as a leader is to manage your entire organization to ensure that tasks are prioritized and accomplished in the most effective and efficient manner by the people most capable of doing so. This means managing your managers, managing your organization, and managing yourself.

Many managers, supervisors, and employees focus on tasks that they like, or tasks that get the most unwanted attention. Some tasks may lack priority, many tasks should be redefined, reassigned, or removed from the task list.

You will never be successful at managing your job responsibilities until you manage and mentor your subordinates to most effectively manage their job responsibilities.

Task Inventory

Each organization is unique. Your company has its own set of operational requirements that must be successfully fulfilled in order to meet your business and financial obligations. Each organization also has a unique set of human resources, skills, and other assets to accomplish these requirements.

If you intend to manage these responsibilities, you must first identify the discrete tasks that must be accomplished to do so. Take this seriously; many organizations find themselves spending large amounts of time on tasks which do not directly contribute to achieving the organizational goals. Other tasks that are required are often being performed by the wrong people, in the wrong way, lacking in efficiency, and wasting valuable time and resources.

Take the time to clearly identify the tasks, understand how the tasks are being performed, and evaluate which tasks can be eliminated, combined, streamlined, outsourced, or otherwise improved to make your organization more effective.

Do your Accountants rely on Excel spreadsheets to accomplish various tasks? With modern integrated Accounting software, there should almost never be any requirement to generate or maintain an Excel spreadsheet. Work with your Accounting package supplier to fully automate every function, including report generation and trend charting. A small investment in software configuration will deliver major reductions in labor, as well as minimize opportunities for mistakes (or the dreaded lost file / corrupted file).

You will never be successful in managing the workload in your company until you have clarity on the tasks that your organization is performing.

Process Mapping

Once you have identified the tasks that must be done, you must carefully evaluate how the tasks are being performed.

Process Mapping is a valuable technique to understand and define more complicated tasks. For example, the process of executing a Purchase Order is a great example of a task that should be evaluated using a Process Map.

Prepare to be surprised when you gain visibility on how key tasks are actually being performed. Tasks are typically allowed to evolve seemingly without any logic or reason, until they become convoluted, confused, inefficient wasters of time and talent.

Processes don’t naturally organize themselves into their most efficient form. Teams don’t instinctively understand or appreciate the most effective method of accomplishing a process. Process Mapping is a great tool to identify wasteful tasks, allowing the organization to achieve the most efficient, streamlined process.

A great resource for Process Mapping is “Improving Performance: How to Manage the White Space on the Organization Chart” by Geary A. Rummler and Alan P. Brache.

Task Scheduling and Workload Distribution

Procrastination is a very common human trait. We have all been guilty of procrastinating at one time or another. Some of us are champion procrastinators, never completing any task until the last minute.

After you have rationalized the various tasks performed by your organization, and have worked diligently and creatively to make each task and process as efficient and streamlined as possible, you must consider task scheduling. Determine firm dates for completing various tasks. Never allow or tolerate late or last minute task completion, especially when subsequent tasks such as month end closing depends on timely completion of precursor tasks.

Do not overlook opportunities to achieve a more balanced distribution of workload. Many tasks do not require highly specialized skills. Such tasks simply require a well-defined process and some training to efficiently and effectively follow the process to complete the task.

Do not allow physical or virtual walls to prevent a fair and prudent distribution of tasks. There is no reason why the Administration Officer can’t assist the HR department with time and attendance, or assist Accounting with some tasks. Remember, everyone is working for the same team.


To achieve the full potential of your organization, your organization needs to focus on its core competencies. Anything that is not integral to your business should be evaluated for outsourcing.

In recent years, payroll outsourcing is becoming more common. This is a good example of using an outside specialist organization to most efficiently execute a very important but non-core task. Payroll is certainly very important; if your staff doesn’t get paid correctly and on time, you can be sure they won’t be your staff for long. They’ll be working for someone else. Yes, important, even vital tasks can be effectively outsourced.

Accounting Outsourcing is becoming increasingly common. Traditionally, accounting was a labor intensive, paperwork intensive function. The flow of paper documents was a fundamental, physical limitation preventing outsourcing.

Today, nearly all accounting functions are performed using third party accounting software packages. All data, whether sales transactions, purchasing and expense transactions, inventory movements, etc., are recorded entirely using integrated software tools. Even more importantly, modern software packages are fully integrated with the Internet, so a transaction entered in one physical location can immediately be processed by someone in the next room or halfway around the world. Physical proximity is no longer a practical limitation to accounting transactions.

Modern Accounting Outsourcing contractors can completely manage nearly all of your accounting transactions, including report generation and flagging potential troublesome trends or issues, from a completely remote location.

Today many companies are also outsourcing some or all of their Maintenance tasks, Warehousing / Logistics, IT, Security, Housekeeping, etc.

Due to scale efficiencies and expertise, outsourcing contractors can often do a better job than your staff, more efficiently, more reliably, and for lower total cost.

Manage Your Company, Don’t Let It Manage You

I often find Managers aren’t really managing anything. These managers could more accurately be called “Caretakers.” They just monitor the company activities, and keep things chugging along.

For some organizations, a Caretaker role is the appropriate leadership model. If your company produces and delivers a well-established product or service, has a stable and loyal customer base, has little opportunity or appetite for growth or product development, and does not face or risk strong competition or disruptive new technology, then the Caretaker role might be ideal.

However, I observe that there are fewer and fewer organizations that enjoy such entrenched and persistent stability that they have no need or incentive to pursue improvements. What I do see is Caretaker managers running companies that desperately need enlightened and inspired leadership to realize their full potential.

