People OPEX™ – A Continuous Improvement Strategy for People Operations

As the competition for talent becomes increasingly challenging, the importance of continuous improvement, retention, and building a measurable strategy around people operations is critical.

The People OPEX™ framework provides a new opportunity to unlock value and productivity for companies by adapting operational excellence principles to People Operations. By applying these metrics and thinking about availability, performance, and quality from a human capital perspective, we can increase organizational performance and ROI for the business.

In recent years, more companies have started calling their Human Resources department People Operations instead. Lazlo Bock was one of the first to take on the title of Head of People Operations at Google as he writes in “Work Rules.” Claritas has taken this notion of People Operations and expanded it using operations as an analogy to create a framework for people operations by gleaning lessons that can be applied from operations to human resources.

Lessons Learned from Operational Excellence

Most operations have some type of continuous improvement or operational excellence (OPEX) program in place. Many of the concepts that are used by OPEX teams stem from the quality, Six Sigma, and lean movements. These concepts can also be leveraged in People Operations.

There is a lot we can learn from the Six Sigma and lean movements that applies to People Operations. Here are just two examples:

·        Toyota drastically changed their company culture when they implemented Six Sigma. In a Japanese culture where it was strongly discouraged to speak up or disrupt the peace, they taught their employees that flagging a quality issue was considered a service to the company. They also started collecting a lot more data to track quality metrics which resulted in Toyota having a reputation for some of the most reliable cars in the industry.

·        Before psychological safety became widespread, it has been well known within the chemical manufacturing industry that a significant correlation existed between facilities with strong safety programs and better performance. A Dupont plant manager by the name of Berlin Bradley developed what is known as the Bradley Curve, which explains how to develop a stronger safety culture. In organizations that have a strong safety culture, the leaders at these facilities were increasing the psychological safety of their employees through their physical safety programs that required reporting of near misses, incidents that had the potential to result in a major employee injury or environmental incident but by chance did not. When their employees were encouraged to speak up about physical safety issues and they saw this was not reprimanded but rather improvements came from it, they were more likely to speak up about other issues that were hindering productivity as well.

Why is there a need for People OPEX™?

The People OPEX™ framework is intended to help companies continuously improve their people operations.

·        More and more companies are seeing talent shortages, especially in certain STEM sectors, so productivity improvements are only going to become more important in the future.

·        We have also reached a tipping point where digital transformation has permeated the entire organization and more companies have started to build People Analytics into their Human Resources organizations. People OPEX™ provides a way for People Operations to integrate existing metrics along with additional data into a powerful operational framework. 

My background as both a people manager and an engineer, leading large programs with cross-functional teams, as well as continuous improvement initiatives and process design has provided me with a unique perspective that led to the development of this framework.

It might seem strange or even unappealing to correlate people with equipment but in some ways, many companies have done a better job planning what they need to do with their equipment (physical capital assets) than their people (human capital). Most companies will agree that people are their greatest asset. And for many companies, people are their greatest expenditure. Yet, many companies spend much more time on product development and planning their capital expenditures than people development or succession planning.

The basic premise of People OPEX™ is how can we better leverage data and continuous improvement concepts to improve worker productivity. It is not intended to “squeeze” more out of employees but rather look at employee and organizational development in a different way. Employee satisfaction is a leading indicator of performance for many companies. So how can we increase employee satisfaction profitably? It starts with putting the right people in the right place in the organization but that by itself is not sufficient.

Key People OPEX™ Metrics

One of the main ways Operational Excellence has been measured in Operations is by using OEE (Overall Equipment Effectiveness). OEE is made up of three factors: Availability, Performance, and Quality. When it comes to organizations, we want to look at Overall Organization Effectiveness (OOE) instead.

Overall Organizational Effectiveness = Availability x Performance x Quality

When we look at People OPEX™, for each OEE factor, there are analogous OOE metrics that can be used to measure and track how well that metric is improving over time. Some examples are shown below.

Key Performance Indicators for Traditional OPEX vs. People OPEX™

There are other metrics as well that we can use or add to each area to measure and improve availability, performance, and quality of your People Operations.

If you are interested in how People OPEX™ can be implemented in your organization, contact Claritas Consulting & Coaching. Go to www.claritasconsultcoach.com to book a complimentary discovery call.