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Election 2014 – Fix the System

Election2014

Election 2014 is upon us and nothing has changed.  We have the same people running the country and the voters are still expecting different results.  Some politicians have been entrenched in Congress for decades.  Please don’t tell me the 2016 ticket will be the same candidates we’ve seen for the past few years…Bush…Clinton…really, America?

The waste associated with the political process is astronomical.  If a publicly traded company were run like our government the shareholders would elect a new board of directors.  The American taxpayer should do the same.

This is my annual “flush the toilet” post.  Honestly, I should post this message every month or so in the hopes it would take hold.  For years we have been conditioned to vote for the most popular, charismatic, experienced, smooth talker.  It’s time for this to stop.  In Election 2014 I’m voting for challengers no matter their party affiliation.  I’m flushing the toilet.

I’m sick and tired of the billions of dollars that are wasted by lobbyists and politicians.  TV ads, fancy dinners, and limo service doesn’t make this country better.  It’s time to tell the elites that we don’t need them telling us how to run our lives.  And oh by the way, it’s time for them to “earn” a living instead of relying on tax dollars.

Did you know Nancy Pelosi will be paid nearly $1 million per year (guaranteed for the rest of her life) for her service to our country?  Did reading that sentence make you throw up in your mouth a little?

This isn’t an attack on the left or the right.  That is just an excellent example of the waste that we the taxpayer have allowed.  Stop the madness, flush the toilet in Election 2014.  We can’t fix what has already occurred but we can sure keep it from getting worse.  Nip it in the bud, cut off the head, cut your losses, or however you want to say it.  The lesser of two evils in the next election isn’t going to cut it any more, flush the toilet.

And keep flushing the toilet until our elected leaders figure out that they are servants of the people.  Keep flushing the toilet until they establish term limits.  Keep flushing the toilet until they have the same health insurance that every other American is stuck with (thank you, ACA).  Keep flushing the toilet until the unlimited salary and retirement is eliminated for all politicians.  The founding fathers did not intend to create a job for those that cannot find gainful employment elsewhere.

Our political system is too big to succeed.  It’s time to reboot the system.  This great country wasn’t built on royal blood lines or elitist connections.  Yet the top 1% keeps getting richer while the middle class keeps shrinking.

I could go on for hours but I will close now with this thought: If we assemble a few hundred random people in the same room, could we make things any worse?  Flush the toilet in Election 2014 and keep flushing every year until elected officials finally start respecting those who elect them.


FairTax And Efficiency

fairtax


The FairTax is basically a national sales tax that would replace the current individual and corporate income and payroll tax.  It is HR25 in the House and S 122 in the Senate.  Unfortunately govtrack.us gives this bill a 0% chance of being enacted.  This is the best idea for streamlining tax collection ever, period.  So, if this is such a good idea, why will it never see the light of day?

Here at iManage4Results we usually focus on efficiency at a micro level.  However, sometimes great examples of inefficiency present themselves at a macro level.  Today we focus on our income tax system.  There is no greater example of inefficiency than our own federal government.  Talk about too big to fail, it’s too big to succeed as well (a future topic).

Currently, the Internal Revenue Service requires all citizens and US businesses to file an income tax return.  Over the years, Congress has changed and added to the Internal Revenue Code so many times that the entire collection is over 5,000 pages.  Of these 5,000 pages a very small number actually apply to the majority of taxpayers.  Yet the complexity of the code makes it nearly impossible for most taxpayers to prepare their own returns.

The billions of dollars paid every year for tax preparation, tax planning, record retention, training, lobbying, and IRS audit and enforcement adds up to one of the best examples of waste, inefficiency, and non-value added activities I can think of.  The family earning $40,000 annually pays at least $100 to have their tax return prepared.  The largest corporations have tax preparation expenses in excess of $1,000,000.  What payback do we receive from this expenditure?  We don’t get charged with tax evasion.

The FairTax aims to eliminate this waste and provide the tax revenue needed for our government to operate.  I encourage you to head over to FairTax.org and take a look for yourself.  I don’t want to recap all of the details, but I do want to list a few points that most folks are missing.