I also see managers who recognize that their organization needs to change, evolve, improve, and grow to survive in an increasingly competitive global market. However, they are so overwhelmed with the daily crises, challenges, workload, and both internal and external demands that they are virtually paralyzed. They work too many hours, suffer from stress, and despite best intentions never manage to gain control over their own workload or that of their team.

Do not allow yourself to be managed by the crisis of the day. Do not allow your team to struggle day in and day out, never achieving success in their positions and departments. Don’t succumb to the easy option of throwing more people at the problem. Without a well developed operating environment, more people merely creates more complexity and less transparency, increasing your costs, reducing your competitiveness, and makes it more likely that your organization will never achieve the efficiency that can and must be realized.

Congratulations, you are the Manager. It is time to start Managing. You have many tools in your toolbox. Use them skillfully, and you will become the Manager that your team, company, shareholders, and customers require you to be.

Frank T.

Human Resources: Vital Resources

Industrial leaders are typically focused on the daily priorities of running their manufacturing operation, ensuring that the supply chain functions smoothly, dealing with technical or quality issues, and responding to customer or sales inquiries, issues, opportunities, or complaints.

Unfortunately, too few managers recognize the importance of the Human Resource function, or simply choose to delegate all responsibility for HR to the HR manager.

Industrial Leadership is a team sport. Of course it is reasonable to expect the HR Manager to manage and lead the HR function. The same applies to quality, safety, supply chain, operations, etc.

However, there is a significant difference between delegating and disregarding. I find many managers delegate quality responsibility to the QC department, delegate procurement functions to the Purchasing Department, but completely disregard HR functions.

When I discuss quality with a Plant Manager, I find that the manager is deeply familiar with the quality process, and is well informed about the quality systems and standards to which the company operates. The manager frequently reviews the quality performance reports and charts, and seeks to address any quality issues that may be arising. When outstanding quality performance is achieved, the manager eagerly announces, recognizes, and rewards the team for the achievement. The manager also gets directly involved to mentor the team in overcoming any issue that might be impeding the quality performance.

Many Industrial Leaders do not feel confident or competent when dealing with the Finance or Accounting Department. However, this does not deter most leaders from recognizing the importance of financial performance. They sit with the Accounting Manager on a frequent basis, review the financial performance of the organization, seek to understand any issues, and work directly with the Accounting Manager to address any issues or opportunities. They also closely monitor the P&L if for no other reason than to anticipate the bonus that they are likely to earn, or to make changes to minimize any losses and protect their job and career.

Regretfully, I too frequently observe that the HR department rarely receives the same quality of engagement, oversight, and support from the Plant Manager that other departments enjoy. Too many Plant Managers treat the HR function as little more than an unwelcome distraction from their priority tasks of running a successful business. Discipline, turnover, annual reviews, time and attendance issues, salary actions; don’t bother me with the details, just deal with the issues so I can focus on the important tasks.

HR: Human Realities

HR should never be viewed as a distraction. The HR function is certainly not less important than quality, supply chain, accounting, or sales.

Your employees are truly vital company resources. You depend upon each individual, as well as each group, team, or function, to perform their responsibilities properly, professionally, reliably, and consistently. You expect, or at least hope for, loyalty and enthusiasm from your employees. As your business develops, you need each employee to improve, expand, and grow his or her skills and experience to best support the company to achieve its broadest organizational objectives.

You have undoubtedly taken VIP visitors on a tour of your facility. You proudly take your visitor to show them the heart of your operation; the most important piece of equipment or the vital process that fundamentally defines the success of your business. You proudly describe the process details, the developmental history of the process, the key process parameters, the performance statistics such as the high output yield or the very low loss or waste. You proudly introduce the supervisor to your visitor by first name, and you may even know the names of many of the operators and technicians involved with the process.

Your VIP visitor clearly understands that you are proud of this fundamental process, are deeply engaged with the process, and understand all technical and operational details of this process inside and out. As you conclude the plant tour, your VIP has total confidence that you are the captain of your vessel, and that you and your vessel are shipshape You are fully prepared, competent, and qualified to navigate through the most difficult water and dangerous weather to deliver your passengers and cargo to your destination safely and on schedule.

Now, imagine that your VIP visitor doesn’t want to tour your facility. Instead, you are asked to take the VIP visitor on a tour of your HR department.

Are you capable of giving the same quality of introduction to the HR department? Are you confident to discuss the details of the HR department, the fundamentals of your HR policy, the developmental history of your HR process, the vital HR statistics such as turnover, sickness, employee training and development, disciplinary actions and the intervention steps to promote responsible behaviors and avoid incidents that lead to disciplinary violations. Can you explain to the VIP the aspects of your HR function that you are most proud of, and describe the current initiatives that you are pursuing to take your HR function to the next level of achievement?

At the end of your HR department tour, would your VIP visitor have the same level of confidence in you? Most likely, the VIP would leave the tour concerned that you’re obviously not familiar with the charts, can’t plot a course, and if the HR manager depends upon your guidance and leadership, your vessel will most likely end up on the rocks or sunk far beneath the waves, with all hands lost.

No Second Chances

Being an Industrial Leader is a very serious business. Mistakes can have very serious consequences. Out on the factory floor, a single major mistake can result in serious disruption of your production process, serious damage to expensive equipment, massive warranty claims for defective products that could threaten the financial health of the business, and could even lead to the death or serious injury of facility employees, contractors, or to consumers of your defective product.

Fortunately, most factory mistakes don’t result in such serious consequences. Our modern industrial processes have safeguards to protect against most if not all foreseeable mistakes.

The most common mistakes involve small changes that just don’t work as well as we might have hoped. We try a new machine or component; if it works we keep it, if it doesn’t we discard it or upgrade it and try again.

