Spotting the REAL source of production crashes
With the amount of doom and gloom in the papers recently it is very easy for employees to blame the economy for not meeting their production targets, which can create a convenient mask for what is really the cause within your business.
Bad results are not due to a "thing" not working - they are due to an individual or group of individuals consciously or unconsciously going into agreement on changing the way something that has worked well in the past. Yes that can also include not having a product that is needed and wanted.
One of the common mistakes of managers is to assume they know the reason for a production crash without inspection. This leads them off to fixing the wrong "reason" whilst the production gets worse.
A very handy took for a manager is the Cause and Effect Diagram. It allows the Manager to spot the correct source of a crash by looking at real data instead of a gut feel. The tool is not just for managers, it is for business owners and even non-managers.
Let me give you an example of how we applied this principle to MACRO and how it allowed us to determine the real source.
We analyzed the preceding statistics that supported this statistic, and took the line back all the way to the number of staff we have. We placed all statistics in a cause and effect line up on the board room wall.
Our cause and effect line up looked like the picture below.
We know that it takes 3-6 weeks for a new job to be converted to a placement, the main factor being the availability of both candidate and employer to interview.
In October all of our statistics between requests (reaches) for our services from marketing material and placements crashed . Marketing material sent was increasing for the two months before hand, but the number of reaches for our service had been dropping, resulting in fewer jobs in from marketing. Was this the real source? Was it because our marketing was being less effective that we received less job briefs and therefore fewer placements? It sounded plausible. We knew that 50% less employers where looking to hire in the last six months - so blaming it on the market may seem reasonable.
We looked further at the marketing statistic - it had actually picked up in the last two months gone (January and February) - yet there was no flow through effect in placements from our employers. So no - it was not the real source. If it was, then placements would have increased once the number of reaches from marketing had increased.
We now knew then that the clue was the somewhere between us getting reaches from our services from marketing and our recruiters actively prospecting for new work. Looking further, we spotted that Job briefs in the month preceding the crash had dropped. We needed to find out why. So we looked at what changed around that period. Management of the recruiters was gathered and asked for the data...and there it was.
We run two business models at MACRO - contingency recruitment, where in there is no fee payable from the employer unless we place, and retainer recruitment, wherein the employer pays a retainer amount up front to secure our services. Contingency roles are usually for salaries less than $120K and can be filled by MACR through advertisements and our database searches. Retainer based roles cannot be filled by advertisments, sometimes by database searching, but mostly through targetted search (a much more labour intensive process).
In September we moved our entire contingency team to a retainer based model.
We decided to do this as the market at the time had more jobs that available candidates in our market and our recruiters were frustrated by the low probability of placements in the contingency model due to a higher rate of uncommitted employers.
The result was that our recruiters stopped getting in 5 new contingency roles a week and focused on getting in the extremely hard to find roles that deserved a retainer model. Even worse, given the experience of the recruiters in selling both models, they chose to run predominately roles that should have been retainers on a contingency model.
This meant fewer roles, much more work to fill these roles and still mostly contingency based (lower probability of placement). This meant fewer placements.
Now we had something we could control instead of blaming the markets and becoming complacent. Management sat down with all the recruiters and brought back the contingency recruitment model.
We can help you with your Cause and Effect analysis.
If you would like MACRO to run an analysis on your production line, contact us.