Pros

  • Tax dodgers (illegal immigrants, criminals, cash employees) would pay when they buy.  This alone has the potential to increase total tax revenue.  If you want to research further, look at GDP times 23% versus the current tax system revenues.

  • Sales tax infrastructure is already in place at the local level.  Is it possible to travel anywhere in the US and not pay sales taxes?  Currently only 3 states do not have any sales taxes, either local or state level.  These states are Montana, New Hampshire, and Oregon.

  • The IRS is reduced greatly in size because retail businesses now become the taxpayer.  Since most states already have a sales tax infrastructure, the enforcement authorities are in place as well.  The IRS would be limited to minimal oversight of these collection points.  In light of the ethical issues facing the IRS these days maybe it is time for their power to be reduced.

  • Income taxes and payroll taxes are eliminated for individuals and corporations.  Take a look at your tax withholdings and calculate the percentage.  Don’t forget Social Security and Medicare, this is 7.65% in addition to your federal withholding.

  • The price of goods will not change due to competition.  If corporate taxes are eliminated, selling prices will be reduced because we have a capitalistic market economy.  Shareholders demand a certain return on investment.  If expenses are reduced competition will take over and force selling prices to be lower.  The models predict selling prices to return to normal levels within a few months even with the 23% national sales tax included.  Remember, corporations will not pay any taxes either.  This is a critical point the opposition likes to gloss over.

  • The wasted effort of tax planning and preparation is eliminated.  There’s not much to say about this.  Billions of dollars annually could be saved and invested in activities that generate payback.

Cons

  • Lots of IRS employees would be unemployed.  Let’s face it, if we have the same revenue stream we can redeploy these folks to other areas of the government that are in constant shortage.

  • Lots of tax preparers, accountants, and attorneys would be unemployed.  These are smart people who will find jobs.  We have a shortage of talented number crunchers.

  • Low income earners would pay more.  See note above describing competition, prices will go up briefly but then return to normal levels with competitive pricing.

  • Corporations will lose their influence over politicians.  With no more income taxes, corporations would have very little need to lobby (aka contribute to reelection funds) politicians for favorable legislation.

  • Politicians would lose lots of campaign donations.  This is ultimate the reason The FairTax will never happen.  Politicians need the lobbying money to keep their jobs.  Without this money, challengers would be on a more even playing field with an incumbent.  Term limits would fix this, but why would a politician ever want that to happen?  Our founding fathers never intended to create career politicians but that’s exactly what we have now.

fairtax

HR25 is finally getting a vote in the House Ways and Means Committee.  However, it is expected to receive little support.  Political action committees donated over $42 million to the members of the House Ways and Means Committee during the 2012 election cycle, while individuals donated another $33 million.  This is a powerful committee and the members are heavily influenced by these donations.  Eliminating the current income tax system would significantly reduce the donations.

Regardless of whether you agree with the concept of The FairTax, you have to admit that it eliminates billions of dollars of waste.  Let’s cut out the middle man and fund our government efficiently.  Unfortunately, our federal government is the inefficient middle man in too many situations.  At least in this case, The FairTax is a valid solution to a giant problem that will keep getting larger.

  

Perfection Is Expensive

Perfection


Perfection is the pursuit of any company that practices Continuous Improvement, Lean, Six Sigma, the list goes on and on.  Perfection should be the ultimate goal in any business.  Competitors will find a way to be more cost efficient.  If you don’t keep up they will steal your customers.  Perfection is not as elusive as you may think.  Just be creative in how you define it.

Let us suppose a manufacturing plant has a goal of 87% utilization.  They have determined that optimal throughput is X and standard equipment downtime is Y.  So given the amount of time machines have to be down for routine maintenance, the maximum amount of production would be 87% of the total amount machines could run if there were no downtime.

Too many companies allow themselves to start thinking 87% is perfection.  Others define goals well above reality.  This is really a half-full half-empty way of looking at it.  But what if the glass is just too big?  Instead of defining perfection at 87% or even 92%, why not set a goal to increase capacity?  The capability of the machine will not change unless you change the machine.

Managers often lose focus on what really matters.  It is all too easy to get buried in the trees and forget about the forest.  I know it’s cliche but it happens.