If we install a new motor on a machine, and the motor vibrates, runs hot, makes too much noise, or otherwise fails to meet our expectations, we can replace it. The machine doesn’t get angry that we installed a bad motor on it. The machine doesn’t hold a grudge. The machine doesn’t tell other machines that we are thoughtless and incompetent. The machine doesn’t quit and go work for a competitor.

Regretfully, most humans are far less tolerant when they are subject to mistakes, whether real or imagined. If you hire or transfer an employee into a position where their salary is significantly more or less than their peers in the same job, you can be sure that someone will perceive this as a mistake and will not be happy. Are you going to raise everyone’s salary to match the highest salary? Are you going to cut the high salary to match the average for the position? Are you going to terminate or relocate the new employee to solve the problem, even if the employee has performed well in the position and prefers to stay? Is everyone or anyone going to understand and accept your solution to the problem? Will you or your management team ever be forgiven for making the mistake?

Most HR mistakes do not lead to loss of life, though workplace violence is a modern reality. Disgruntled employees can cause great trauma and disruption to a workplace. Nearly all HR mistakes carry serious consequences, and most mistakes can be very difficult to satisfactorily address and resolve.

HR issues involve real people, and mistakes or issues can directly and seriously impact both the employee and the employee’s family. Terminations are especially disruptive and damaging to an employee and family. Hiring too many people, with the intention of keeping the best and terminating the poor performers, can have devastating consequences on those individuals who are terminated. Did they fail to perform adequately, or did you fail to recruit them responsibly?

If you are an Industrial Leader who thinks you can delegate and disregard HR issues, secure in the knowledge that you are devoting your time to the more important priorities of your company, you are seriously mistaken.

VR Department

You are not the Accounting expert, but you diligently monitor the Accounting Department, ask responsible questions, seek to provide support and encouragement, and strive to improve your personal accounting and finance skills.

You are not the Quality expert, but you have carefully read and considered your Quality Manual, you have studied the ISO 9000 process, you have participated in surveillance audits, quality reviews, and supplier audits. You routinely review the quality performance statistics and reports. You promote and support the quality process and the quality department, and you work to expand and enhance your knowledge of quality management.

You are not the Process Engineer, and you might not have an engineering degree, or have a degree in an unrelated engineering discipline. However, you recognize the importance of process integrity, you have worked diligently to understand the process fundamentals, and you understand the risks and hazards associated with the process. You engage with the process experts, and you seek responsible opportunities to continuously improve the process to maximize the operational and financial performance of the business to best serve your shareholders, stakeholders, and customers.

Just because you are not an HR expert either, do not make the mistake of failing to give equal attention to the HR department. I don’t recommend that you rename your HR department, because it might cause confusion both internally and externally. However, I strongly recommend that you think of your HR function as being the Vital Resources Department.

You have a lot of diverse responsibilities. You have daily challenges that are competing for your time and attention. It is too easy to relegate HR issues to the bottom of your priority list, where they will languish until the issues grow into crises.

Manage your HR Department just as you do any other vital organizational function or department. Even though you are not an HR expert, you must accept and internalize the vital importance of the HR function.

You must carefully read and understand the Employee Manual and all other HR Policies and Procedures. You are the leader of the company; you have the big picture. You understand how all the pieces of your corporate puzzle fit together. Does your Employee Manual and HR Policies and Procedures integrate properly into your vision of your organization?

I find that there are typically small issues, and sometimes major issues, where HR documentation is not properly optimized to achieve the best performance for the organization. Does this mean the HR manager failed? Almost certainly not. What it does mean is that the HR Manager doesn’t have access to the same “big picture” or “helicopter view” that the Plant Manager or Managing Director has. It is always the responsibility of the leader to ensure that each piece of the management puzzle fits properly and optimally into the overall organizational puzzle.

You must be a partner and mentor to the HR Manager. Provide your best support and encouragement to the HR function. Ensure that the HR department has the resources they require to most effectively and efficiently discharge their responsibilities.

Seek every opportunity to improve your HR skills and competencies.

When you take care of your Vital Resources with the same diligence and intensity as you devote to your other business functions and departments, you will achieve the maximum performance and efficiency from each of your individual employees, groups, teams, and departments. Your organization will never achieve its full potential unless your Vital Resources Department receives the support, supervision, and recognition that it deserves.

Frank T.

Conquering Corruption

“Trust, but verify.”

— Ronald Reagan


When the word “corruption” is mentioned, the thoughts of many people run to politics and politicians. However, the dark world of corruption is far deeper and broader, encompassing much more than just political corruption.

In Industry, there are many opportunities for corruption to rear its villainous visage. If we think in terms of industrial economics, there are incentives to engage in corrupt acts in both procurement (input) and sales (output) functions.

Most industrial managers are well aware of the US Foreign Corrupt Practices Act (FCPA) and the UK “Bribery Act 2010.” These laws cast broad nets to ensnare wrongful actors primarily involving bribery or kickbacks in favor of sales or supply contracts, especially involving foreign government officials.

The FCPA and Bribery Act are very serious laws, and managers must fully respect and diligently comply with the provisions of these laws. If you as a manager have any doubts or questions concerning the coverage or details of these laws, you should do some urgent research and if necessary seek professional advice.

The good news is that output side corruption or bribery requires resources. Anyone seeking to engage in output side corruption needs to have some resources at their disposal to realistically execute these corrupt acts. You as manager, assuming of course that you are not corrupt and reject corruption as a business tactic, can effectively protect against most forms of FCPA or UK Bribery offenses by maintaining strict control over budgets, and absolutely refusing to fund or authorize any spending that might directly or indirectly be used to sponsor corrupt acts.

