Theory of Constraints TOC Talent Management - Part 1
Employee Engagement, Employee Relations, Rewards and Recognition
The theory of constraints (TOC) is an overall management philosophy introduced by Eliyahu M. Goldratt in his book, The Goal, published in 1984. According to him, , constraints are usually external in nature; Physical [Equipment, Material Shortage, Lack of People, Lack of Space], Policy [Government Regulations, Company Procedures, Union Contracts], Paradigm [Organizational beliefs and culture], and Market [when production capacity increases sales, etc.], that can be fixed using FIVE focusing steps – Identify the constraint, Exploit the constraint, Subordinate and synchronize to the constraint, Evaluate the performance of the constraint and Repeat the process. Consequently, the theory of constraints can be used to improve the efficiency of organizational operations, project management, supply-chain and logistics, high-speed automated production lines, marketing and sales, and finance and accounting. However, even best of the processes cannot work if employees are not skilled or competent or the right fit for the job or are not motivated. Hence, the theory of constraint works effectively well in Talent Management too, such as performance management, recruitment, employee retention, etc. In his book, “What got you here won’t take you there”, Marshall Goldsmith has explained how human habits, behaviors, and beliefs can be constraints and can limit their performance and growth. He highlighted 21 behavioral constraints which can be eliminated through coaching using FIVE focusing steps as explained by Goldratt. In this article, I will be explaining how I am using TOC in Talent Management and helping leaders, managers and high potential employees in eliminating constraints that are limiting their individual and team performance.
Since 2007, I have been helping organizations, initially as a part of internal HR Team and later as a Management Consultant, in improving performances of their employees and teams, more often, the performance of sales team. Earlier, when I was working as a part of HR team in an organization, I used to get recommendations from reporting managers to terminate the employment of random employees based on poor performances. An investigation into the case would often suggest that the cause of poor performance was not a real constraint. As a management consultant, it is my responsibility to find a right performance constraint, whether in an individual, or a team and sometimes in an organization and fix it, just like an automobile mechanic.
According to my experience, potential performance constraints are as follows:
1. Poorly defined role – competency match [Job Description]
2. Unclear objectives and performance parameters
3. Inadequate communication within the organization
4. Poorly designed performance management system [KRA’s, Definition of Good Performance, Rewards, etc]
5. Lack of resources and authority to get things done
6. Poor and conflicting working conditions
7. Inadequate performance of subordinates or managers
In addition to above mentioned constraints, career aspirations of employees, their motives and motivations, poorly defined priorities and family life of employees also work as performance constraints [for e.g. An employee going through a divorce and a fight over the custody of his children won’t be able to give 100% to his work]. As a Management Consultant, someone who is helping others to improve their performance, it becomes paramount for me to identify the performance bottleneck and eliminate it from the way, and restore the flow.
Khoury’s Performance Equation has summarized it beautifully –
Performance = [(D + A)/O]*Motivation
D = Degree of Quality and Direction [Knowing what to do, Objectives, Goal, Clear definition of Outstanding and Unacceptable Performance]
A = Ability of an individual [Knowledge, Skills, Competencies, and Right fitment into the role]
O = Obstacles/Opportunities [Lack of resources, Poor Processes, Lack of Authority, etc.]
M = Motivation [Career Path, Future, Family, etc.]
Which means a highly skilled and motivated person won’t be able to perform optimally if he doesn’t have properly defined parameters. Similarly, an employee working in an environment that drives performance and has right system and processes in place won’t be able to perform if he is not a right fit for the role or if he is not motivated enough.
For me, cases of “D” and “O” come under Consulting Assignments and “A” and “M” come under Coaching Assignments.
Tools to Identify and recognize bottlenecks
To find the bottleneck, whether at organizational level or at the team or an individual level, I use several tools, such as – Problem Specification, Present State / Desired State Technique, Process Mapping, Backward Process Mapping, Scenario Thinking, Fishbone Diagram, Systems Analysis, Psychometric Assessments and 360-degree feedback. Let me explain these techniques in brief.
Problem Specification – It helps in collecting specifics and appropriate data for defining a problem statement that clearly indicates the link between an undesirable “as is” situation and the desired “should be” situation.
Present State/Desired State Technique – This technique helps us identify where we are and where we want to go so that an appropriate path can be found to reach the desired objective. It also helps us to know whether the solution goals (desired state) are consistent with our needs (present state).
Fishbone Diagram – An Ishikawa Diagram, or the fishbone diagram, because of its unique shape, is a way to visually organize and examine all factors that may influence a given situation by identifying all possible causes that produce an effect.
Process Mapping – This identifies and maps all cross-functional processes, organizations metrics, and estimated processing time. It ensures a systematic understanding of the “as is” situation and improvement process.
Backward Process Mapping – BPM is a method of solving a problem by assuming and imagining that your problem is solved and then working backward. While conventional thinking urges us to think forward, one step at a time from a beginning point, the working backward method encourages us to move from an imaginary ideal solution and then think backward to the beginning point.
Scenario Thinking – Action learning teams are frequently used to explore the roots of an issue or problem confronting an organization. One of the tools often deployed in such situations, and which has applicability to case-based learning, is scenario thinking and planning. Unlike traditional forecasting methods, the attempt to predict trends and exert management control over uncertainty, scenario thinking and planning embraces uncertainty and engages in processes of prospective thinking about alternative possibilities. The purpose of scenarios is not to produce predictions or to enhance planning, but to change the mindset of people who develop and use them.
Systems Thinking – It is a framework to observe interrelationships and study patterns of change rather than static “snapshots”. Today, systems thinking is needed more than ever because we are becoming overwhelmed by complexity. Perhaps, for the first time in history, humankind has the capacity to create far more information than anyone can absorb, to foster far greater interdependency than anyone can manage, and to accelerate change faster than anyone’s ability to keep pace. Certainly, the scale of complexity is without precedent. Organizations are breaking down despite individual brilliance and innovative products because they are unable to pull their diverse functions and talents into a productive whole. The essence of Systems Thinking lies in a shift of mind – seeing interrelationships rather than linear cause-effect chains and seeing processes of change rather than snapshots.
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