It’s all about priority, people.  Simple payback is a key measure for the small business.  As long as you have projects with paybacks of less than 5 years, you are not in danger of chasing perfection for the sake of being perfect.  If you are following David Allen’s “Getting Things Done” methodology, then you are documenting every possible project you have identified.  Now just sort that list by payback.  Pick the quickest payback and get to work delegating the project.

The amount of resources available will control the amount of projects you have open at any given time.  If you have more people, machine time, or budget for contractors, keep assigning until your resources are 75% full.  Don’t go over that because if all time is spent doing there is no time left for thinking.  But we’ll cover that in a future post.

But how do we know when enough is enough?  The last 15% is the most expensive.  The low-hanging fruit lies in the first 85% of possible projects.  Why should I allocate resources to research saving $300.00 per month in propane costs when I can allocate those resources to a project that will save $20,000.00 per month in wasted raw materials?  Just because we know we can save on propane doesn’t mean we should put everything else on hold.  Put the project in your list and assign it when it has priority.

Getting Things Done With Evernote Folders

Folders


Evernote has become the premier cloud-based note taking application.  It is widely popular because of its flexibility of deployment.  It is available via web browsers, mobile devices, and as a local install on Mac and Windows computers.  Since your notes are stored in the cloud, you have instant access from all of your devices.

The flexibility of Evernote extends to filing, retrieval, and search.  You can organize your notes using folders and tags.  Think of folders as physical folders and tags as smaller buckets within the folders.  Finding a note is a quick process of navigating through a folder or a tag.  And if you choose to use only one or very few notebooks, or even no tags at all, you can easily search by keyword to find your notes.  It’s like having the google search engine attached to your filing cabinet.

Evernote alone could allow you to go paperless.  Paper documents can be scanned and uploaded as notes.  Even Microsoft Office documents can be stored.  Or you can create a note and type the content.  PDF and image files are scanned by the Evernote servers so you can search for those files by keyword.  Premium members even get Microsoft Office scanning.

Now let’s take a look at how to use Evernote in conjunction with David Allen’s Getting Things Done methodology, or GTD as it is commonly known.  GTD accomplishes stress-free productivity by collecting all actions, projects, and reference materials thereby allowing your mind the freedom to do and create without trying to remember what you need to do.

Evernote is the perfect virtual filing cabinet.  Folders can be created for all of your projects.  These folders can be “stacked” in Evernote to combine smaller projects under a larger project.  Or you can stack all work projects together and all personal projects together.  These folders will hold all support materials related to your projects.  You can even forward emails to a special Evernote address with simple coding in the subject line so you can save it in the correct folder and tag without having to touch it later.

There are many guides available that show how to execute the entire GTD system within Evernote.  The application is perfectly capable and has a few features that help with that process.  Reminders will allow you set “due dates” for actions or follow-ups.  Folder stacking allows you keep context lists separate from reference material.  Since the folders are sorted alphabetically, you can use symbols such as # or @ to keep your action lists at the top.

Folders can be shared among project team members.  However, true collaboration is a bit bulky since Evernote is not a folder-syncing service, it is a filing cabinet.  Dropbox or SugarSync is much more suited for the task of sharing the same spreadsheet among team members.  Google Drive is also a way to sync spreadsheets or word processing documents.

I have been using Evernote for about 3 years.  It is a necessary tool in my business and personal life.  I use it for everything, project reference, recipes, location reminders (GPS coordinates can be saved along your note), tax return copies, household bills, and other items I just need to remember.  I have a picture of the water filter for my refrigerator, a copy of my passport, birth certificate, company phonebook, health insurance card, report cards, school calendar, the list can go on forever.

Your data is encrypted and safe.  I have read many reviews by folks a lot more technical than myself and I have seen nothing to cause concern.  Even so, you should still practice regular password changes.  Changing your password regularly is the single most important way to protect your data.

While I know Evernote is an awesome application and is a suitable one-stop shop for a GTD system, I have chosen to use it for reference only.  There will be a future post on my preferred to-do list system, both the cloud and mobile component.