At the risk of oversimplification, management holds the purse strings, and therefore a responsible manager can realistically protect against most if not all forms of output corruption and bribery.

Congratulations, this means that you as a responsible and engaged manager have a very good tools and opportunities to prevent corrupt output acts involving your organization, and hence can realistically protect yourself from prosecution and incarceration.

Unfortunately, this does not mean that you get a free pass on corruption and bribery.

Many industrial organizations have been seriously damaged, and in some cases completely destroyed and bankrupted, due to what I call input corruption.

Input Corruption

Competition for most products and services is fierce, and growingly increasingly intense. Competitors are continuously improving the quality of their products, and are simultaneously driving costs out of their supply chain and internal processes to maximize their competitive strength.

Some competitors, realizing that they are unable or unwilling to compete on a fair and level plane, seek to tilt the competitive odds in their favor.

The dark and secretive world of corruption is, by its nature, difficult to comprehend and understand. The economic incentives of corruption can be significant for the successful participants. This leads to a very creative environment and an incredibly diverse range of corrupt practices designed to benefit the corrupt sponsors and their conspirators in crime.

Industrial Corruption 101

OK, let’s learn about being corrupt.

Virtually every department, position, and activity can be corrupted. However, one of the most common targets for corruption is in the procurement activity.

Suppliers are desperate to sell their products and services. Competition is fierce, and the stakes can be very high. Failure to win an order can mean the failure of the company and ultimately bankruptcy. Even if a supplier is not facing bankruptcy, the pressure and incentives to win an order can be very high.

Procurement corruption can therefore be very lucrative for the participants, and can be initiated by either the purchasing officer or by the supplier. In either case, a kickback incentive is negotiated in favor of a successful purchase order.

Make no mistake, regardless of whether procurement corruption is initiated by the purchasing or supplying organization, the cost of corruption is paid in full by the purchaser, i.e. your organization.

Maintenance or services are another common area for input corruption. Even if the service supplier is competitively selected by a non-corrupt procurement process, ample opportunities exist for corrupt actors to benefit from corrupt practices.

A very common corrupt service scheme is invoicing for excessive or unnecessary services. An inside conspirator, such as a maintenance engineer, agrees to validate invoices and documentation for services in excess of those actually provided, and possibly authorizing unnecessary replacement parts, in favor of a kickback on a portion of the incremental profit earned by the corrupt service supplier.

I find that most honorable managers are quite clueless when it comes to the incredible diversity of input corruption opportunities. I don’t claim to be an expert either. Perhaps only those that have worn black hats in their past can fully appreciate the power and creativity of dark influences.

Believing in Ghosts

You can’t seek a cure unless you are ready to acknowledge the problem.

Many managers have expressed concerns to me that they think they have a corruption problem in their organization. However, they lack evidence, and don’t know what to do.

How can you act when you have no evidence of wrongdoing?

In many cases, acknowledging that corruption possibly or even likely exists within an organization is akin to acknowledging a belief in ghosts. You worry about its existence despite a lack of hard evidence.

Corruption is Corrosive! 

You might not have hard evidence of input corruption in your organization. However, rest assured that your staff is aware of its spectral presence. They might not know the details, because dark influences shun the light and leave precious little evidence.

However, the staff quickly recognizes that some people have more disposable income than they should have. They notice secret conversations, when certain individuals frequently go outside to have private mobile phone conversations. They observe favoritism, when it seems like someone is especially friendly with a particular vendor, or becomes very defensive when a vendor change is suggested.

It is also common for staff to wonder why Management doesn’t recognize these same signs. Surely the boss has noticed this same curious behavior. Is the boss incompetent, or is he / she part of the corrupt conspiracy?

Do not allow corruption to corrode your team loyalty, cohesion, trust, and morale.

Anti-Corruption Inoculation

You are the leader of an Industrial Organization. You must protect your organization from Corruption. Don’t wait until you have solid evidence of a crime; you may never be lucky enough to get such evidence.

Your integrity is also on the line. You may not be involved in corruption, you may not support corrupt acts of your staff, your motives may be entirely noble and your heart pure. Unfortunately, your staff has no way of knowing that. Your staff will simply witness the circumstantial evidence of Input Corruption, and you will be blamed for being either complicit or incompetent.

Don’t waste another day. You must implement a pro-active program to eliminate and prevent corruption.

Create an Anti-Corruption Policy: Prepare a clear, concise, written policy. Your policy should:

  • Affirm your commitment to operate your business ethically and with integrity.
  • Strive to compete on a level playing field and to provide a level playing field for your suppliers to compete to serve the company.
  • Prohibit and prevent all forms of corruption and bribery, and to implement programs to promote integrity, honesty, and accountability in the exercise of all responsibilities and duties.
  • Implement and maintain internal systems and controls to prevent unethical conduct by employees, ensure good governance, and instill the values of integrity and accountability.
  • Provide communication channels for employees and stakeholders to confidentially report suspicious circumstances without risk of reprisal.

Communicate Your Anti-Corruption Policy: You are the boss. You are the leader. You are the moral compass for your organization. You must clearly and strongly communicate that your organization absolutely has no tolerance for any form of corruption.

Do not trust your deputy managers to communicate your policy. Do not take any risk that your policy or your message is diluted during dissemination. Accept this as your responsibility, and discharge it with resolute enthusiasm and sincerity.

Engage Directly with Suppliers: Input corruption cannot occur without the cooperation and complicity of suppliers. Again, do not allow your message the opportunity to be diluted during dissemination.

Be clear, be strict, be honest. State in the most clear terms that your organization values its relationship with its product and service suppliers, and that your success is built upon the success of your relationships with your supply chain. Indicate that your organization places its highest emphasis on honest, honorable, and mutually valuable relationships. Indicate that corrupt acts, no matter how small, have no place in your supplier relationships. Gifts or other forms of incentives, esteem, or gratitude exceeding a token or nominal value are not welcome. Emphasize that any corrupt acts, regardless of form or method, are completely unacceptable and will be dealt with in the most strict and severe manner.

Most importantly, include the anti-corruption statement and Whistleblower Contact Information to allow suppliers to report any corrupt action or inquiry.

I recommend that you establish a multi-tiered communication strategy to ensure that your message reaches each supplier, and that the receipt is validated.

But I have 1,000 suppliers, and even more prospective suppliers … how can I possibly communicate to all of them?

Welcome to the 21st Century. With our diverse digital infrastructure, there is never any excuse for not being able to communicate with one or one million people.

Bidders: With every bid, require your prospective bidders to submit a signed acknowledgement accepting your company’s anti-corruption policy. This should be signed by an authorized director, and I suggest that you also collect signed copies from the manager(s) of the relevant supplier departments. You need to be sure that your anti-corruption message has been received and understood by the people who are in a position to engage in, prevent, or witness corrupt acts.

Suppliers: Each supplier should be required to sign and return your company’s anti-corruption policy at least annually. If a single supplier provides multiple products from different divisions or locations, be sure that each division / location has signed and returned an acknowledgement form.

I also recommend that your anti-corruption policy be clearly referenced on your standard Purchase Order and Purchase Requisition forms. Most importantly, ensure that the whistleblower hotline contact information is provided. You must maximize the risk that a corrupt act or inquiry will be reported and acted upon, to have the best hope of preventing a corrupt act from even being considered.

Quality: Be sure to build your anti-corruption program to eliminate opportunities for evasion.

Most likely your organization has a Quality Department, and follows a quality policy manual that includes supplier qualifications and validation.

I think you can agree that anti-corruption is a quality that you wish to encourage and enforce among your supply chain.

I suggest that you directly involve the Quality Department in receiving, recording, and validating the anti-corruption acknowledgements from suppliers. By diversifying the responsibility for anti-corruption among multiple departments, you significantly increase the likelihood that your system cannot be compromised.

Localized Standards

Today most Industrial facilities are located overseas. Our parent companies insist that we comply with the USA standard “FCPA” or the UK “Anti-Bribery Act”. However, our employees may wonder why they should be seriously concerned with compliance to foreign standards.

We are a sovereign nation, we have our own culture, laws, and standards. Why should we subjugate ourselves to foreign laws and standards?

The simple answer is that your company exists in a globalized business community, and that FCPA and other laws and standards are relevant to your business regardless of where it is located.

However, why limit yourself to compliance only to these important but “foreign” laws.

Most countries and jurisdictions have their own very good anti-corruption initiatives. If you are serious about anti-corruption, I recommend that you seriously look for local initiatives to compliment your FCPA and Anti-Bribery compliance programs.

Here in Thailand, for example, the Thai Collective Action Council against Corruption (Thai CAC) is taking a high profile public leadership position against corruption. The Thai CAC offers membership and certification programs for companies to declare and demonstrate their intent to eliminate all forms of corruption.

By getting your company directly involved with respected local anti-corruption initiatives, you are clearly indicating through both words and deeds your determination to eliminate corruption from your organization.

Risks and Rewards

Ok, perhaps you agree that input corruption is a dark problem that needs to be addressed. You think you may have a problem, and you would like to take some prudent steps to minimize your exposure.

Congratulations, acknowledging the problem is a major step towards solving it.

However, you were looking for a silver bullet, and all I have given you is a new level of bureaucracy to further complicate your business systems.

Thanks a lot!

If you and your team view this as another level of bureaucracy, this program will fail. Frankly, if you allow your team to view any of your internal initiatives  and policies as just another level of mindless bureaucracy, your programs are doomed for failure.

Is Safety just another level of mindless bureaucracy? Is Quality and ISO 9000 mind numbing bureaucracy. Do you allow your team or yourself to be seen to be just going through the motions to comply with Corporate edicts without enthusiasm?

You are the boss, and your integrity is always on the line. If you allow your team to think that any program or policy is just a bureaucratic waste of time, you compromise both the program and your personal integrity. You must either defend the policy and ensure that it is implemented in the most efficient, effective manner, or you must fight to eliminate the program. Industry today is too competitive to allow wasteful programs to be perpetuated.

However, if you are an enlightened manager, if you have experienced or witnessed the destructive impact of Input Corruption, you will quickly value the importance of an effective Anti-Corruption program.

Do spoken and written words really make a difference? Absolutely!

The vast majority of your staff want to work for a high quality, honorable, safe company. They will be proud to serve a company that does not allow a few rogue individuals to leverage their positions to generate personal profit at the expense of the organization.

By creating a highly visible, well documented, and rigorously enforced anti-corruption policy, you significantly increase the risk inherent in any corrupt activities. If the risk is too high, potentially corrupt individuals will not seek the rewards to be gained from corrupt acts.

Eliminating the scourge of corruption from your organization is hard, but far from impossible and eminently well worth the effort. Take prudent, pro-active steps to create, communicate, implement, and execute a strong anti-corruption policy.

You can and must inoculate your business to protect it from any and all forms of corruption and corrupt influences.

Frank T.

Thai Customs Business Conference 7 July 2016

Thai Customs Business Conference

On Thursday 7 July 2016 I had the privilege of attending the first ever Thai Customs – Business Conference, which was held at the S31 Sukhumvit Hotel in Bangkok.

This conference, which was attended by around 100 conference participants from a broad range of interested stakeholders including many Chambers of Commerce, represented a refreshing outreach by the Thai Customs Department to the Thailand business community.