Bottlenecks And Political Inefficiency


Have you ever thought there was an employee who knew so much and had so much experience, they could not be replaced?  We encounter this frequently in smaller manufacturing companies because maintaining the status quo is so easy to do.  If it ain’t broke don’t fix it, right?

Wrong!  It actually is broken.  What you have is a bottleneck.  Your organization is only as good as that person.  You will never get better with that one employee holding the reins.

Large corporations take care of this problem through attrition, overkill, and rotation.  Ever wonder why folks are moved from department to department?  It simply keeps the system in motion and reduces the likelihood of a bottleneck.

Politicians, quite possibly the largest collection of bottlenecks, exist because they create their own rules.  iManage4Results says if you want to fix the problem just implement term limits.  But politicians know if you fix the problem they are out of a job.  Bottleneck workers are just as smart.  They typically will feed information to the owner or general manager in hopes of maintaining their “protected” status.  They will also undermine other managers if they feel threatened.  Time spent protecting their job results in lower productivity.

Bottlenecks cause all sorts of problems.  High priority projects slow to a crawl.  Mini-bottlenecks grow because bottlenecks protect their own.  Be aware that fraud and embezzlement like to hide in bottlenecks.  (We will cover illegal activities and how to spot them in a later post.)

Fixing a bottleneck is easy, transfer the employee, manage them to expectations, or terminate them.  Identifying the bottleneck takes observation and common sense.  Look for employees that make others nervous.  Find out who has lots of vacation banked.  Listen for someone to say, “Bob won’t share his secrets,” or “Nancy is the only worker who can run that piece of equipment,” or “This place would shut down without Henry.”

And finally, watch out for managers that have skip relationships with the owners.  Owners commonly skip their GM’s and go right to the source.  This break in communication encourages the bottleneck.  The owner does not always realize their managerial shortcomings when doing this.  They recognized it enough to hire a GM, but not enough to use the GM for maximum productivity, thus creating a bottleneck.

So, bust the bottlenecks and watch your organization prosper.  And remember, those bottlenecks are likely good employees.  A change for them may be just what they need for a productivity boost.

Verify Then Trust Your Data


Imagine you are sitting on the board of the largest global bank. The data used in the board meetings should be pretty accurate, right? Now imagine you are a middle manager with a local manufacturing company. The data used to make a decision regarding equipment upgrades should be just as accurate, if not more so.  You have to verify the data in order to trust the data.

Yesterday I received one of those random junk emails that get passed around. Warren Buffett claimed that he could end the deficit by passing “a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.” Since I got this on the internet it must be true.

There were many things about the email that made it believable. First and foremost, Warren Buffett said it. There were many statistics on amendments to the Constitution, such as how long it took for them to be passed. There was even a proposed “Congressional Reform Act of 2012” that listed in detail, how Warren Buffett would fix the deficit.

But, there were a few things that made the email unbelievable. At one point Buffett was spelled incorrectly with only one “T.” Anyone can type an email these days. Heck, anyone can write a blog post. I am living proof of that. I was also curious as to how such a good idea was not plastered all over the front page of every newspaper in the world for three months. We all know how politics works so I am not going there.

I made a next action entry in my GTD system to verify the email on snopes.com. For those of you that don’t know GTD, or Getting Things Done, pick up the book from Amazon. It will change your life.

It turns out the Buffett statement was true after all. The bottom line is trust your instinct. But sometimes you have to question your instinct. Trust but verify. Don’t just assume the data is accurate, we all know what happens when we assume.

Make sure you understand the mechanics behind the data. Take the time to learn the value of the operation, the cost of the machinery, how many workers it takes, the amount of raw materials used, the cost to deliver the product to the customer, and anything else you can value. How can you recalculate the spreadsheet if you do not know the underlying process? Do not just trust the data, verify it.

Hire Wrong And Fire Right


You may be asking why I would suggest hiring the wrong person. Well, these days it’s all about the numbers. You really never know if someone is right for the job until you hire them. In fact, you don’t know if someone is wrong for the job until you hire them.

A former boss once told me that a good hiring policy is a good firing policy. There is a lot of truth in that statement. The hit ratio for a good hire used to be about one in ten. Then a few years went by and it became one in twenty five. Recently, it seems more like one in five hundred. But you never know when you will find the gem you are seeking.