The recently appointed Director General of Thai Customs, K. Kulit Sumbatsiri, stated very clearly and concisely that Thai Customs needs to adjust and change from being a Tax Collector to become a Trade Facilitator, and no longer be an obstacle to trade and investment.

He also indicated in his opening remarks that Thailand can no longer count on customs tax collection as a significant source of revenue, because tariffs are being restructured to increase Thai trade competitiveness.

The Thai Customs Department is currently executing its new five year plan, titled “Future Customs 2020.” This plan will see the transformation of the Thai Customs Department to become a trade facilitator for Thailand business activities.

New initiatives that the Thai Customs Department is diligently pursuing include:

National Single Window: This has been discussed for more than ten years, but is now being diligently pursued. The National Single Window will effectively create a “One Stop Shop” for importers, where the Customs Department will be electronically linked to 36 related government agencies in a database, to allow importers to pursue import licenses from relevant agencies such as the Agricultural Department, Ministry of Industry, and even the Ministry of Public Health. The goal is to facilitate prompt and convenient import license approvals. A pilot program involving the five most frequently imported goods will soon be launched.

Pre-Arrival System: This is a system to expedite customs arrival formalities. Manifests from air and ocean shipments will be transmitted to Thai Customs six hours in advance of arrival. Thai Customs will analyze the manifests during a 4 hour period prior to shipment arrival, and pre-approve shipments for the Green Line or Red Line channels. The Pre-Arrival Process of Suvarnabhumi Airport is being used as a model. The goal is to expand this system to other airports and seaports based on the success of the Suvarnabhumi model.

Authorized Economic Operator Program (AEO): The AEO program is a successor to the previous 1999 Gold Card Scheme and the 2009 Licensed Customs Broker program. AEO was launched in 2013 upon the cancellation of the Licensed Custom Broker program. Today Thailand has 297 AEO Operators, including 147 Customs Brokers and 150 Importers / Exporters.

The advantages of AEO include exemption from physical examination except for related laws otherwise stated or in the case of suspicions. Also, AEO members will receive priority for conducting physical examinations when they are required.

Thailand is in the process of negotiating reciprocal “Mutual Recognition Arrangements (MRA)” with Hong Kong, Singapore, Malaysia, and S. Korea. Hong Kong and Thailand have already executed an MRA agreement, and a pilot operation will begin later this year.

Advanced Tariff Ruling (ATR): This is a service for importers to seek an advance ruling on tariff classification of goods prior to import into Thailand, upon a written request. This will provide certainty with regard to the correct tariff classification for imported goods. An ATR ruling is effective for two years from the date of the ruling, and will be issued within 60 official working days after application.

Digital Customs and Customs Mobile Application: The Thai Customs Department is working on a mobile application that will greatly facilitate the importation and customs clearance process.

During the conference, the Thai Customs Department officials also provided an update on recent and pending revisions to Thai Customs Laws, some of which are nearly 100 years old. Most noteworthy are incremental changes to the Rewards and Bribes laws, which will limit the size of rewards paid to Customs officials.

I very much appreciated the information and vision that was shared by the Thai Customs Department. I am cautiously optimistic that the Thai Customs Department can effectively transform itself into a modern, professional, world-class trade facilitator.

Frank T.

Loan Sharks Circling

Is there no end to the number and types of issues that an Industrial Leader must deal with?

Loan Sharks are prevalent here in Thailand and throughout most of Asia, but predatory loans of various types are a global phenomenon.

In the USA, many employees get trapped into Payday Loans, which are small loans with high interest rates and fees of up to 400% on an annualized basis.

Unlike Payday Loans in the USA, which are legal, loans from Loan Sharks are illegal in most jurisdictions. Unfortunately, they remain prevalent, widespread, and highly destructive to those unfortunate individuals who become trapped by predatory loan agents.

Many company work rules forbid employees to loan money to each other for profit. Here is an example of language that is common in many Thailand based work rules:

An Employee shall not acquire any advantage by money lending among Employees, play illegal lottery, be a collector or a member of a money pool, or perform any activity for profit. 

In nearly every company that I have managed here in Thailand, I have run into issues concerning Loan Sharks. From my many discussions and relationships with companies and business leaders in other countries, Loan Sharks and predatory loans are a scourge that impacts employees everywhere.

Not the Company’s Business

Okay, I understand that Loan Sharks are scum, and that predatory loans are a terrible trap that ensnares many victims. However, why do I need to worry about this problem. I already have enough problems to manage in my factory.

Life is always going to be a challenge, and my employees and their families will sometimes suffer minor or major crises. Do I need to be personally involved every time someone’s puppy dog gets run over by a car?

Employee Retention and Loyalty Is Your Business

Yes, it is true that even with the best of intentions, an Industrial Leader cannot take responsibility for solving every problem that an employee might encounter. We can and always should be compassionate, but there are genuine limits on what issues we can and should seek to address.

The financial security and personal safety of your employees must be a priority. Predatory loans and loan sharks can and often do sink your employees deep into debt with almost no hope of salvation. When an employee is paying nearly all of his salary directly to a loan shark, the employee loses the capacity to be a loyal and responsible employee. Escaping the clutches of the loan shark is frequently the single highest priority of an ensnared victim.

It is not uncommon for a loan shark victim to simply disappear, individually or as an entire family. You lose a valued employee, and the employee loses a job, perhaps a career, and certainly his or her reputation as a loyal employee.

Shark Warning: No Swimming

I will suggest that the worst Loan Shark is the one who is working for your company, ensnaring your valued employees.

In my personal experience, employee Loan Sharks are extremely common, and extremely damaging. These in-house Loan Sharks are frequently in positions of authority, such as foremen, supervisors, or department managers. They loan money to employees, including subordinates in their own departments, then use their position of authority to enforce repayment of the loan.

I have personally encountered several instances of Loan Sharks operating inside my companies. Each shark was in a supervisory position, and had ensnared a number of victims. Some victims managed to pay back the loans, others sunk deeper into debt and despair as egregious interest charges mounted.

One revelation common to each case was that the staff in general was well aware of the Loan Sharking activities. Most of the employees were well aware of the rumors concerning who was Loan Sharking, and who were victims. People are generally poor at keeping secrets, and desperate people share their despair with their friends and colleagues.

Unfortunately, rumors about rules violations (and indeed law violations) such as Loan Sharking typically only reach the ears of Sr. Management when the problem becomes severe. By that time, employees may assume that Management must also know of the problems and the rules violations, and wonder why Management takes no action to address the problem. Management integrity can be seriously impacted even though the manager is truly unaware of the problem and would be sympathetic if aware.

Shark Repellant

Don’t assume or hope that your company doesn’t have problems with Loan Sharks. Most likely you already have at least one active Loan Shark on your staff, or you soon will. Without a proactive policy, eventually (likely sooner rather than later) someone on your team will take advantage of another employee and ensnare them with a predatory loan.

Check the law in your jurisdiction. Be sure you understand what the law says about predatory loans, non-bank loans, and loan sharks.

Check your work rules. If your work rules don’t clearly and strictly prohibit money lending among employees, revise them accordingly. Naturally, you should always consult with a lawyer or other legal authority to ensure that your rules are properly written and are enforceable.

Most importantly, you as leader must very clearly, loudly, and publicly announce that lending money among employees is strictly prohibited, and anyone taking advantage of another employee by lending money will be strictly punished. This message must be repeated periodically, probably every six months, certainly not less than annually. Your organization must clearly understand that your company culture of care and respect for fellow employees means that predatory loan sharking is completely unacceptable and will not be tolerated.

Teaching Financial Responsibility

Eliminating predatory loan sharking within the organization is very important, and must be taken seriously by management.

However, management should also seek to provide employees with basic financial skills and advice to enable them to effectively manage their money and protect their families.

I encourage companies to include Personal Financial Skills training for all employees. Training can be provided in the form of a seminar, a take-home pamphlet, a series of 5 minute “tool box talks”, and/or other forms of engagement and outreach. It takes some effort to assemble a financial responsibility program, but it is well worth the effort.

Actively promote employee loyalty and tenure as a source of financial stability. Employees who are employed for several years can often qualify for bank loans, whereas “job jumpers” have difficulty gaining bank credit.

Don’t neglect discussing employee health and personal safety practices. Many people fall into debt and get ensnared by loan sharks due to unexpected medical expenses. A healthy and responsible lifestyle, especially avoiding accidents and injuries from contact sports, intoxicated driving, irresponsible motorcycle riding, or unsafe home repairs, can eliminate many if not most unexpected major medical expenses.

Do not wait until loan sharks ensnare and devour your employees and destroy your team loyalty and motivation. Protect your staff and organization today.

Frank T.

New Car Smell: Preserving the Pride

Do you ever sit down and talk with your industrial employees? Do you really get to know them? Do you learn about their troubles and triumphs?

For many factory employees, one of the most proud events in their life is when they buy their first new car. Buying a new car, or even a nice used car, is a major accomplishment and financial commitment. A new car also represents a significant emotional event, announcing to the world that through hard work and dedication, the employee has achieved a very visible symbol of personal success.

I have watched my employees beam with pride as they park their new car in the parking lot. They choose a safe spot where their precious vehicle is unlikely to be bumped by a carelessly opened door. They wash and wax the car to protect the paint from damage. They drive carefully, and don’t follow too closely to other cars or especially trucks to ensure that their car doesn’t get chipped by debris. They don’t let anyone smoke, eat, or drink in their new car; they want to enjoy the new car smell as long as possible.

They also take their car in for routine maintenance, strictly following the recommendations of the owner’s handbook. Oil changes, tire rotations, filters; nothing but the best of care for the beloved new car.

Alas, the new car smell fades over time, and with it fades the pride of ownership. Parking at the back of the lot is too inconvenient; better to take the closest spot available and risk having a door bumped. Washing and vacuuming the car takes time and effort, and the car is surely going to get dirty again the next time it rains.

Fortunately, the car doesn’t seem to mind if an oil change is delayed or skipped entirely. The car owner saves a bit of money, and there is no immediate evidence that the car has suffered due to a skipped maintenance task. The car still (usually) starts every morning, and despite the fact that it is no longer shiny, smells like an old gym locker, and makes strange knocking and squeaking noises, it still manages to carry its owner from one place to another.

Any modern car, even an economy model, can deliver several decades and hundreds of thousands of kilometers of safe transportation if responsibly cared for. The reliability and durability of a modern car is truly amazing.

However, it also seems most true that those individuals who can least afford to replace an aging car are most likely to neglect the care and preventative maintenance of the car. Once the new car smell is gone, neglect replaces pride, complacency takes the place of care, and the reliability of the car rapidly degrades along with its appearance and value.

Okay, I understand that this short story is not surprising. You tell me that this is simply human nature. Love fades. Familiarity breeds contempt. What does this have to do with Industrial Leadership anyway?

Our facility is filled with equipment and systems that are vital to the success of our business. In many cases, the condition of our equipment is not just a matter of performance and efficiency, but human safety and environmental protection can also be compromised by poorly maintained equipment.

Joint Ownership

As a manager, you can observe how an employee takes care of his or her car, but you don’t have any input or control over whether the employee is a responsible car owner or not.