The key is finding a potential hire that brings something to the table. Look for someone that has skills your organization is lacking. Whether it is a second language, a mastery of freight scheduling, or maybe they can juggle five balls at one time. You never know what skill may add value to the company.

Sometimes a new opportunity presents itself in unlikely ways. Look for passionate candidates that want to change the world. Even if the fit does not feel right, you never truly know until you give it a chance.

Be upfront and honest. You never want to hire knowing it won’t work out. But if you never hire it will never work out. That gem you have been looking for may not be found until you take a chance.

You have to communicate what is expected. Human beings have an instinctive desire to please. If you define the objectives of the job and those conditions are met, you claim success. If the objectives are not accomplished, you lay out the course for the desired outcome.

Once you identify failure, accept it and move on. Termination is an inevitable outcome if you are a manager. Goals have to be met by everyone in the organization. Goal setting will be the topic of a future post.

Delegation Rocks!


We have all read the principles of delegation.  I especially like the visual of the manager giving a direct a little rock.  Then, once in the direct’s hand, it magically turns into a big rock.  It turns out this oversimplified visualization really is the key to successful delegation.

The key is understanding the science behind what it takes to turn a little rock into a big rock.  It does not happen just because you tell someone to do something.  It does not happen just because you ask someone to do something.  It does not happen just because you are the boss.

A direct interprets a task as a big rock when you explain that it is a big rock.  The task is integral to accomplishing the departmental objective.  You assigned the task to them because you knew their skills would allow them to accomplish it much faster.  You assigned the task to them for training so they can improve their skills.  Your direct’s relationship with the other department will help.  There can be many reasons a task is important.

Why is one of the most powerful words in management.  If you have to ask it, someone has not explained things completely.  If you lead with why you are assigning a task to a direct, you eliminate the “Who Moved My Cheese?” moment.  The employee understands why you assigned the task/project to them, no energy is wasted on complaining “Why does she always give me these assignments?”  Energy can then be spent on prepping the direct to complete the task.

Sometimes a task can be delegated without instruction.  Many times you have to teach a skill set needed to complete the task.  Other times you must review the progress on a daily basis and offer guidance along the way.  Follow up is another key to delegation and will be a future post topic.

If you want to turn little rocks into big rocks, explain why, teach, and establish a follow up date.

 

LEAN Manufacturing May Not Be Lean


Most everyone in the business world has some knowledge of Lean Manufacturing.  The official Wikipedia definition of Lean Manufacturing is “a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.”  There are several related practices such as the Toyota Production System, Six Sigma, and 5S just to name a few.

Large corporations spend millions of dollars for trainers to certify employees.  How many resources go into teaching workers every buzzword and acronym known to each of these respective systems?  I argue that the process is counterproductive in it’s whole.  The overkill of managing these formal systems is wasteful and not adding value for the end customer.  By definition these programs should be eliminated.

Ok, but we all know there is a good message in Lean Manufacturing.  What you need is an experienced manager who can implement and train while accomplishing the major goal of the organization, provide value to the customer.  Forget the buzzwords and the black belts, just apply some common sense.

Take a look at your entire organization.  Draw it out on a whiteboard or sketch it by hand on paper.  Start looking for large clusters of equipment, people, and resources.  Make an educated guess to assign a dollar value to each of these clusters.  Once you have the top three areas identified, perform a deep dive and learn everything about each area.  You may have to observe it for hours, talk to OEM’s to determine machine capability, or maybe even perform a job for a while.

Problems will start yelling at you.  You will scratch your head and wonder why no one ever fixed these issues.  Unfortunately, line workers assume they don’t have the authority to do anything about the problems and just learn to live with them.  Managers are just unaware.

So, either managers have to spend way more time in the jungle or employees have to be given the authority to initiate fixes.

I’m not saying the manager should work in the jungle and fix the problems, that will be a future post on delegation.

 

Lean Management

Desk


iManage4Results applies Lean Manufacturing concepts to every day management techniques.  You try to eliminate waste on the shop floor, so you might as well apply that same process to your management function.