However, you are responsible and accountable for the equipment and systems in your facility.

If you expect your facility to operate safely and reliably as it was designed, and to deliver the maximum operational performance and efficiency with the minimum environmental impact, you need to ensure that your equipment and systems stay “like new”.

Many managers say that they want their employees to “take ownership” of their various tasks. Nothing wrong with this concept. However, the manager must remember that ultimate accountability remains with the manager. Therefore, this is fundamentally a policy of joint-ownership.

Preserving the New Car Smell

Yes, complacency is part of human nature. That does not make it inevitable or desirable. A responsible manager must work to conquer complacency.

I can’t tell you how many times I’ve toured industrial facilities, and seen important equipment that was dirty, scratched, dented, obviously abused, and clearly unloved. A six month old machine that looked like it had already suffered six years of extreme abuse. When the machine then fails prematurely, the manager and team insist that the machine was defective or inadequate. It is the supplier’s fault for supplying an inadequate machine.

Complacency can be conquered. The antidote of complacency is pride. Pride of ownership. Pride of performance. Pride of accomplishment.

An enlightened, responsible manager always insists that each employee or team maintain their equipment and systems in “as new” condition. Not merely clean, but shiny and bright. It is not adequate to merely operate the equipment as it was designed to be operated, it must also be cared for lovingly.

Equally importantly, the manager must recognize and reward employees and teams for their success in maintaining the new car smell. This must be an engrained, continuous activity, a habit, a deeply imbedded aspect of company culture.

But We Have a Janitor

Pride cannot be outsourced. A janitor can sweep floors and empty the garbage cans, but never allow the vital care and cleaning of equipment to be delegated to a janitorial or contractor team.

The manager should always insist that the employee or team responsible for a machine or system also be responsible for the care and cleaning of the system. Allow the employees the opportunity to develop pride in their equipment, just like the pride they show for their first new car.

Care and cleaning is an investment in the long term reliability, efficiency, and effectiveness of the equipment. As manager, you must ensure that you are allocating your employees enough time, along with the tools and other resources, required for them to complete these vital tasks. Don’t expect to preserve the new car smell if you refuse to allocate adequate time and resources, and/or fail to recognize and reward performance.

Be a responsible co-owner of the equipment, and insist that the equipment is preserved every day and every hour of every day to ensure that the new car smell, the shine, and the brand new performance and reliability lasts for the full life of the equipment.

Be Consistent

Don’t expect to be successful if you only implement the new car smell operating philosophy for selected special pieces of equipment and/or only for new equipment. There is no unimportant equipment in your facility, nor are there any unimportant processes or people.

As managers, we don’t always have the luxury to start with a new facility, new equipment, enthusiastic and well trained new employees, and eager new customers. The new car smell philosophy can and should be applied to all equipment and systems, regardless of age or condition.

Don’t expect an employee to have pride of ownership and operation until the employee can also feel pride in his / her equipment. If the equipment is old and dingy, clean it, paint it, restore it. Absolutely fix or remove any broken or unnecessary accessories.

Do not tolerate chips, dents, and scratches that are past evidence of abuse. Tolerance of past abuse is an invitation for ongoing and future abuse.

It may not be practical to restore the machine to “as-new” condition, like an antique car in a museum. However, it is always practical and in fact it is essential that equipment be restored to a condition that affirms that the machine is still vital and valuable.

Rental Equipment

Don’t allow any exceptions for leased or rented equipment, or for equipment provided by contractors or partner organizations.

Care for your leased forklift trucks, your leased office equipment, your leased company car or truck, exactly the same way as you treat the equipment you own.

Remember, your team is totally committed to Safety First as the path to achieving Operational Excellence. Insist that your team always strive to achieve and demonstrate Operational Excellence regardless of the task involved or equipment utilized.

When Outside Help is Required

When significant PM or major maintenance is required, insist that the employee stay with the machine to supervise the care and maintenance. If the employee doesn’t have the necessary training or skill to perform the maintenance, naturally it is very important that the employee leave these tasks to the skilled specialist technicians. However, they should still remain engaged in the maintenance process, watching and learning from the technicians, and ensuring that the technicians treat the equipment with the same care and pride as the employee owner / operator.

Always insist that proper tools are used and proper procedures are followed. If you only provide your team with crappy adjustable wrenches and home made hammers, don’t be surprised to find your valuable equipment stripped and beaten.

Good tools are expensive.

However, bad tools are twice as expensive!

And even worse, poor tools, and/or the wrong tools, are frequently unsafe. Don’t tolerate unsafe or unprofessional performance from your production employees, your maintenance staff, or your third party service technicians.

“New Car Smell” is Addictive

Habits take time to form, and once established, can be just as hard to break. However, addictive substances can quickly capture a person and be very difficult to overcome.

Both legal and illegal addictive substances are a terrible scourge on our society. By making reference to “new car smell” being an addictive substance, I do not mean to demean, diminish, or disparage the genuine problem of substance abuse and addiction.

The direct personal pride that arises when a team and company seeks to maintain the new car smell is very powerful and persistent. And in many ways it is shares many attributes with a true addiction.

You will find that your team is eager to come to work every morning to get a new “fix” of new car smell. They will actively seek opportunities to increase the dose of new car smell they can get every day. Their behavior will be modified by this addiction.

Employee retention and loyalty will be enhanced, because employees won’t want to suffer the withdraw symptoms if they can’t get their daily dose of new car smell.

Recruiting new employees is also enhanced, as existing employees will be eager to share their addiction with their trusted friends, allowing them to also experience the high that comes from pride in a job well done.

Be a champion for new car smell in your workplace. Get your team addicted. Put the “high” in High Performance.

Frank T.